Why are share accommodation laws so confusing?

Share accommodation laws are unnecessarily confusing. Flatmates.com.au explains why and what you can do to protect yourself.

Share accommodation—in all it’s beautiful variety—is booming. Australians are realising the benefits, both economic and social, of living together. The ongoing debate about housing affordability indicates how hard it can be to find great accommodation for a reasonable price and in a convenient location. As with most things, the law plays a critical role in regulating how share accommodation works. The law states what type of agreement people should use, the rights and obligations of tenants and landlords, and determines how disputes should be resolved. However, the laws for share accommodation in Australia are often difficult to understand and don’t reflect the modern reality of how people are living.

The biggest problem lies in how different share accommodation situations are classified by the law. In most states, there are three different types of legal agreement that could be used for share accommodation: residential tenancy agreements, boarding/rooming house agreements, or common law contractual licenses. This is the case in NSW, Victoria, Queensland, South Australia, and Tasmania.

Residential tenancy agreements are the traditional form of lease—they are designed for renting a whole house or apartment to a tenant (or multiple co-tenants). The laws for residential tenancies are well developed and generally mandate a good balance of rights and obligations between landlords and tenants, while providing a clear dispute resolution process. For example, tenancy law requires landlords to lodge the bond with a government authority for the term of the lease.

Boarding/rooming house agreements are designed to regulate commercial-scale boarding houses with a minimum number of residents (usually 3-4 or more). Like residential tenancies, boarding/rooming agreements mandate certain terms and provide minimum standards for accommodation. For instance, boarders in NSW are entitled to 4 weeks’ notice of a rent increase.

Common law contractual licenses are a catch-all category for any type of agreement that isn’t a residential tenancy or boarding/rooming agreement. Contractual licenses are not regulated by state governments and as such there are few (if any) compulsory terms and no defined process for resolving disputes—in other words, your agreement is only as good as you negotiate it to be. Unless you negotiate all terms and put them in writing, your agreement could be left without much protection in the law.

If you’re already confused after reading this, you’re not alone. In NSW for example, boarding house agreements only apply to boarding houses with 5 or more residents. This means that common share accommodation situations like a home owner renting out a room or a tenant sub-letting a room are not covered by boarding house laws. Although residential tenancy agreements can be used in these situations, generally residential tenancy law doesn’t automatically apply meaning that the agreement will likely be classified as a contractual license.

Although contractual licenses allow flexibility to negotiate, often people fail to put their agreement in writing or don’t think to agree on all the terms they’ll need. The consequence of all this is that people renting rooms with shared access to facilities (e.g. bathrooms or kitchen) are often left without any guaranteed protection in the law.

So why does this issue exist? Like other parts of the share economy, share accommodation—and the technology that facilitates it—moves faster than the law. Currently, the law only regulates very traditional forms of rental accommodation—tenancies for whole properties and rooming agreements in commercial boarding houses. Although share accommodation has been an important part of Australian culture for generations, the law has not caught up with the reality of people sharing their homes by renting 1-2 rooms. This disjunct has only worsened with the rapid expansion of share accommodation driven by housing affordability issues and improvements to technology. Those using share accommodation face similar problems to Uber and Airbnb because the law lags behind the way people are choosing to live and use technology. Another aspect to the issue is that share accommodation law varies between states and territories. Not only can this be confusing, but it makes reforming the law that much more difficult!

What’s the solution? The best thing that individuals can do is to learn more about the law and how it affects them. This is why Flatmates.com.au is compiling free legal guides for every state and territory to help people understand what their legal situation is. These guides can be found at info.flatmates.com.au. The long term solution is for state governments to start a law reform process that aims to address the reality of share accommodation. A good start would be to extend the provisions for boarding houses to all situations where people rent rooms with shared facilities. A better option would be to create a whole new set of laws specifically designed for share accommodation. These would be more flexible than residential tenancy agreements but provide greater certainty than boarding/rooming agreements or contractual licenses. Ideally, all states and territories would adopt identical laws for the sake of consistency.

Until then: don’t stress, put your share accommodation agreement in writing, and read the legal guides at info.flatmates.com.au.