How landlords are impacted by recent changes to tenancy laws

Just like you, I am a landlord. My husband and I have invested in property for over 20 years with the common purpose to secure our family’s financial future.

Along the way, being a landlord has had its ups and downs. We have experienced tenants whose rent was always paid on time and kept the properties immaculately clean, a tenant who trashed and abandoned one of our investment properties, and another where we had to sell to ease some financial strain… Unfortunately, these are the very things that we investors might have to confront from time to time.

To state the obvious, COVID-19 served many landlords its own custom platter of ups and downs.

The moratorium on evictions introduced by the Federal Government instantly cuffed the wrists of property managers and set the agenda for one of the most trying times for landlords, nationwide. Things got even more interesting when our state governments followed suit and introduced further temporary measures by suspending all rent increases, implementing tenant relief options (some landlord relief with an array of conditions) and flexibility for tenants wanting to end their tenancies during this period.

Queensland saw the end of its moratorium in September 2020, however still have temporary measures in place until April 2021. New South Wales’ moratorium is set to end on 26 March and as far as we know, the moratorium in Victoria is still scheduled to end on 28 March.

Along with the different rules and measures imposed across our nation in response to the COVID-19 pandemic, 2020 was already set to see sweeping legislative changes to the Residential Tenancies Act in our key states. Queensland and New South Wales introduced most of their legislation changes in March 2020, however, Victoria (which was set to see the biggest overhaul) has been delayed until 29 March 2021.

I would like to think that most, if not all of our Victorian investors, should by now be well aware of the significant changes that come into effect on 29 March. If you just mumbled ‘huh?’, it’s time to sit up and pay attention!

In a nutshell, the biggest and most substantial change in Victoria (and Queensland and NSW) was the introduction of ‘Minimum Standards’ to residential housing. A total of 132 reforms were consequential in the introduction of ‘Minimum Standards’ which have since been passed by state parliament and now form part of the Residential Tenancies Amendment Act 2020.

Some of these reforms should have been introduced many years ago and some will leave you scratching your head in disbelief.

These reforms (initially 200-plus of them) were proposed back in 2017. In the past three years, real estate agents across the state, along with the involvement of the Real Estate Institute of Victoria, advocated and challenged a lot of these reforms as they were simply unfair to landlords who remain the providers of 90 percent of Victoria’s rental housing stock. As a group, they were able to clarify, tweak, and even abolish a lot of these unjust reforms, however, the final changes to the legislation won’t be favourable for all.

Firstly, you need to understand why the need for change. Simply, Fairer Safer Housing Victoria was inundated with community feedback (Tenants Union) demanding better housing standards which in turn required a review of the Residential Tenancies Act, which has not been changed or updated for 21 years. Some of these changes were absolutely necessary but certainly not all.

For most of you, these changes will only slightly impact you. Primarily because your properties already meet the required ‘Minimum Standards’ that are mandatory AND are being managed by diligent, knowledgeable and highly experienced property managers. Right?

Below, I’m going to briefly run through some of the stand-out changes that we think you need to know.

If you have a few spare hours and want to get across all 132 changes, click HERE.

Terminology changes

  • Landlords = Residential Rental Providers (RRP’s)
  • Tenants =  Renters
  • Tenancy Agreements  = Rental Agreements

Pets – already in effect since 2 March 2020.

  • A landlord cannot unreasonably refuse a tenant request to keep a pet
  • If there are reasons to refuse a pet, the landlord must make an application to VCAT for an order

 Rent arrears process

  • A renter needs to fall in arrears (beyond 14 days) 5 times before the rental provider (agent) can issue a “Notice to Vacate” and apply for a possession order
  • Five times rent arrears must be in the same 12 month period

 Gas and electrical safety checks – come into effect March 29, 2022

  • A safety check of all gas and electrical fittings must be conducted by a licensed tradesperson every two years (this includes microwaves and other appliances for fully furnished properties)
  • Smoke alarms must be tested annually by a qualified technician

Bonds and urgent repairs

  • Bonds will now be limited to 4 weeks rent where the asking rent is $900 or less. (existing bonds will remain in place until that tenancy ends)
  • The urgent repair limit has increased from $1,800 to $2,500

Modifications to your property without your consent

  • Picture hooks, screws for wall mounts, shelves, or brackets
  • Wall anchoring devices
  • Water-efficient showerheads
  • Non-hardwired security systems

Modifications you cannot unreasonably refuse

  • Draught proofing
  • Installation of flyscreens
  • Interior painting
  • Note: additional bonds can be taken to ensure rectification works at the end of the tenancy

Locks   

    • All external doors must be fitted with a functioning deadlock (excludes apartments located in a secured building)

Windows and coverings

    • All windows must be fitted with a functioning lock or latch
    • All bedroom windows and living area windows must have block-out blinds fitted (a sheer blind is insufficient)

 Heating and Cooling – To come into effect by March 2023.

    • All heating and cooling installed must have a rating above 2 for energy efficiency
    • A non-functioning air conditioner is now considered as an urgent repair

Disclosure to tenants

    • A detailed disclosure statement that confirms the rented premises meets the required ‘Minimum Standards’
    • Embedded network tariffs and charges must be disclosed to tenants before tenancy commencement
    • Building or planning applications that are pending or approved may affect the rented premises
    • If the property has been the subject of prior use to manufacture drugs in the past five years

NBN connection fees

    • Owner’s responsibility

Tenant compensation during sales campaigns

    • Tenants are now entitled to a discount of half their daily rate of rent or $30 whichever is the greater for each sales inspection.

Some of these changes are substantial and real game-changers. A good property manager will be your lifeline here so please reach out if you have any doubt about the management of your investment property.

As always, I’m here to help you as best I can.


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