New rental laws came into effect on 29 March 2021.
The law changes expand the rights and responsibilities of renters significantly and Landlords need to be aware of them.
The changes span the lifecycle of a rental agreement - from before you sign a rental agreement until after the agreement ends. This article deals with issues that emerge during the rental period.
Rental Provider = Landlord
Rental Applicant = Tenant
Rental Agreement = Lease
1. Property must be kept in good repair and reasonably fit for occupation
Rental providers must ensure the rental property maintained in good repair and is in a reasonably suitable condition for occupation. This applies regardless of the amount of rent paid or the property’s age and character.
2. Condition report requirements
Condition reporting is required regardless of whether a bond is taken. The condition report must be completed at the start and end of the rental agreement.
3. Rental minimum standards
Under the new laws, rental providers have a duty to ensure their rental property meets the rental minimum standards.
Rental minimum standards have been set for door locks, ventilation, vermin proof bins, toilets, bathroom facilities, kitchen facilities, laundry facilities, structural soundness, mould and dampness, electrical safety, window coverings, windows, lighting and heating.
4. Non-compliance with minimum standards
Rental providers must ensure that the property complies with minimum standards before a renter moves in. If a property does not comply, the renter can terminate the rental agreement before they move in, or they can request an urgent repair.
Rental providers must make urgent repairs immediately.
Rental providers must make non-urgent repairs within 14 days of getting a written request.
Renters must continue to pay rent even if they are waiting for a repair to be made.
6. Urgent repairs
Urgent repairs may include the following:
a blocked or broken toilet
a dangerous electrical fault
a gas leak
a serious water leak, or flooding
breakdown of an essential service or appliance provided by the rental provider, for example, a hot water system.
Under the new Law, more things are now considered an urgent repair, such as a broken cooling appliance, a functioning smoke alarm, pest infestation, mould and meeting the rental minimum standards.
If the rental provider does not respond quickly enough and the renter has to pay for an urgent repair, the rental provider must pay the renter back, up to a limit of $2,500 within 7 days of the renter giving written notice of the reasonable cost of the repairs.
7. Inspections and entry to the property
New rules state that rental providers must give renters 7 days’ notice of a general inspection and pay at least $30 for each sales inspection that takes place.
A renter can object to the production of advertising images or videos that show their possessions in certain circumstances.
Rental providers must also comply with more detailed rules around rights of entry, including a longer notice period for some grounds, restrictions for renters protected under personal safety and family violence legislation, and length and frequency of entry.
8.1 Without Consent
The renter can now make certain modifications to the property without the rental provider’s consent. For example:
installing picture hooks or shelf brackets,
blind and cord anchors,
wireless doorbell, and
adding child safety gates or locks.
Consent is not needed if the modifications are hardwired or compromise exposed brick and concrete walls.
8.2 Consent needed but cannot be unreasonably withheld.
To make other modifications, the renter will need written consent from the rental provider. The rental provider must not unreasonably refuse consent for the following items:
picture hooks or screws for wall mounts, shelves or brackets on exposed brick or concrete walls,
hardware mounted child safety gates on exposed brick or concrete walls,
wall anchors to secure items of furniture on exposed brick or concrete walls,
draughtproofing in a property, e.g.: installing weather seals or caulking or gap filling around windows, doors, skirting and floorboards,
a security system (conditions apply),
changes that are necessary to ensure the safety of a renter who has been or is being subjected to family violence by another party to the rental agreement,
flyscreens on doors and windows,
a vegetable or herb garden,
a secure letterbox,
painting of the premises,
modifications to secure external gates,
any modification which is covered by the Heritage Act 2017,
changes needed for health and safety,
changes to make sure the renter is not too hot or cold in the property, and
changes to reduce energy and water bills.
8.3 Role of VCAT
If the rental provider refuses to allow the requested changes, the renter should first ask why the request was refused, as there may be a good reason.
If the renter thinks the rental provider is refusing to allow reasonable changes, they can apply to Victorian Civil and Administrative Tribunal (VCAT) for a ruling.
8.4 Make Good
Even if the rental provider gave written consent for the changes, before the end of a rental agreement, a renter who has installed fixtures, renovated, altered or added to the property must:
restore the property to the condition it was in immediately before the changes were made, allowing for fair wear; or
pay the rental provider an amount equal to the reasonable cost of restoring the property.
The renter does not have to restore the property or pay the rental provider the reasonable cost of restoring the property if:
the rental provider agrees, or
it is written into the rental agreement that the renter does not have to.
9. Arrears of Rent
Arrears of rent always causes concern. Where possible, rental providers should contact renters to discuss late payment and try to work something out together. If they cannot agree, rental providers have the right to take formal action.
If the rent is unpaid, rental providers can issue the renter with a “Breach of Duty” notice. If the renter does not comply with this notice the rental provider can apply to VCAT to be paid the rent they are owed. If VCAT agrees they will issue what is called a Compensation Order.
Then, if the renter does not pay the full amount by the date shown in the order, the rental provider can issue a Notice to Vacate, giving 14 days’ notice.
9.2 Notice to Vacate
If renters are more than 14 days late on rent (7 days for rooming house or caravan park tenants), the rental provider can give them a ‘Notice to Vacate’ which is a formal statement that the rental provider wants to end the rental agreement and that the renter should leave the property.
9.3 New process for repeated late or non-payment of rent
When a renter pays back overdue rent within 14 days, any Notice to Vacate issued by the rental provider for that overdue rent is invalidated. This applies for the first 4 times it happens in a 12-month period.
However, if the renter fails to pay rent as required on a 5th occasion in the same 12-month period, the rental provider may give a ‘Notice to Vacate’ and apply to VCAT for a ‘Possession order”.
Unfortunately, VCAT may adjourn the possession application and place the renter on a payment plan to meet the outstanding arrears. Often these payment plans are breached soon after they start, leaving the rental provider with the only option to go back to VCAT again.
10. Changes to rights of entry to a property by the rental provider
Rental providers must comply with more detailed rules around rights of entry including:
extended notice period for some grounds,
restrictions for renters protected under personal safety and family violence legislation, and
length and frequency of entry.
11. Excessive utility bills
Where a renter has received an excessive utility bill attributable to a hidden fault (such as a leaking water pipe), the rental provider must pay for the costs that exceed the renter’s ordinary usage amounts.
At May Klye & Associates, we specialise in dealing with the accounting and tax aspects affecting property investors, be they residential or commercial. We have well over a hundred property investor clients, and we have extensive experience in getting them the best tax outcome. If you would like to know more, call Noel or Amanda on 03 9585 7555 or email us at email@example.com