Know your rights in the rental market minefield

Landlords and tenants don’t have to be enemies locked in endless battle over rights and rent.

We all know a horror story about the rental game, right? 

Over the years, countless islanders have locked horns over issues ranging from dirty carpets, mouldly walls and loud music, to unauthorized access, faulty plumbing and  shoddy maintenance. Not to mention the sparring over the size and reliability of rental payments.

Not everyone know this but here are rules in place — which apply to those properties which come under Rent Control — which can help resolve disputes. The key for both landlords and tenants is to know their rights. 

Rent Commissioner Eugene Foley, whose Department administers and enforces the laws which regulate rent increases on residential properties that currently have an ARV of $27,000 or less, told the Bermuda Sun, that the recession has contributed to a softer residential rental  housing market.

A lot of people have left the island which has created a void in the market (see Larry Burchall’s commentary on page 6). Currently, there is an imbalance in the market, more supply than demand.  As a result, the demand to increase rent has lessened.  However, there is still a need to protect tenants in the lower-end of the market from unreasonable rent increases and unlawful eviction. These days, if a landlord has a good tenant — a tenant that respects him, pays rent on time and cares for the property, the landlord is going to try to keep that tenant, may even lower the rent in some instances, because it is difficult to find a replacement tenant in these lean economic times. Landlords are holding on to good tenants and tenants are  in a better position today than they were years ago.  They have more leverage when renewing their rental leases because of the glut of vacant properties on the market. 

Mr Foley said a common problem during the economic downturn is tenants falling behind on their rent. Many tenants have lost their jobs while others have had their work week shortened, placing heavy financial burdens on many households. Many tenants have been referred to the Department of Financial Assistance for help.

If a tenant finds himself in the arrears of rent, he should meet with his landlord to agree a plan of action. If not, the landlord will probably serve on him a notice-to-quit. 

If the tenant doesn’t voluntarily vacate the premises as requested, then the landlord will follow up by lodging an application with Magistrates Court to get possession of his premises in addition to suing the tenant for the rents that he owes. But don’t let it come to that. The purpose of this special feature is to arm both tenants and landlords with the facts about what is, and what’s not, acceptable.

Don’t get ripped off — get smart about Rent Control

It’s widely misunderstood, but if you know how it works, it can be a very useful resource for both tenants and landlord — it’s Rent Control. Here, Rent Commissioner Eugene Foley (pictured right), with input from his team, spells out how it works. 

What comes under rent control?

Are condos and townhouses subject to rent control?

Yes, as long as the ARV is $27,000 or less and occupied by a single tenant.

How do I know if my apartment is under rent control?

Contact the Rent Commissioner’s Office or search the Valuation List at www.landvaluation.bm to determine the ARV of the apartment.  This can also visit your local post office or library where the Valuation List is on display.

My yearly rent is higher than the ARV. Is my landlord ripping me off?

Not necessarily. The ARV is set by the Land Valuation Department and is not the maximum rent which may be charged. The ARV is the assessed value of a property for land tax purposes. The Valuation List is used by the Rent Commission to determine which properties are under rent control and not to regulate rent increases.  Because a property is assessed by Land Valuation doesn’t mean a landlord can increase the rent up to that level without getting approval from the Rent Commission to do so.  

Every rent increase of a property under rent control must first be approved by the Rent Commission.  So if a property has a rent that is less than the ARV, and the landlord wishes to increase the rent, he still has to make an application to the Rent Commission. He cannot automatically put it up to the ARV.  The ARV’s are based on valuations which took effect from 1 January, 2010.  As a result of the economic downturn, the rental market has softened. There are many cases today at the higher end of the rental market where the ARV of the property is greater than the current actual yearly rent. 

My tenant has agreed to an increase in rent. Do I still have to get permission from the Rent Commission’s office to impose it?

Yes. Where a sitting tenant agrees to an increase, the landlord must lodge a notice in the specified form with the Rent Commissioner notifying him of the increase.  The specified form can be obtained from the office.

Can a new tenant agree to a rent increase?

No. If the landlord wished to charge a new tenant more than the last one, he must make an application to the Rent Commission for approval to increase the rent. A tenant must have been in possession of a property for more than six months before he can agree to a rent increase.

What if my tenant fails to agree to a proposed rent increase?

