This is just some of the new rules being proposed by the Victorian government: - Removal of the Notice to Vacate for 'No Specified Reason' - Limiting the use of 'end of fixed term' notices to vacate - Bond capped at one months' rent for all tenancies less than $760 per week - Landlords unable to unreasonably refuse consent for pets - Allowing tenants to make minor property modifications - Landlord and estate agent blacklist - Requiring pre-contractual disclosure by landlords regarding asbestos and intention to sell - A new Commissioner for Residential Tenancies - Early release of bonds by agreement before the end of a tenancy - Faster tenant reimbursement for urgent repairs - Automatic bond repayment within 14 days when a claim hasn't been lodged - Ban on rental bidding and rent bidding apps - Rent increases restricted to once per year - Prohibiting false, misleading or deceptive representations by landlords or agents prior to a tenancy I'm sure our Melbourne PM whizz @Lil Skater can give a local opinion, but some of these changes are awful. Not sure I'd want to invest under these conditions, but if I did I'd make damn sure I had a property manager who was all over them.
Unfortunately a lot of stupid suggestions that haven't been very well thought out. If anyone is interested you can have your say on the new proposed changes here - Tell us what you think For those interested, below is my response that I submitted today. Be warned, it's quite long "The new reforms are weighted heavily in the tenants favour, with some a great ideas - but others have the potential to leave owners significantly out of pocket and with little control over their investments. With the removal of the 120 day no specified reason notice to vacate and the introduction of limiting the use of the 90 day end of fixed term lease may actually result in higher tenancy turn over, and as a result LESS security for tenants throughout Victoria. The existing 120 day notice to vacate allows tenants an additional month to find another suitable rental property, and I believe it's currently the longest notice to vacate time frame in Australia. It provides ample time for tenants to relocate without the need of a stressful move with little notice. As an agent, this notice is normally served if a tenant has been unreliable in the course of their tenancy. Either by having consistent rental arrears or poor maintenance of the property, however not to an extent that I could apply to VCAT under these relevant sections and the owner has allowed the tenancy to roll to periodic to allow the tenants a chance at improving their tenancy and therefore remaining at the property. Should this notice be removed, it means owners and agents will need to start issuing 90 day end of lease notices to vacate without the opportunity for the tenants to rectify there poor history. This will result in a higher turn over of lesser quality tenants, and they will be receiving less notice than they currently do. In turn this will also increase the amount of competition tenants have to secure another rental property. With bond set to be capped at one months' rental for all tenancies less than the median rent, we also need to change the Warrant of Possession procedure to make this fairer on the landlords. Currently we need to wait until the tenants are at least 14 days' in arrears to issue a notice to vacate, by the time we get through to VCAT to have a warrant of possession granted the owner is already out of pocket approximately 5-6 weeks rent, with another 14 days' normally granted for the warrant of possession to be carried out. If this is all added together the landlord will immediately be out of pocket a minimum of 7-8 weeks rent, excluding any damages. With bond covering a mere half of that, this will result in significant loss for the landlords and has the potential to increase the rent to help make up for these losses, and again more likely that landlords will be far more strict when assessing whether to renew the lease of their existing tenancies. If bond will be capped, I believe that the arrears procedure should also be amended. In Western Australia I believe a breach notice for rent arrears can be issued as soon as the tenants are 1 day in arrears and gives them 14 days to make payment - if they do not they are required to vacate the property within 7 days. Over in WA you can also issue a notice to vacate based on successive breaches for failing to pay rent by the due date, which is currently not a provision in Victoria. This cuts the process effectively in half. I personally love pets and try to encourage my clients to at least be open to the idea of allowing pets, often with the provision of a slightly higher bond as there's additional risk to the landlords. If pets are to be allowed in all rental properties, there should be an option for the landlord to take a small pet bond to help in the event of damages. It is also not described what "minor non-structural" property modifications are. Does this mean a tenant can paint the property, rip up the carpets, replace all curtains/blinds and change all light fittings? After all, all of these are non-structural but all would require a landlord to pay thousands of dollars to rectify if this is not further clarified. Where does the line end? Is there an onus on the tenant to change everything back? I agree it's the tenants home and they should be able to settle in without issues, but allowing modifications to a property they do not own should not be permitted without the owners prior written consent. With restriction on rental increases to once per year, you'll find a lot of landlords will start issuing larger increases once per year - rather than smaller increases spread over 6 month intervals. Again, making a rental property go beyond affordability for tenants a lot quicker and again, providing tenants less security. The potential of having a landlord/agent black list isn't such a bad idea in theory. However, how is this going to be policed and ensure that the information is accurate? In Victoria we cannot lodge a tenant on a "blacklist" such as NTD or TICA without them leaving and owing money above the bond, or a VCAT order. Things like successive breaches, poor