VICTORIAN tenants will officially be able to make minor modifications to their rental homes and own pets without landlord consent after new laws passed parliament last week.
The reforms — which also include the introduction of “basic standards” and limit rent rises to once a year — mark “the biggest reforms to renting in Victoria’s history”, according to the state government.
Parliamentary transcripts suggest they won’t come into effect until July 1, 2020, to allow up to 18 months for “consultation with stakeholders”.
More Victorians are renting than ever before, and for longer. As a part of its plan for fairer, safer housing, the Victorian Government has undertaken a comprehensive review of the Residential Tenancies Act to ensure that it meets the needs of the current and future rental market. More than 130 proposed reforms resulting from the review, included in the Residential Tenancies Amendment Bill that is now before the Victorian Parliament, provide enhanced protection for the diverse population of renters, while retaining appropriate support for investors.
Outlined below are 30 key reforms. In addition, the package includes reforms that address issues unique to rooming houses, such as clarifying requirements for licensing and implementing minimum standards, and reforms that provide certainty for residents and operators of residential parks, including compensation for some residents in the event of a park closure. The reforms also build on proposed new laws enabling long-term residential leases that are currently before the Legislative Council, including to allow additional bonds for long-term leases and to clarify a renter’s obligation to restore any modification.
The full list of reforms are available at www.engage.vic.gov.au/fairersaferhousing.
Comprehensive guidelines and educational materials will be developed to support implementation of the changes.
Reform 7. A new Rental Non-compliance Register for residential rental providers (RRPs) and agents will be established and maintained by the Director of Consumer Affairs Victoria. This will enable renters to identify those who have previously breached their obligations under the Residential Tenancies Act. A listing for the RRP or the agent will be made if VCAT has made a compliance or compensation order in respect of a breach of duty under the Act, or if the RRP or agent has been convicted of an offence under the Act.
Before a residential rental agreement
Reform 12. RRPs and their agents will be prohibited from inducing someone to enter a residential rental agreement by misleading or deceptive conduct (for example, if the agent tells a prospective renter that the house has a highspeed internet connection, when the agent knows this is not the case).
Reform 13. Before entering into a residential rental agreement, the RRP will now be required to disclose:
- any ongoing proposal to sell the property
- any ongoing mortgagee action to possess the property
- that the RRP has a legal right to let the property (if the RRP is not the property owner)
- details of any embedded electricity network • any other prescribed matters, such as the presence of asbestos.
This reform also applies to rooming houses, caravan parks and residential parks.
Reform 14. Sometimes, if a RRP is using an agent, the renter will only have the full name and address of the agent, not the RRP. If the RRP’s details are needed for the purposes of legal proceedings, VCAT will be able to order that the agent disclose the RRP’s name and address.
Reform 20. Any requirement in the residential rental agreement specifying that the renter must have the property professionally cleaned before vacating the property will only be valid if such cleaning was needed to return the property to the condition it was in at the start of the tenancy, taking into account fair wear and tear. This reform also applies to agreements for rooming house rooms and caravans.
Rent and bonds
Reform 22. Rental properties must be advertised at a fixed price, and RRPs and agents cannot request or solicit rental bids. The reform does not prevent RRPs and agents from accepting a rental bid if it is offered unprompted by a prospective renter.
Solicitation of bids exacerbates the imbalance of power between RRPs and renters, who may feel pressured to pay more than they can afford in order to get a rental. The reform leaves market participants to choose if they want to offer a bid, rather than in response to opportunistic price-gouging by RRPs and agents.
Reform 23. Rent increases will be limited to no more than once per year. This reform also applies to rooming houses, caravan parks and residential parks.
Reform 26. RRPs will be required to permit rent payments via Centrepay.
Reform 27. The cap of one month’s rent for both bonds and rent in advance will still apply with an exemption for high value properties and VCAT discretion to set a higher amount. The current high value exemption (for properties with a weekly rent of more than $350) will be updated to reflect market rents, and set at twice the median rent for Victoria. This reform also removes the current exemption when a property is the RRP’s principal residence. This reform also applies to high value exemptions for bonds in residential parks.
Reform 29. Renters can apply to the Residential Tenancies Bond Authority (RTBA) to have all or part of the bond released either with or without the RRP’s consent. If both parties have agreed, the RTBA will pay out the bond in accordance with instructions from the parties as to any apportionment. If the renter is applying without mutual consent, the RTBA will notify the RRP, who then has 14 days to notify the RTBA if they are disputing the claim. If not the bond will be automatically paid out. RRPs will still have to apply to VCAT if claiming from the bond without the renter’s consent. This reform also applies to bonds in rooming houses, caravan parks and residential parks.
During a residential rental agreement
Reform 31. Renters will be required to obtain their residential rental provider’s (RRP) consent to keep a pet. However, the RRP will be taken to have consented to the pet unless they apply to VCAT within 14 days. The RRP can terminate the lease if the renter does not comply with a VCAT order excluding the pet from the property. The factors that VCAT may consider when determining whether it is reasonable to refuse consent to keeping a pet include:
- the type of pet the renter proposes to keep, or is keeping, on the property
- the character and nature of the property, or appliances, fixtures and fittings on the property.