A landlord has the right to lodge an application with the Rent Commissioner for his approval to increase rent.

What if I am unhappy with the Rent Commissioner’s decision on a rent increase?

Either party may lodge an application to have the terms of the initial rent increase certificate reviewed by the Rent Commissioner. In such a case, the Commissioner shall consult the Rent Increases Advisory Panel and shall thereafter serve on the landlord and tenant certificates specifying his decision.

When is the next major change for valuations due to take place?

The next Valuation List should take effect on 1 January, 2015.

Why have some rents fallen?

Over the last few years, several thousand people have left Bermuda. As a result, there are currently more rental properties on the market then there are tenants to take them.  Simply put, the current available supply of rental properties in the market place is greater than the demand for them. Hence, there has been a plunge in rental rates, particularly at the higher-end of the rental market. 

What can I do if I’ve paid an unlawful rent?

If a landlord has charged a tenant a rent which is in excess of the standard lawful rent, the tenant may recover from the landlord the excess rent charged in accordance with the provisions of the law.

What is the most money I can get back for an overcharge?

The Magistrates Court handles claims up to $25,000 and the Supreme Courts for claims in excess of that.

What if a landlord cannot pay back the overcharge rent?

The tenant may live in the premises and use the overpaid rent as a credit toward future rents until the amount owed by the landlord is completely used up.

Let’s get down and dirty — just how clean should this place be?

Don Burgess: Quite often there are disputes over how clean is clean. How can those be resolved?

I often recommend when landlords craft a contract they should include a provision that clearly sets out should be left — if the place is to be painted, the carpets and the drapes are to be professionally cleaned and this should occur on the last month of tenancy. 

Landlords may request proof of this through receipts that it was professionally done.

If you have been there a year and you damaged the carpet, then that would deemed to be unreasonable wear and tear. But if you’ve been there 15 years and the carpet is worn out, then a reasonable landlord should not require this tenant to replace it. It should be reasonable and fair. 

If you think there is going to be a dispute then you should take photographs of everything. Landlords can help prevent disputes by putting together a conditions sheet of each of the rooms at the commencement of  tenancy— the floors, the walls, the ceiling — and furnishings if any and then a comparison can be made for discrepancies.

DB: Painting always seems to be an issue. Is it unique to Bermuda to have the walls painted by the tenant on checkout?

EF: It not’s unique, but if it’s in the contract and the tenant has signed off on it, then they are bound by it. 

But I’ve heard claims by tenants that when they took the place it wasn’t freshly painted and the landlord is requiring to paint it — that’s unreasonable. You can’t expect a tenant to do something, which you didn’t do in the first place as a landlord. 

DB: Who is responsible for addressing mould on the walls?

EF: Most houses in Bermuda will have some problem with some mildew or mould at some time. Those are landlord responsibilities because it is the fabric of the building. If the problem is so severe it’s creating health issues and the landlord has been advised but isn’t doing anything about it, then the tenant can go directly to the Environmental Health Department. They have an inspection team that deals with minimal housing standards. They would also deal with sanitation issues, water, cesspit issues. 

They will send someone out there to assess the situation and if it appears to have been a breach then they can advise the landlord on how he should deal with it. 

DB: Having a good contract seems key for both tenant and landlord then.

EF: Absolutely. The landlord should give the tenant an opportunity to read the contract before he signs off. The tenant shouldn’t be placed under duress to sign the contract without reading it. That way the tenant’s obligations and responsibilities are clear. If the tenant signs off on it, then he’s bound by it. 

DB: Key things a landlord should know/do?

EF: Landlords need to do their homework because there are risks involved. Just because the tenant looks good and came across clean does not always tell the whole story. 

Landlords should thoroughly vet prospective tenants. This should not only include references from a former landlord but also confirmation the person is employed and some particulars with regard to his income.

Landlords may want to get a statement from a bank saying the prospective tenant is a client in good standing.

Landlords should specify how many people can stay in the dwelling — eg how many members of their family. Landlords should specify which people are staying at the premises.

DB: Key things a tenant should know?

EF: If you’re in a Rent Control property, check with the Rent Commission to see if we have a registered rent approved for that apartment. 

Always encourage your landlord, if he’s not proactive about it, to execute a written contract of tenancy.

