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Reforms of Victoria’s renting laws

 Technology, automation and artificial intelligence (AI) seeks to cut out the very work that professional service advisors do.

By Jeremy Davey, Senior Lawyer and Jacqueline Wilcock, Paralegal

In late 2017, the Victorian government announced a sweeping set of reforms to the Residential Tenancies Act 1997 in an effort to ‘make renting fair’. These forms have been passed by both houses of Victorian Parliament in the last fortnight, and are due for Royal Assent by the Govenor in the coming weeks, with the reforms to be rolled out progressively. With one in four Victorians renting, it is important for tenants and landlords to understand their legal footing in light of these new amendments.

The proposed changes seek to realign the balance of power between tenants and their landlords. Some of the amendments include:

  • A crackdown on rental bidding;

  • The removal of uncertainty surrounding 120-day notices to vacate;

  • Allowing pets to live in the rented premises; and

  • A cap on maximum rental bond payments for tenants.

Rental bidding

When landlords pit two potential renters against each other in order to drive the price of rent on their property up and force them to outbid each other to secure the property, this is known as rental bidding. At times, a landlord may even advertise the property on two different sources with two different rental prices to encourage this activity. The fierce competition in sectors of the rental market already makes it hard for renters to know where they stand, and the reforms represent the government’s attempt to add certainty for prospective renters.

The amendment would ban the practice of rental bidding altogether. More renters will - by consequence - be able to enter a new affordable market with landlords to be held accountable for engaging in formal (or even informal) ‘auctions’ of their rental premises.

Notices to vacate

At present, a landlord can provide their tenants with a 120-day notice to vacate for no specified reason, despite the written agreement between them governing their relationship. Unfortunately, this does not give renters adequate certainty as to when they may be required to vacate their home. This can be extremely distressing, and falls hardest on tenants seeking stable accommodation, such as families with small children.

The reforms turn this notion on its head, in an attempt to increase stability for tenants. Landlords will now be prohibited from issuing such a notice without a particular reason; however, this can only be served in particular circumstances. They will only be relevant where a tenant has an agreed term of tenancy in their rental agreement, and they have already been a tenant in the premises in question for at least the length of one term.

Pets

Except for seeing-eye dogs, landlords currently have the discretion to deny potential tenants on the sole basis that they have a pet of any kind. Should the landlord discover a pet after the tenant’s application has been approved, the tenant may be served with a notice to evict for breach of the rental agreement, if such a term banning pets is included within. It is irrelevant in this circumstance whether a concealed pet has caused damage to the property, is causing a nuisance and/or is a danger to the tenant’s neighbours.

The RSPCA estimates that approximately 15% of animals surrendered to them each year come from rental properties where the landlord has denied the right to have a pet at the property. Under the amendments, a landlord will still be required to give consent for the tenant to have a pet, however they must have reasonable circumstances to refuse. Those reasons can include things like property damage, or if the pet would be at a severe disadvantage, due to the nature of the property (i.e. no backyard for a large dog).

Upon vacating, renters who have had a pet at the premises will then be responsible for having it fumigated, in line with their obligation not to damage the property.

Bond payments

The maximum rental bond, where the weekly rent is ≤$350, is one month’s bond. Where the weekly rent is greater than $350, there is no maximum set on the bond price. According to Premier Daniel Andrews, more than 50% of rental properties are more than $350/week in rent, meaning that no bond cap exists for these tenants.

The rental reforms will see that this price is raised to $750/week, making most rental properties subject to the capped bond amount. This will also apply to any rent paid in advance.

A full list of the rental reforms can also be found at https://www.vic.gov.au/rentfair.html.

As mentioned earlier, the legislation has now passed the Senate and House of Representatives - after significant debate in the weeks prior, and now passes to the Govenor for Royal Assent, expected in the coming weeks.

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At Law Squared, we partner with passionate entrepreneurs and businesses who need our technical help and expertise in many areas. We’d love to have a chat with you, so feel free to drop us an email at hello@lawsquared.co.


 

Jeremy Davey

jdavey@lawsquared.co

+61 451 395 702

JAcqueline Wilcock

jwilcock@lawsquared.co

+61 415 991 293

 
 

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