Douglas v Gennacker Pty Ltd (Residential Parks) [2011] NSWCTTT 385 (24 August 2011)

CONSUMER, TRADER AND TENANCY TRIBUNAL
Residential Parks Division

APPLICATION NO:	RP 11/09921
	
APPLICANT:	Craig Andrew Douglas
	
RESPONDENT:	Gennacker Pty Ltd 
	
APPLICATION:	A proposed rent increase is excessive
	
APPEARANCES:	Ms Faye Urquhart on behalf of the applicant
Mr John Wilmott on behalf of the respondent
	
HEARING:	Tweed Heads on 9 June 2011
	
LEGISLATION:	Residential Parks Act 1998
Corporations Act 2001
	
ISSUES:	Whether the proposed rent increase for site 47 is excessive
	
KEYWORDS:	Excessive rent	
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ORDERS

1. 	The Tribunal orders that the rent for site 47 shall not exceed the sum of $153.50 for the period of 12 months from 1 April 2011.

REASONS FOR DECISION

The application

1.	The application first came before the Tribunal on 18 March 2011. Conciliation took place but was unsuccessful. There was a hearing on 9 June 2011. The parties provided their evidence. The decision was reserved.

Background

2.	Mr Douglas resides at site 47 Homestead Holiday Park Chinderah under a residential site agreement. On 24 February 2011 Mr Douglas was served with a notice of rent increase under section 53 of the Residential Parks Act 1998 (the Act) requiring him to pay an increase in rent from $144.10 to $154.50 per week from 1 April 2011. 

The evidence

3.	The applicant relied on written submissions and oral submissions of his representative Ms Urqhart, and his own evidence.

4.	The respondent’s evidence consisted of oral evidence from Mr Wilmott, a director of the respondent, the respondent’s accountant Ms Hickling and various documents.

5.	Evidence as is relevant, is referred to in the consideration of the application.

Consideration and findings

8.	No objection was taken to the validity of the rent increase notice or its service on the applicant.

9.	The applicant occupies a site within a residential park known as Homstead Holiday Park (“Homstead”). It is immediately adjacent to Hacienda Holiday Park (“Hacienda”). While owned by different companies, Homstead and Hacienda share common associates (adopting the meaning of “associate” under the Corporations Act 2001). They also share common management and some facilities.

10.	Homstead is located at Chinderah and situated on the Tweed River. It is eight km from Tweed Heads which is at the southern end of the Gold Coast. The park consistes of 172 sites and amenity buildings. The park appears to be of a reasonably high standard. Other facilities include a covered barbeque area, swimming pool and private boat ramp. Services include twice weekly gargbage collection, private mail boxes and water. An office and shop were available in the park but they have recently closed and the Haceinda office services both Hacienda and Homstead. There is a recreation hall at Hacienda available to Homstead residents.

11.	Section 57 of the Act sets out the matters that are to be taken into account in determining whether a rent increase is excessive. It provides:

57 	Matters to be considered in determining rent applications

The Tribunal may, in determining whether or not a rent increase or rent payable under a residential tenancy agreement or a proposed residential tenancy agreement for residential premises is excessive, have regard to each of the following factors:

(a) 	the general market level of rents for comparable premises in the same residential park and in other residential parks in the locality or a similar locality,

(b)	the value of the residential premises,

(c) 	the frequency and amount of past rent increases under the residential tenancy agreement or previous residential tenancy agreements between the same park owner and resident,

(d) 	a general price index (such as the Consumer Price Index),

(e) 	the conduct of the parties,

(f) 	the amount of any outgoings in respect of the residential premises required to be borne by the park owner under the residential tenancy agreement or proposed agreement,

(g) 	the estimated cost of any services provided by the park owner or the resident under the residential tenancy agreement or proposed agreement,

(h) 	the value and nature of any fittings, appliances or other goods, services or facilities provided with the residential premises,

(i) 	the accommodation and amenities provided in the residential premises and the state of repair and general condition of the premises,

(j) 	any work done to the premises by or on behalf of the resident, to which the park owner has consented,

(k) 	any other relevant matter.

I will deal with each of these matters separately.

