Baltov v Casaceli

Facts

1. The tenancy agreement commenced 3 July 2020 at a rent of $6,517.86 per month/$1,500 per week.
2. The premises are located at Millers Point/The Rocks and were built in 1996. The unit is unfurnished with two bedrooms, a study, two bathroom and two car spaces, being about 164 m2 (including the balcony). The tenant resides there with his wife and two young children. The unit is located 110 metres high in a high rise building, in the front row of units facing the harbour, with impressive views to the Opera House and the Harbour Bridge and beyond to the Blue Mountains and the heads.
3. The unchallenged evidence of the tenant was that the unit appears to have its original fixtures and fittings and has not been refurbished since being built about 25 years previously. The tenant gave unchallenged evidence that the parquetry flooring is lifting up and faded, the stove knobs are broken, bathroom tiles are cracked and the light switches are cracked.
4. On 3 June 2021 the landlord respondent gave the tenant written notice of a rent increase of $250 per week/$1086.30 per month to $1,750 per week/$7,604.16 per month commencing on 3 August 2021, which is about 17%. This is the first rent increase since the tenant occupied the premises, being some 12 months.
5. On 10 June 2021, the tenant offered a 10% increase to $1,650 per week so as to obtain some long term security for his family, but which he thought was "too generous". The offer was declined.
6. The Consumer Price Index (CPI) published on the Reserve Bank of Australia website shows the CPI for June 2020 at -1.9 % and June 2021 at 0.8%.
7. The tenant's evidence of a current rental range for a similar size unit, view and car space was $1,200 to $1,400 per week, with those at the higher range renovated or furnished.
8. The tenant contends that the increase is excessive for the following reasons (in summary). 1. In 2020, rental prices for house and units fell in a number of Sydney suburbs. The rental market in Millers Point fell by 16% in 2020, which was the third biggest price decline in houses nationally. 2. There is an apartment supply glut in Millers Point with 192 apartments for rent. 3. Landlords are having trouble maintaining (let alone increasing) rents due to the Covid pandemic. There is only 50% commercial occupancy in the nearby CBD due to the effects of Covid. 4. The tenant did not ask for a rent reduction during Covid and continued to pay full rent in a timely manner. 5. The landlord erroneously relies on price comparisons for neighbouring three bedroom units, when the tenant's unit is two bedrooms with a study. The study does not have windows and cannot fit a standard single sized bed, so it should not be classified as a bedroom. The marketing material reflects a two bedroom unit. 6. The state of repair and general condition of the premises with its original fixtures and fittings is showing significant signs of wear and tear. 7. Any rent increase for the residential premises should be fair to both parties.
9. The landlord contends that the increase is reasonable. During 2021, the rental market has been improving, albeit slowly. His evidence based on raw data of size/square metres demonstrates that $1,750 per week is the appropriate rent.
10. The landlord's evidence of a current rental range for a similar size unit, view and car space was $1,500 to $2,600 per week, with those at the higher range renovated or bigger and those at the lower range smaller. The landlord has also added an extra $100 to account for the second car space the tenant has.

The law

1. A claim under RTA s 44(1)(a) must be brought within time, which in this matter is 30 days after notice of the increase is given: RTA s 44(2) and Residential Tenancy Regulations 2019 clause 39(1). The Notice was received on 3 June 2021. This requirement is satisfied as the application was filed on 25 June 2021.
2. The relevant law concerning this matter appears in RTA s 44(1)(a) which relevantly provides: (1) Excessive rent orders The Tribunal may, on the application of a tenant, make any of the following orders: (a) an order that a rent increase under an existing or proposed residential tenancy agreement is excessive and that, from a specified day, the rent for residential premises must not exceed a specified amount, (b) … (2) Time limit for excessive rent increase applications An application for an order that a rent increase is excessive must be made within the period prescribed by the regulations after notice of the increase is given. (3) ... (4) Determination of excessive rent For the purposes of making an order under this section, the Tribunal may declare that amounts payable under a contract, agreement or arrangement under which goods, services or facilities are provided to the tenant are rent. (5) The Tribunal may have regard to the following in determining whether a rent increase or rent is excessive: (a) the general market level of rents for comparable premises in the locality or a similar locality, (b) the landlord's outgoings under the residential tenancy agreement or proposed agreement, (c) any fittings, appliances or other goods, services or facilities provided with the residential premises, (d) the state of repair of the residential premises, (e) the accommodation and amenities provided in the residential premises, (f) any work done to the residential premises by or on behalf of the tenant, (g) when the last increase occurred, (h) any other matter it considers relevant (other than the income of the tenant or the tenant's ability to afford the rent increase or rent). (6) Effect of excessive rent order An order by the Tribunal specifying a maximum amount of rent: (a) has effect for the period (of not more than 12 months) specified by the Tribunal, and (b) binds only the landlord and tenant under the residential tenancy agreement or proposed residential tenancy agreement under which the rent is payable.
3. The discretionary matters which the Tribunal is 'to have regard to' are set out in RTA s 44(5). Not all these factors are required to be considered and the weight to be attached to each is a matter for the Tribunal in the circumstances of each case; there is a wide discretion to be exercised judicially but without a requirement to adopt any particular method of determining the fair rent. The RTA does no more than provide a list of matters for consideration, and leaves it to the Tribunal to determine whether any or any particular weight should be given.
4. I have considered a number of the matters: 1. The general market level of rents for comparable premises in the building, locality or a similar locality. The evidence is of a current rental range for a similar size and two car spaces of $1,250 to $2,600 per week, some renovated, with differing views. 2. The state of repair of the residential premises, which although showing wear and tear do not prove that the premises are in such a bad state to justify a rent freeze. The tenant's evidence of some fixtures and fittings requiring repair is a matter to which RTA s 63 applies, and I infer in the absence of evidence of an application for work to be done by the landlord, that the tenant does not have any real complaint about the state of the premises. 3. Work has been done to the residential premises by the tenant, who replaced the down lights at his own cost of $495. 4. The rent has not increased since the commencement of the tenancy 12 months ago, although CPI has increased from last year.
5. Other factors the Tribunal considers relevant RTA s 44(5) include: 1. The size, age, amenities and location of the premises. 2. The length of the tenancy agreement, which has continued for some 12 months. 3. Adherence to the terms of the agreement by both parties. There is no evidence of any breach by the landlord of his obligations, not the tenant. 4. The landlord's approach to repairs. There is no evidence that the tenant has requested repairs which the landlord has refused to carry out; to the contrary the landlord replaced the dishwasher and repaired the air conditioner.

Onus of proof

1. The tenant has the onus of proving under RTA s 44 that the rent is above the general level of rents for comparable properties. Although I am satisfied that the proposed rent increase is more than can be justified, I am not persuaded that the tenant has proved that there should be no rent increase at all.
2. Taking all the evidence and matters into account I am satisfied there should be a rent increase of $150.00 per week to $1,650 per week, but that the rent is not to be increased for 12 months.

Conclusion

1. In all the circumstances and on the balance of probabilities it is just and appropriate to make the order.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 November 2021