Reform 32. Renters will be able to make certain prescribed minor modifications without the consent of the RRP. Other types of modifications (including disability-related modifications) will require the RRP’s consent, which cannot be unreasonably refused. If the RRP asks, the renter will also need to restore any changes or face losing their bond to cover the cost if the RRP has to do it. Renters will remain responsible for restoring any changes made to the property, and will be able to lodge a restoration bond to cover the future removal of fixtures. Whether a modification is authorised or unauthorised, it is still the renter’s duty to redress any resulting damage to the property. For modifications in rooming houses, caravan parks and residential parks, operators will be required to not unreasonably refuse consent to disability-related modifications.
Reform 37. There will be clearer obligations for residential rental providers (RRPs) to provide and maintain the property in good repair, and in a reasonably fit and suitable condition for occupation, despite the age and character of the property. This reform is intended to address a mistaken belief among some RRPs and their agents that it is unnecessary to undertake repairs to premises that are old and run-down, and that a renter should accept a property in disrepair if they have agreed to pay lower rent.
Reform 38. RRPs will be required to ensure that the rental properties they let out comply with prescribed rental minimum standards. The minimum standards that will be prescribed will include basic, yet critical requirements relating to amenity, safety and privacy, such as:
- a vermin proof rubbish bin
- a functioning toilet
- adequate hot and cold water connections in the kitchen, bathroom and laundry
- external windows that have functioning latches to secure against external entry
- a functioning cooktop, oven, sink and food preparation area
- functioning heating in the property’s main living area
- window coverings to ensure privacy in any room the owner knows is likely to be a bedroom or main living area.
RRPs will be given time to bring their properties up to scratch before the minimum standards come into effect.
Reform 39. The power to prescribe rental minimum standards has been flexibly designed, so that it can incorporate standards imposed under other Victorian legislation, such as energy and water efficiency requirements.
Reform 42. A more robust condition reporting process will clarify obligations to complete a condition report at the start and end of a residential rental agreement. Condition reporting will be required regardless of whether a bond is taken at the start of the rental agreement. Electronic reporting will be permitted by the Residential Tenancies Act.
Reform 51. If a residential rental agreement includes a prescribed term setting out safety-related activities (such as testing smoke alarms) that must be completed during the tenancy, the RRP and renter will be required to undertake their respective safety-related activities and, where relevant, ensure the activity is carried out by a suitably qualified person.
Reform 52. RRPs will be required to comply with prescribed requirements for recording and producing gas and electrical safety checks conducted at the property.
Reform 53. Renters and rooming house residents will be required to not remove, deactivate or interfere with the operation of a prescribed safety device, unless it is reasonable in the circumstances to do so (for example, if the reason for removal was to repair or replace it). Examples of prescribed safety devices could include smoke alarms and pool fences.
Urgent and non-urgent repairs
Reform 54. The existing definition of urgent repairs will be expanded to include breakdown of a cooling appliance, non-compliance with minimum standards or the safety-related obligations (such as a functioning smoke alarm), pest infestation and mould caused by the building structure. This reform also applies to urgent repairs in rooming houses and caravans.
Reform 59. To encourage residential rental providers to maintain their properties in good repair, renters will have increased access to the Rent Special Account. The Rent Special Account is designed to hold rent payments that have been redirected when the RRP has not undertaken any necessary repairs. Upon application by the renter, VCAT will be required to order that rent be paid into the Rent Special Account instead of to the RRP, unless the RRP can prove that they would experience financial hardship if the rent was paid into the Rent Special Account. If, despite having been ordered by VCAT to undertake repairs, the RRP still has not fulfilled their duty, the renter may now apply to have any rent held in the Rent Special Account repaid to them in full as compensation for the inconvenience of having to wait for repairs to be performed. This reform also applies to rental arrangements in rooming houses, caravan parks and residential parks, and responsibility for administering the Rent Special Account will be moved from VCAT to the RTBA.
Rights of entry
Reform 66. In order to enter the property to take advertising photos or videos, a RRP will be required to give seven days’ notice to enter the property, making a reasonable attempt to arrange a time that suits the renter. Renters will be able to prevent the taking of photos or videos, or the use of photos or videos, in certain circumstances.
Reform 67. If a property is being sold during a tenancy the RRP will have the right to conduct sales inspections (including open inspections) up to twice a week, at times reasonably negotiated with the renter at least 14 days in advance. The renter will be entitled to prescribed compensation for each sales inspection. If the renter is a protected person under family violence or personal safety legislation, the renter can require that any inspections be by appointment only, rather than open.