(a) 	The general market level of rents for comparable premises in the same residential park and in other residential parks in the locality or a similar locality

12.	The applicant has submitted the following parks and their rents as appropriate for comparison:

Park name	Rent range	
Tweed Heritage Caravan Park Chinderah	$112.00/$121.00	
Pyramid Holiday Tweed Heads	$128.50	
North Star Holiday  Resort – Hastings Point	$133.00/$135.00	

Ballina Headlands Leisure Park – Lennox Head	$105.00/$111.00	
Ballina Lakeside Tourist Park	$129.50/$139.50	
Tweed River Hacienda Holiday Park - Chinderah	$$149.00/$154.50	

13.	The applicant has provided details of the facilities of each park and some charges and uitility inclusions (such as water). The applicant does not provide any comparative rents for Homestead.
	
14.	The respondent provided a letter from Hacienda stating that the site fees in Hacienda range from $149.00 to $187.60. The respondent considers that this is the most appropriate rent comparison.

15.	The consideration of comparative rent is somewhat difficult for Homestead. Comparison with residential parks that are not in the immediate locality is not appropriate. Chinderah is immediately adjacent to Tweed Heads which forms the southern part of the conurbation known as the Gold Coast. The Gold Coast is a large metropolitan area with all the facilities that can be found in a metropolitan area. The other localities do not have this facility. Additionally Homestead and Tweed are both adjacent to the Tweed River and have boat launching facilities. No other residential park in the area has this location or amenity.

16.	It is noted that the Tribunal has recently dealt with rent increases at nearby Drifters Holiday Park (two separate decisions) and at Noble Lakeside Park. In these decisions Homestead and Hacienda were considered to be superior parks because of their location. 

17.	The respondent states that existing rents in Homstead are in the same range as those in Hacienda. Rent increases were recently negotiated with the residents’ committee. The applicant is the only resident disputing the rent increase. The rents vary on the basis of proximity to the river, access to open space and attached amenities. The rent sought from the applicant is at the lower end of the range. It is noted that site 47 does not have attached amenities, backs onto the park boundary and is about midway between the road front of the park and the river. 

(b) 	the value of the residential premises

19.	The sites in the park are owned by the park operator. There are 172 sites. The dwellings on the sites are owned by the residents. The respondent provided two land valuations from the Valuer General. At 1 July 2005 the unimproved value was $4,420,000.00. At 1 July 2008 the unimproved value was $5,580,000.00. The applicant submits that an exemption for payment of land tax is available to the respondent. No evidence was presented to show that this was being paid by the respondent. Land tax is not noted in the respondent’s costs information.

(c) 		the frequency and amount of past rent increases under the residential tenancy agreement or previous residential tenancy agreements between the same park owner and resident

20.	The applicant provided the following history of rent increases:

1 May 2008		$126.40

1 October 2008	$130.05

1 January 2009	$131.50

1 April 2009		$135.80

1 April 2009		$144.10

21.	The rent increases were not disputed by the respondent. Using these figures there has been an average rent increase of about 4.6% annually over the three years from 2008 to 2010.

22.	The applicant provided a copy of a document that notified residents that the park manager had agreed to reduce the rent increase from 7.2% to 6.5% if the residents paid their rent by direct debit. The respondent states that this is not its document. It is believed to have come from the residents committee. The substance of the arrangement was not denied.

(d) 	a general price index (such as the Consumer Price Index)

23.	The all groups conumer price index for Sydney has been submitted as the relevant price index. It is appropriate to use this index as it will reflect state based price movements for utilities and other charges relevant to a residential park. The relevant index number in the quarter preceeding the 2010 rent increase is 170.5.  The index number for the same quarter in 2011 is 175.9. The increase over the period is 3.17%. Applying this to the 2010 rent would give a rent of approximately $148.70 for 2011.

(e) 	the conduct of the parties

24.	There was no evidence or submissions from either party.

(f) 		the amount of any outgoings in respect of the residential premises required to be borne by the park owner under the residential tenancy agreement or proposed agreement

25.	The park owner provided a letter and submissions from his accountant, Ms Hickling. It was stated that excluding tourist operations, depreciation and items of a capital nature costs increased by an average of 8.26% between 8 January 2010 and 7 January 2011. The various cost items were listed with the increase in cost shown as a percentage but no particulars or actual amounts were provided. Nor was the proportion of those costs to the overall costs provided. 

