2 Points not addressed in Victorian tenancy laws

Investor beware

 

Two points that have not been addressed in tenancy laws are that investors inherit no rights on an existing lease and bidding for a tenancy is not only the rental provider’s issue. In effect, the seller’s obligations end at the sale even though they may have a tenant that is problematic. Further, if a rental provider does need help it is currently a two-year wait through the Victorian Civil and Administrative Tribunal (VCAT).

 

VCAT is responsible for changes to tenancy laws and most changes are welcome. The new laws that address the needs of tenants came into effect in 2021, however, there are never caveats or reciprocity in these changes.

 

The law changes include:

 

  • new rental minimum standards;

 

  • urgent repairs;

 

  • allowable modifications by renters;

 

  • no eviction without a reason and

 

  • a ban on rental bidding;

 

The changes span the lifecycle of a rental agreement – from before you sign a rental agreement until after the agreement ends.

 

What has not been addressed

 

No one would dispute that people should feel that they can live in a property for a long time and call it home. However, when changes are made the other side of the argument is not front of mind and some rental providers can be very adversely affected. If you noticed none of the changes are conditional assuming the tenant is a saint. Is the assumption that the rental provider is wealthy and clearly doesn’t need protection? The world has changed on the side of the ledger too – many tenants are wealthier than the rental providers.

 

New investors can inherit bad tenants with little to no protection

 

An acceptable reason for eviction is selling. However, what rights does a new landlord have with those tenants? Very few! When an investor takes on a property with ‘bad’ tenants in place they will be stuck.

 

The new rental provider will not be able to evict those tenants. The rental provider is not adequately protected because:

 

  • if the tenants do not keep the place clean and in good order – regardless of what the lease outlines.

 

  • the agent is only able to ‘keep an eye on’ those tenants and is not allowed to do inspections outside of the six-month legal inspections – a lot of damage can be done in six months;

 

  • if there are damages, the rental provider will wait for the current two-year backlog with VCAT to seek remedy for any claim they make;

 

  • if an agent returns the bond without the rental provider’s written permission – no written permission is legally required now. The new rental provider must make another claim against the agent – two years wait;

 

  • if the tenant has no money to pay for their damages beyond the bond that was sent back – bad luck. Proving the agent’s negligence for placing such a tenant in the premises is near impossible or prohibitively implausible – solicitor’s costs and

 

  • no one from VCAT will go through with the rental provider all the documents they need to make their claim – it is up to the claimant to figure it out or employ a solicitor. There is no checklist like there is for tenants.

 

The ban on rental bidding

 

The ban on rental bidding comes across like agents and rental providers are creating a rental frenzy. All the blame is going to the rental provider but renters themselves are also suggesting offering more. Potential tenants are doing this ONLY BECAUSE there are not enough properties. Governments are to blame for that, not the individual rental providers.

 

People love particular locations for a myriad of reasons and will try and negotiate for very sort-after locations. It is not a surprise that the bidding only happens where stock is limited and location is premium. The roles of the tenants and governments are completely ignored and blame is allocated to the rental provider – grossly unfair.

 

The rental provider term has replaced the landlord to signal a more equal relationship between tenants and rental providers. However, there have been changes on the other side too in that the tenants are also more affluent. Currently, the tenancy laws unequally address the needs of the parties, as it is clearly not fair when there are no conditions just consequences.