July 2, 2014 5:04 pm

House Rules: property law and splitting service charge costs

Splitting service charge costs, expectations for letting agents, and Australia’s swimming pool regulations
Illustration by James Ferguson depicting property law©James Ferguson

1. Splitting service charge costs between tenants

The service charge for my flat has recently increased because the landlord has changed the way it divides costs between tenants. Do I have to accept this? It depends what your lease says. If it sets out exactly what proportion of service costs you will pay and the landlord isn’t charging any more than that, then you don’t have any scope to argue about how costs are divided.

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My lease actually says that I have to pay a fair proportion and the landlord’s surveyor has the right to decide exactly how costs are split. Does that mean I am stuck with it? No. Tenants at a marina village recently won a case overturning a surveyor’s apportionment of service charge between tenants. Disputes about service charge go to a specialist tribunal, which has the power to decide whether service charge is payable and, if so, how much, when, and by whom. Any provision in a residential lease that tries to give a third party the right to decide those things is void.

What if the lease says the surveyor’s decision is final and binding? That makes no difference. The provision is void and you can challenge the division of costs if you think it is unfair.

2. What to expect from letting agents

My daughter has finished university finals and hopes to go on to a postgraduate course in the autumn. She is looking at flats now, to make sure she gets somewhere. The letting agent said she will have to pay a holding deposit now and that she won’t get it back even if she can’t secure her funding and can’t take up the postgraduate place. Is that allowed? The law in this area is complex but the basic principle is that the terms offered to a prospective tenant should be fair.

The idea of a non-refundable holding payment doesn’t sound very fair to me. The Competition and Markets Authority agrees. It recently published extensive guidance for letting agents, to help them comply with their legal obligations. The guidance says that a term that makes a pre-tenancy holding payment completely non-refundable is likely to be unfair.

Could they argue that the landlord will lose money if my daughter pulls out and hang on to some of her payment? Probably, as long as they can show that they have kept back only the landlord’s net costs or its net loss of profit – but not both.

What if they could easily find a new tenant and not lose money at all? The landlord must do what is reasonable to limit its loss and can’t keep back money if it isn’t actually out of pocket.

How do I know what to expect from letting agents in general? Have a look at the “Key Principles” summary sheet published alongside the recent guidance.

3. Safety rules for swimming pools in Australia

I hear the residential property market in New South Wales is doing really well – I own a property there and I’m tossing up whether to relet it or sell. But my property has a swimming pool and I hear there might be some new rules relating to pools? You’re right, there has been regulation around pool fencing and safety requirements for some time, but a number of changes have been introduced over the last couple of years. If you are considering leasing or selling your property, you should make sure it is registered on the statewide register. From April 29 2015, the pool will also need a valid compliance certificate before the property is offered for sale or lease.

What if my property is a lot in a strata or community scheme and there is a pool on the common property? You still need to make sure that the pool is registered and has a valid compliance certificate and provide a copy of the compliance certificate. But don’t worry – the owners corporation (or equivalent) is responsible for registering the pool and making sure it complies with the safety requirements.

How do I check if the pool at my property is registered and how do I get a copy of the compliance certificate? There is a public register at swimmingpoolregister.nsw.gov.au. By entering the property address you should be able to confirm that your property is registered. So long as there is a valid compliance certificate in place you will be able to obtain a copy directly from this online register free of charge.

What if there’s no valid compliance certificate – how do I get one? You should arrange for the local council or an accredited certifier to conduct an inspection. They will be able to issue a certificate of compliance if the pool meets all safety requirements. If you are a lot owner in a strata or community scheme you should contact the strata manager (or executive committee) to see if steps are being taken to obtain a certificate. If they don’t co-operate, you can go direct to your local council and request an inspection. A compliance certificate will remain valid for three years from the date of issue.

How much will it cost? Local councils can charge up to AU$150 for an initial pool safety inspection and $100 for a follow up inspection. Accredited certifiers have their own fee scales.

How long will it take? It could take three months to get a compliance certificate following the first inspection. So if you are thinking seriously about selling or leasing your property in NSW you should check that the pool is registered and that there is a valid compliance certificate sooner rather than later.

What happens if I don’t comply with these rules? If you lease your property without supplying a copy of the valid compliance certificate you could receive penalty notice for AU$440 or a court-imposed penalty of $2,200. From April 29 2015 your agent will not be able to market the property without evidence of registration and a copy of the valid compliance certificate. If you exchange contracts without attaching this documentation, the buyer could pull out within 14 days and you would have to return the deposit and any other moneys paid to you under the contract.

I own properties in other Australian states or territories as well – do the same rules apply? All Australian jurisdictions have similar rules requiring fencing to meet certain safety standards but currently, only Queensland has similar requirements on a sale or letting. Ask a solicitor or conveyancer in the relevant jurisdiction for detailed advice.

Jessica Wallis is a solicitor (qualified in New South Wales, Australia) in the Real Estate team at King & Wood Mallesons SJ Berwin

Illustration by James Ferguson

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