26.	The applicant submitted that there is insufficient information about the respondent’s outgoings to justify a 7.2% increase in rent over the 12 month period from 1 April 2010.

27.	The applicant submitted that there has been a reduction in facilties. There is no on-site park manager, the office has closed and residents must use the office at Hacienda, the shop has closed and the closest shop is 300 metres away. Mr Douglas also referred to access to the barbeque area being restricted. A public telephone was no longer on site.

28.	The respondent told the Tribunal that the shop was closed due to a lack of patronage by the residents. The telephone was removed for the same reason. The office at Hacienda is a reasonable distance, a traffic barrier was erected into the barbeque area to prevent cars illegally parking in the area. The onsite managers cover both Hometead and Hacienda. 

29.	While there has been some rationalisation of services and facilities I  consider that there has not been any significent reduction in services.  In relation to the respondent’s costs, because of the lack of quantitative data I do not give much weight to this evidence other than to note that some costs may have increased by a percentage greater than CPI.

(g) 		the estimated cost of any services provided by the park owner or the resident under the residential tenancy agreement or proposed agreement

30.	The applicant submits that the residents pay for their own electricity, gas and telephone. They also pay insurance for their homes and public liability insurance. The respondent made no submissions on this point.

(h) 	the value and nature of any fittings, appliances or other goods, services or facilities provided with the residential premises

31.	There are no submissions by either party on this point.

(i) 	the accommodation and amenities provided in the residential premises and the state of repair and general condition of the premises

32.	There are no submissions.

(j) 	any work done to the premises by or on behalf of the resident, to which the park owner has consented

33.	The applicant submitted that maintenance of dwellings is met by the residents.

(k) 	any other relevant matter

34.	There were no submissions by either party.

35.	The general intent of section 57 of the Act is to determine whether the rent increase is excessive taking into account the various prescribed factors.  It is difficult to use comparative market rents because; (i) the situation of Homestead and Hacienda is unique in the locality, and (ii) the adjoining park. Hacienda, is effectively run by the same management as Homstead. 

36.	I note that the Tribunal has had regard to the fact that the level of rents paid in a residential park can be distorted by residents not having an ability to freely negotiate an appropriate rent because of the costs that would be incurred if they did not accept the rent increase and had to relocate. Having acknowledged this I also cannot ignore the general level of rents in both Homestead and Hacienda. The lowest rent being $149.00. 

37.	The other factors that I consider relevant in the circumstance of this application is the increase in the CPI and the increase in costs generally. The history of rent increases gives an average of  4.6% since 2008. This is greater than the CPI increase. I do not consider that the past increases of 4.6% increases to be excessive. 

38.	It must be acknowledged that the CPI is a measure of a basket of consumer goods and may not accurately reflect general increases in utilities and other costs of the respondent. In refering to utility costs I am refering to those that consitute part of the park overheads, for example electricity for street lighting, rather than that consumed directly by residents. While there is no objective evidence of the increases in these items I acknowledge that there have been considerable increases in these charges over recent years. As such I consider that increases in rents over the CPI can be justified. In this case the increase is 2.5% greater than the average of the preceding three years. Other than a general reference to cost increases by the respondent there is no objective evidence of why costs have increased from 4.6% a year to 7.2% that is now sought. 

39.	I have referred to the offer to the park residents by the respondent to reduce their rent increase to 6.5% if they enter into a direct debit arrangement. Taking into consideration the rents in Hacienda and Homestead and the evidence of cost increases provided by the parties I consider that this figure best represents the cost increase to the respondent and should be adopted as the rent increase for the applicant.

Determination

40.	Applying 6.5% as the rate of increase I find that the rent sought by the respondent is excessive and that the rent to apply to site 47 for the 12 month period from 1 April 2011 is $153.50.

41.	If the applicant has paid rent in excess of $144.10 from 1 April 2011 the excess is to be refunded to the applicant within 28 days of this determination. Likewise, if this determination results in rent arrears for the applicant they are to be paid to the respondent within the same period.

B Pickard
Member
Consumer Trader & Tenancy Tribunal

24 August 2011