maintenance of the property, being difficult to deal with etc. cannot be lodged with these blacklists and all history is removed after 3 years. If you introduce the blacklist, it cannot be simple complaints from tenants because they didn't like how they were treated - it needs to be solid evidence that a breach of the Residential Tenancies Act has taken place with court documents showing the outcome. Now, there are a few things I agree with. Morally I don't think agents or landlords should participate in rental auctions, I think it's a poor way to do business - tenants are welcome to submit a higher rental price should they wish, but I'm looking for the best tenant and not the one willing to pay more money. If the right tenants also happen to offer more rent, well that's a great outcome - but it's not the top priority for most. An agent or landlord shouldn't be allowed to make false, misleading or deceptive representations to anyone. Simple. Disclosure to sell within the first term of the tenancy may be a good idea if it would change the mind of a tenant applying for a property, but there needs to be provisions for change of circumstances for the owner. Regarding asbestos, I'm sure there's a number of owners that may not be aware of asbestos in their properties - will this mean that all landlords will be required to have an asbestos inspection prior to leasing the property if it was built prior to asbestos no longer being used? Would they have to do it yearly or a once off? This needs to be clarified and honestly in 8 years of being in property management I've only be asked a handful of times if there's known asbestos at a property. I do not think these reforms were really considered for the overall impact on tenants and landlords, and certainly don't believe it will offer "fairer, safer housing". Both parties need to be considered when introducing legislation, not just the tenants. If you sit down and read the current legislation, you will quickly realise it's already very tenant orientated. Added to this a number of the examples used by the Andrews Government site give examples of how some tenants have been treated poorly, but what it doesn't tell you is these examples are already illegal in Victoria." I probably could've kept going, and if anyone asks me about this in person I could probably rant your ear off about it all. A property investment is just that, and investment. Just because it's an investment doesn't mean that owners should lose all control over their property to their tenants. Likewise, a rental property is a tenants home and they shouldn't be treated like a second class citizen and also deserve to have some security with the legislation. I don't think these reforms are truly capturing both sides. At the end of the day both landlords and tenants are human with families to support, neither party should have more rights than the other.
Personally I think many of the suggested changes will be good for landlords in the long term. Australia's tenancy rights are laughably poor compared to other OECD nations. But you know what? Landlords can and absolutely do make fantastic investment careers regardless of laws like these, and in fact good tenancy laws do a great deal to encourage rental competition and stability. Many of these laws are similar to laws in Germany and many other European countries, where somewhere around 90% of people rent and do so simply because of the security it brings, which creates a very good situation for dedicated investors. Ireland has improved tenancy laws in the last decade, and has in that time gone from record low numbers of tenants to huge tenancy growth (not only because of improvements in tenancy laws, but it helps). Good tenancy laws encourage people to rent long term, often for life. Many people in Australia only buy to 'get out of the rental cycle' because they feel it is unstable. With good tenancy laws, more would rent, which shifts investment gains away from a shorter term, speculative and often unpredictable reliance on capital growth (which encourages inexperienced investors to flood the market, who then become your competition), and over to growth from building a solid, positively geared portfolio driven mostly by rent. Investors in most countries make a living that way. In many countries I've lived in, it's not unusual for tenants to rent for decades, and it honestly takes so much hassle out of the market. I'm not saying all the suggestions are ideal (or even workable) but in the long term, rental security does need to shift more towards a middle ground between landlords and tenants, and that will bring about a lot of benefit. Tenants seeing rentals as horribly unstable and undesirable simply does not foster a healthy market, and with rental yields at record lows, in a market with too much stock, encouraging more people to rent will be hugely helpful.
I think there's also a lot to be said as far as rental security, but I think that more comes from educating the landlords and tenants. I think the most unstable rentals tend to be with people already bending the legislation, and not that the legislation is necessarily unfair. I find the majority of tenants don't want to stay long term, and it's been shown only abut 20% of tenants remain in their rental property for more than 5 years. Of course, this is likely to change as the percentage of renters grow. Introducing laws that encourage longer term stability is good, but removing the landlords right to move someone on if they're not suitable means that it will result in landlords using the 90 day end of lease notice far more frequently as they'll have no options beyond the first lease if they're not 100% happy with the tenancy. There needs to be a middle ground, and I don't think changing the legislation to the above proposals is that middle ground. Maybe we need more penalties for agents and owners doing the wrong thing and making it easier to terminate tenancies if someone is consistently in breach? This will potentially help weed out those who are currently ignoring the legislation, offer more security to the tenants and also help give everyone peace of mind that so long as they work within the legislation things will be a lot safer and fairer for all.