Terminations and security of tenure
Reform 69. The ‘no specified reason’ notice to vacate for periodic residential rental agreements will be abolished. This is because residential retail providers’ (RRP) ability to terminate a tenancy for reasons other than those prescribed by the Residential Tenancies Act does not adequately protect renters against unfair termination of their tenancies, where they can be asked to leave without a reason. This has a significant chilling effect on renters’ behaviour – it can lead to an unwillingness to request repairs, for example, ultimately leading to run down properties and diminished enjoyment of their home. This reform aims to improve the balance of bargaining power between the parties, and to encourage RRPs to be more transparent about their reasons for wishing to end a tenancy. This reform also applies to periodic residency rights in rooming houses and caravan parks, and periodic site agreements in residential parks.
Reform 70. RRPs will be able to issue an ‘end of fixed term’ notice to vacate at the end of the first fixed term of a residential rental agreement, but not for any subsequent fixed terms. Renters will now be able to issue a 14-day notice of intention to vacate before the end of the first fixed term, in response to receiving an end of fixed term notice. This reform reflects the view that the first rental agreement is often a trial period for both the renter and RRP. It may be, by the end of the first term that the RRP does not wish to continue the relationship because they would like to rent the property to a new occupant. For subsequent fixed terms however, the ability to terminate using this notice will be removed, so that the RRP will only be able to terminate for a reason prescribed by the Residential Tenancies Act.
Reform 76. A RRP will be able to issue a 14-day notice to vacate if the renter or other person jointly occupying the property has seriously threatened or intimidated the RRP or agent, or their contractor or employee. This reform also applies to residents of rooming houses and caravan parks, and site tenants in residential parks. This is a new termination ground which, in combination with other protections targeting violence and dangerous conduct, is designed to help RRPs and other providers of property to respond effectively to a broad spectrum of unacceptable conduct.
After residential rental agreement
Reform 84. There will be greater clarity about how a RRP should be compensated when a renter breaks a fixed term lease. This will include:
- requiring advertising costs and re-letting fees to be calculated on a pro rata basis
- requiring the pro rata loss to be a percentage of what the RRP actually paid (not what the RRP may now be asked to pay the agent) for securing the renter who is breaking the rental agreement
- preventing RRPs from claiming for loss of rent where the RRP had served a notice to vacate
- requiring a RRP claiming for loss of rent to mitigate loss by placing the premises back on the rental market promptly and not unreasonably rejecting proposed new renters.
This reform also applies to fixed term site agreements in residential parks.
Reform 86. The process for storing and disposing of goods left behind by a renter at the end of a residential rental agreement will be simplified, streamlined and modernised.
- All goods of monetary value must be stored by the RRP for 14 days, during which time the renter can reclaim them.
- If the volume of goods left behind prevents the RRP from reletting the property, the RRP can require the renter to pay an occupation fee (equivalent to the rent) for each day the goods are stored, in order to reclaim the goods.
- The renter can apply to VCAT to extend the 14 day storage period if necessary, and the RRP can apply to VCAT to charge a higher occupation fee if necessary.
- When the storage period ends, the goods can then be sold or disposed of by the RRP, and the renter can reclaim any proceeds of sale minus the RRP’s costs.
This reform also applies to goods left behind in rooming houses, caravan parks and residential parks.
Reform 87. A RRP or database operator must give a copy of personal information about a person listed in a residential tenancy database to that person if requested in writing, and may charge a fee to provide the information. Amendments will allow renters to access one free copy of their residential tenancy database listing per year. This reform also applies to residents of rooming houses and caravan parks, and site tenants in residential parks.
Reform 93. The proposed reforms implement each component of recommendation 116 of the Royal Commission into Family Violence to better protect and support family violence victims living in rental accommodation. Reform 93 is the key element, enabling VCAT to adjudicate terminations of residential rental agreements in situations of family violence. It can terminate an agreement or require creation of a new agreement that does not include the person who committed the violence.
Under this reform, the Residential Tenancies Act will include provisions that:
- enable a renter who has been subjected to family violence to challenge the validity of a notice to vacate issued on a range of grounds including danger, threats and intimidation, failure to comply with a VCAT order, successive breaches of duty, use of premises for an illegal purpose, where the offending conduct was caused or committed by the person who subjected the renter to family or personal violence
- enable a victim of family violence who is a co-renter to apply to VCAT for an order to terminate a fixed term or periodic tenancy, without requiring consent from the other co-renters
- require VCAT to consider the relative impacts and hardship of each party to the residential rental agreement, prior to making an order
- enable VCAT to make an order requiring the RRP or agent to ensure that the victim of family violence has access to the rented premises to remove their belongings, where this is necessary
- enable VCAT to apportion liability between the relevant parties in relation to bond, utility charges, other liabilities such as damage, and compensation for early termination of the rental agreement (if relevant). VCAT would be able to determine that the person who committed family violence was fully liable
- enable VCAT to specify a termination date that must not exceed a certain period of time from the making of the order (for example, two weeks) • enable VCAT to make an order preventing a RRP, agent and database operator from making a negative listing on a tenancy database against the renter who had been subjected to family violence.
To address the impact on co-renters and RRPs, VCAT, when making an order to terminate the residential rental agreement, may also make an order to:
- terminate the residential rental agreement, or
- terminate the existing agreement and create a new agreement with one or more of the remaining co-renters (with the same terms and conditions as the original agreement).