That tricky issue of the deposit... will I ever get it back?

Don Burgess: How much of a deposit can a landlord demand of a tenant?

DB: What are the rules on keeping deposits?

EF: When the tenant pays a deposit to the landlord, the landlord should understand that it is the tenant’s money. The landlord is holding the deposit in order to ensure that the tenant fully complies with the terms and conditions of the rental agreement. 

When the tenant vacates the rental premises and doesn’t deliver up the premises in accordance with the terms of the agreement, the landlord can use the deposit for remedying any breaches and damages to the premises.  

DB: How can some deposit and condition of property disputes be taken care of?

EF: When a tenant has served a landlord with a notice-to-quit, the landlord should be proactive and carry out a preliminary inspection of the premises to determine its condition and state of repair.

The landlord can then point out to the tenant the matters that need to be addressed before delivering up the premises. If the tenant turns over the key to the landlord at the end of the tenancy and has not complied with the agreement, then the landlord can use the deposit to offset the costs of what needs to be done to the rental premise. 

If a landlord makes deductions of a tenant’s deposit, then he should provide the tenant with an itemized written statement with receipts setting out details of what deductions have been made from the deposit and for what reason or purpose. 

If the tenant disputes the charges made by the landlord, the tenant can institute a civil action against the landlord for what he believes he is entitled back from his deposit.

DB: What about using the deposit towards the last month’s rent?

EF: This comes up quite often these days. Some tenants are concerned their landlord is not going to refund their deposit at the end of their tenancy. 

As a result they think that they can use their rental deposit towards the last month’s rent. The deposit monies are used for security/damage purposes and not for rent. 

The tenant is obliged to pay rent in full up until the rental contract terminates.

Security of tenure — it’s a priority issue for many tenants. Rent Commissioner Eugene Foley shares useful advice:  

Don Burgess: I just brought a property that is occupied by tenants, can I evict them?

Eugene Foley: Yes, but only if you have a lawful ground in which to do so. 

DB: What are the grounds a landlord can use to evict a tenant?

EF: As long as a tenant behaves properly, pay his rent regularly and complies with the terms of his agreement, the landlord cannot serve him a notice-to-quit except where the landlord requires the premises for his own occupation or the occupation of his father, mother, or any child or grandchild of his over the age of eighteen years or married.  

A notice can also be served on a tenant where the landlord wishes to rebuild a rental premise or carry out major renovations to it.  

Finally, where a landlord has specified that an occupant is an undesirable tenant and has given the tenant an opportunity to remedy the matter complained of and the tenant has failed to do so, the landlord can serve on the tenant a notice-to-quit the premises.

DB: Are there any exceptions to this?

EF: The benefits of protection regarding the continuation and termination of tenancies do not apply to a tenancy of an apartment in a building a part of which is occupied by the owner where such building does not comprises more than three living units.  In this case, the landlord is not required to give any reason or ground for terminating a tenancy. 

DB: What constitutes an ‘undesirable tenant’?

EF: For the purpose of the Rent Control law, ‘undesirable tenant’ means a tenant who uses his rental premises for illegal purpose; or persistently admits to his premises any person of bad character; or causes unnecessary annoyance, nuisance, disturbance, inconvenience or damage to the landlord or his property or any other person or property of that person occupying the same building as the tenant  or any building adjacent to it; or is in breach of his agreement, is persistently in arrears in the payment of his rent for periods of not less than two weeks and at the time of service upon him of the notice-to-quit his rent is in arrears for not less than two months.

DB: Can a landlord kick-out a tenant after he has failed to correct his undesirable behaviour after being warned?

EF: A notice-to-quit cannot be served on the tenant unless the landlord has given to the tenant in writing an opportunity to remedy the matter complained of and the tenant has failed to do so. If the tenant does not correct his behaviour, the landlord can then serve a notice-to quit.  The notice must specify the grounds on which the landlord considers the tenant to be undesirable. 

Where the tenant disputes the allegation contained in the notice, he shall do so in writing within 14 days. Thereupon, the landlord shall send copies of the notice-to-quit and the tenant’s explanation to the Rent Commissioner, together with a request that a date be fixed for a hearing before the Rent Increases Arbitration Tribunal. The Tribunal shall hear evidence in a summary way and adjudicate on the dispute between the landlord and tenant.