In a press release dated Sunday 8 October 2017, the Victorian Premier Daniel Andrews announced what was described as an "unprecedented package of tenancy reforms."
The press release alleges that the Andrews Labor Government will make renting fair.
The legislation to achieve these reforms is expected to be introduced into the Victorian Parliament in 2018. It will take effect, if passed, in 2019.
So far, there is actually very little detail about the proposed reforms.
Broadly speaking, they fall into the six categories:
1. Rental security;
2. Tenant rights;
3. Faster payments and rental bonds;
4. Fair priced rent;
5. Pets are welcome; and
Under this heading, the proposed reforms are as follows:
(a) Landlords must give a reason to end a tenancy
(b) Limit the use of the ‘end of fixed term’ notices to vacate
(c) False, misleading or deceptive representations are proscribed
(d) Pre-contractual disclosure
(e) Long term leases are encouraged
Commissioner for Residential Tenancies
A Commissioner for Residential Tenancies will be appointed to champion the rights of Victorian tenants in the private sector.
The Commissioner will consult widely with tenant and consumer advocacy groups across the rental sector to identify systemic issues and will give tenants a voice in seeking changes to renting laws.
Currently, tenants who breach their obligations under the Residential Tenancies Act 1997 may find their names on a tenancy database, sometimes referred to as a ‘blacklist’.
Landlords and real estate agents will now be subject to similar measures.
The government claims it will create a landlord and agent ‘blacklist’ that will be available to all tenants so they can identify landlords and agents who have previously breached their obligations under the Residential Tenancies Act 1997.
FASTER PAYMENTS AND RENTAL BONDS
14 day automatic bond repayment
Under this proposal, either party will be able to apply to the Residential Tenancies Bond Authority (RTBA) at the end of the tenancy to have all or part of the bond released either with or without the other party’s consent.
If both parties agree, the RTBA will pay out the bond within 14 days in full or in accordance with instructions from the parties as to any apportionment.
If one party has not consented to the bond being paid out, the RTBA will notify the other party, who then has 14 days to notify the RTBA if they are disputing the claim. If not the bond will be automatically paid out.
Early release of bond
Currently, the parties to a tenancy can mutually agree to the release of the bond at any time before a tenancy has ended. A tenant can also apply for their bond to be released seven days before the end of the tenancy, subject to the landlord’s agreement.
To help alleviate financial stress, and to better facilitate these private agreements between exiting tenants and landlords, the government proposes to amend existing provisions in the Residential Tenancies Act 1997 that govern the return of the bond where a tenancy has not yet ended.
The proposal is that tenants will be able to seek agreement from their landlord up to a month before the end of the tenancy for their bond to be released early. If the landlord agrees, the bond can be paid out as agreed up to 14 days before the end of the tenancy, rather than the current period of 7 days.
Updated bond cap & up-front rent cap for most properties
The government asserts that current arrangements for the cap on maximum bonds and up-front rent are out-dated and apply to less than half of all rental properties in Victoria. This means that many tenants are exposed to paying more than one month’s bond and rent in advance.
The proposed reforms will ensure that bonds will be no more than one month’s rent for any property where the weekly rent is less than double the median weekly rent. Only landlords who have obtained an exemption from VCAT will be able to require a bond of more than one month if the weekly rent is below this limit.
Upfront rent will also be limited to one month’s rent for these properties.
By linking reforms to the median weekly rent – which is currently $385 - the cap on bonds and up-front rent will cover the vast majority of rental properties in Victoria into the future.
The government claims that these reforms are needed to improve the affordability of the upfront costs of renting, while still allowing landlords to protect truly high-value properties.
Faster repairs reimbursement
One of the most frequent concerns expressed by tenants requesting a repair was that urgent repairs take too long to resolve. Some repairs require immediate attention and it may not be reasonable for a tenant to wait until the landlord can resolve it.
Tenants who have paid for urgent repairs up to the current authorised limit of $1,800 will be able to seek reimbursement from the landlord for the reasonable costs of repair within 7 days, instead of 14 days.
This will reduce the amount of time tenants are out of pocket for urgent repairs that the landlord should have covered.
A failure by the landlord to reimburse the tenant will entitle the tenant to seek a compensation order from the Victorian Civil & Administrative Tribunal. A breach of a compliance order would expose the landlord to being ‘blacklisted’.
FAIR PRICED RENT
The frequency of rent increases can impact on a tenant’s ability to meet the ongoing costs of their accommodation.
Less frequent rent increases will help tenants manage cost of living pressures, which are increasing.
The proposal is to limit rent increases to once every 12 months, instead of every 6 months. Rent increases must also be reasonable. Tenants have the right to appeal to the Victorian Civil & Administrative Tribunal if they believe an increase is excessive compared with the market rent for a similar property.
Cracking down on rental bidding
The government claims that rental bidding can lead to reduced transparency for rental applicants and can increase search costs if properties are advertised at a price lower than a landlord is willing to accept.
The reform proposed is that landlords will be expected to set a realistic fixed price, enabling potential tenants to rely on the advertised price when looking for their next rental property.
Therefore, the proposal is that all landlords and agents must:
- advertise properties at a fixed price (no ranges or ’price plus’ advertising); and
- not invite prospective tenants to make an offer at a price higher than the fixed price (including via technology platforms).
If tenants enter a bidding war that was not initiated by the agent, that seems to be okay under the proposals.
PETS ARE WELCOME
The proposal is that tenants will have the right to keep pets, provided they obtain the landlord’s written consent first. Landlords will not be able to refuse a request for consent unreasonably.
In the case of an assistance dog, consent cannot be refused at all.
Guidance will be issued to help landlords and tenants understand the types of situations where it may be reasonable to refuse consent.
An outgoing tenant will be required to undertake cleaning and fumigation if there is pet-related damage to the property that goes beyond fair wear and tear. This is consistent with their existing duty not to damage the property and to leave it in a reasonably clean condition.
Tenants can make minor modifications
A tenant will still require the landlord’s written consent to install fixtures or modify the property, however a landlord will not be able to refuse consent unreasonably to certain types of modifications – for example, modifications needed for safety reasons (i.e. installing furniture anchors), minor modifications (i.e. installing a picture hook), or access to the internet.
Depending on the type of modification requested, the landlord may require the tenant to use a suitably qualified trade person. This would include someone who is licensed or otherwise has the relevant expertise to carry out the modification.
In the case of disability-related modifications, which can be more complex, an assessment may be needed to determine the need for home modifications. This would be conducted by an accredited occupational therapist, or other allied health practitioner as appropriate. Tenants may also rely on an existing assessment.
Whether these reforms are necessary is presently a matter of debate.
In any event, when the legislation is passed, I will revisit this topic if the legislation is different to the current proposals.
Hayden Starke Chambers