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SWEEPING CHANGES TO AFFECT LANDLORDS AND TENANTS

The property management team at KR Peters are on hand to help rent providers navigate the complex web of reforms to the Residential Tenancies Act 1997 being introduced by Consumer Affairs Victoria.
25-02-2021

As at the end of March, landlords can no longer give tenants a notice to vacate for no specified reason, but they will have new grounds for eviction if they have been subjected to threats or intimidation.

The changes are among 132 reforms to the Residential Tenancies Act 1997 being introduced by Consumer Affairs Victoria that will affect both landlords (now known legally as 'rental providers') and tenants (who are now referred to as 'renters').

The amendments cover everything from pets, to domestic violence situations, a rise in the urgent maintenance limit to $2500, minimum property standards and energy efficiency ratings.

KR Peters Property Manager Crystal Barneveld says the changes are detailed and comprehensive and it is important that landlords familiarise themselves with the changes which take effect from 29 March.

"There is no doubt that many of the changes coming into effect - such as the minimum standards and compliance checks - are there to provide safety and peace of mind for renters and rental providers alike," Ms Barneveld said.

"My only concern is that these changes are potentially going to cost rental providers a significant amount of money all at once, as well as significant ongoing costs to continue to keep their property compliant and therefore rentable.

"It concerns me that this may force many investment owners to seriously consider selling, which may in turn cause a further decrease in the availability of rental properties, thus pushing the demand and price of rents higher and pricing many people out of the rental market.

"I feel that a staggered approach would have been more suitable. Having so much come in at once is potentially going to overwhelm a lot of people."

So, what do the changes mean for rental providers?

This blog covers some of the main changes. Separate blogs will expand on specific changes in the areas of pet ownership, domestic violence and the new non-compliance register.

Reasons to end a rental agreement

Under the new laws, rental providers must specify the reason to end a rental agreement from a list provided in the legislation. They cannot issue a ‘no specified reason’ notice.

There are two new reasons:

  • Threats and intimidation. A rental provider may give a renter a notice to vacate if the renter or any other person occupying or jointly occupying the rented premises has seriously threatened or intimidated the rental provider or the provider’s agent, or either of those persons’ contractors or employees. Minimum notice period is 14 days.
  • Notice to vacate when a pet is kept without consent. A rental provider may give a notice to vacate if VCAT has made an order excluding a pet from the rental premise, at least 14 days have passed, and the renter has not complied with the VCAT order. Minimum notice period is 28 days.

There are also four existing reasons that have been amended - damage, danger, end of fixed term rental agreement and non-payment of rent.

Non payment of rent

New requirements for the late or non-payment of rent allows the rental provider to give the renter a 14-day notice to vacate when 14 days or more of rent is owed. A ‘strike’ system applies where the first four times in a 12-month period a renter is given a notice to vacate for non-payment of rent are treated differently to the fifth and subsequent times a notice is given.

The first 4 times in a 12-month period a renter is given a notice to vacate, if they pay all the unpaid rent on or before the termination date in the notice, the notice is of no effect. If the renter does not pay all the unpaid rent on or before the termination date in the notice, the rental provider may apply to VCAT for a possession order.

VCAT may place the renter on a payment plan if it considers that satisfactory arrangements can be made to avoid financial loss to the rental provider.

If a renter has received four notices in a 12-month period, they will accrue ‘4 strikes’ against their name. If no more notices are received during that period, the strikes will be cleared when the 12-month period ends. However, if a fifth or subsequent notice is given in the same 12-month period, the rental provider may apply to VCAT for a possession order at the end of the 14-day notice period, and VCAT may issue the order even if the renter pays the outstanding rent within the 14-day notice period.

End of Fixed Term notices to vacate

A rental provider will only be able to issue the renter an ‘end of fixed term’ notice to vacate at the end of the first fixed term of a tenancy. Where a renter remains in a property after the initial fixed term expires, the rental provider can only end a subsequent fixed-term agreement using one of the other reasons in the Residential Tenancies Act 1997 to end a rental agreement.

Rent increases

The rental provider must not increase the rent payable under the rental agreement at intervals of less than 12 months. This reform is in effect for rental agreements that started after 19 June 2019.

The rental provider must give the renter at least 60 days’ notice of a proposed rent increase.

The rent cannot be increased during a fixed term rental agreement unless:

  • the rental agreement states that the rent may be increased during the fixed term by a specified amount, and the rent increase is not more than that amount, or
  • the rental agreement specifies the method that will be used to calculate the rent increase during the fixed term, and the rent increase is not more than the amount calculated using that method.

The new legislation also states that properties must be advertised at a fixed price. It will be unlawful to advertise a property with a price range or solicit bids for rent.

Other important changes include:

  • The rental provider can require an additional bond amount if the rental agreement is a long-term i.e. more than 5 years, or the renter makes modifications to the property.
  • If a renter carries out urgent repairs, they must give the rental provider written notice of the repairs and the cost of the repairs. The rental provider must reimburse the renter for the cost of the repairs within 7 days of receiving the written notice. The urgent maintenance limit has been increased from $1800 to $2500.
  • The definition of urgent repairs has also been expanded to include air conditioning, safety devices such as smoke alarms and pool fences and unsafe or insecure faults such as pet infestations and mould or damp.
  • The rental provider must arrange a professional gas and electric safety check every two years.
  • New energy efficiency star ratings apply to heating, cooling and other built-in appliances like dishwashers.
  • The energy efficiency (2 star) heating rental minimum standard has been extended to apartments, unless the rental provider can prove it would be unreasonable in terms of technical, cost or owners corporation requirements to install an energy efficient heater.
  • A new rental minimum standard has been developed for ventilation.
  • The rental provider must provide a free set of keys or another security device to each renter who signed the rental agreement.
  • Rental providers must disclose if there is asbestos present in a property or if asbestos has been removed within the last three years.
  • Renters will be able to make prescribed modifications without consent from the property owner.
  • All external doors need to be fitted with deadlocks and windows must open and close and also be fitted with locks.

The property management team at KR Peters are on hand to help rent providers navigate the complex web of changes.
"We at KR Peters are doing all we can to obtain as much information for our clients, including sourcing trades and services, to assist in bringing owners’ investment properties up to compliance," Ms Barneveld said.

The reforms starts on 29 March, however some laws will not apply to rental providers and renters who have existing rental agreements until these agreements end.