Background
On 23 June 2023, the Minister declared the local government areas of Ballina, Byron, Clarence Valley, Kyogle, Lismore, Richmond Valley and Tweed a reconstruction area (the Northern Rivers Reconstruction Area) in the Order. The Reconstruction Area Order was made on the recommendation of the RA under section 40(2)(b) of the RA Act.
The RA owns a number of residential properties located in the Northern Rivers Reconstruction Area that are suitable for use as social housing. The properties are located in the Lismore local government area and were acquired by the RA as part of the Resilient Homes Program.
There is currently a shortage of social housing in the Northern Rivers Reconstruction Area and it is desirable to make these properties available for use as social housing.
The RA is not a social housing provider as defined in the Residential Tenancies Act 2010 (RTA). In order to make the properties available for use as social housing the RA must first lease the properties to a social housing provider using an agreement known as a head lease. The social housing provider may then sublet the properties for social housing purposes.
The head lease, as an agreement, grants a right of occupation of residential premises for a residential purpose and may be subject to the operation of the RTA as a residential tenancy agreement. The requirements of the RTA in relation to residential tenancy agreements are not suitable for a head lease arrangement between the RA as landlord and a social housing provider as tenant. A social housing provider does not require the processes and protections provided to a tenant under a residential tenancy agreement.
Local councils in New South Wales adopt a similar approach to making properties available for social housing, by entering into a head lease with a social housing provider. There is an exemption from the operation of the RTA and the Residential Tenancies Regulation 2019 (Regulation) provided for local councils under section 12 of the RTA and section 36A of the Regulation to facilitate these transactions.
It is recommended that the Minister amend the Reconstruction Area Order to specify that the RTA and the Regulation do not apply to a head lease between the RA and a social housing provider on equivalent terms to the exemption granted to councils under section 12 of the RTA and section 36A of the Regulation.
