New rental laws which set minimum standards for rental properties in Victoria are coming into effect next month, after being delayed due to the pandemic.
The new reforms are certain to shake up Victoria’s rental market, creating so-called challenges for landlords and tenants alike.
What are Victoria’s new rental laws and when do they start?
The start date of the Victorian government’s Residential Tenancies Amendment Act 2018 was delayed due to COVID-19 pandemic, with the amendments now being introduced by 29 March 2021, rather than the original 1 July 2020.
The new regulations will see a whopping 132 new reforms introduced covering everything from rules around starting a tenancy, living in a rental, leaving a rental and repairs and modifications, to rooming houses, caravan and residential parks, situations surrounding family and personal violence, long-term leases and other changes.
The changes have sparked a mixed reaction from tenants’ groups and the real estate industry, with some welcoming the legislation changes and others warning that it will add to costs for both tenants and landlords.
Victoria’s new rental laws - what it means for landlords
The raft of new rental regulations would put extra pressure on landlords and investors in Victoria.
The new laws would include minimum standards for rental properties to provide a three-star shower head, a working stove, food preparation area and sink in the kitchen, as well as a vermin-proof rubbish bin, Consumer Affairs Victoria said.
Landlords must also ensure properties are free of mould, have appropriate lighting and ventilation, and heating in the main living area.
If heating has to be installed, it must be energy efficient.
And these are only some of the changes that landlords might have to take from next month.
In addition to the minimum standards, for rental agreements starting on or after 29 March 2021, a licensed or registered electrician and gas fitter must have conducted an electrical or gas safety check within the past two years — and every two years — while the property is rented.
In short, these changes are likely to lead to landlords charging a higher rent, or worse, it could even see investors decide to exit the asset class altogether if they can’t justify the cost and time needed to adhere to the new rules.
The Real Estate Institute of Victoria is particularly concerned that the extra pressure on landlords to adhere to the huge volume of changes could discourage property investment in the state.
This would then, in turn, trigger an unbalanced regulatory burden on the rental market, Real Estate Institute of Victoria CEO Gil King warns.
“Increasing ownership costs and making maintenance and management of property more complex is a deterrent for investment,” he said.
He added that not only will the changes likely to result in higher rents, it could also see mum and dad investors exit the asset class which will in turn put further pressure on rental availability and affordability for Victorians.
Education is also an issue, he explained.
The changes will require extensive education and engagement in just two months to help ensure the real estate sector is equipped to implement the regulations effectively.
The new standards will, in many cases, require substantial changes to processes, documents and systems, meaning a fresh round of education is needed for the sector.
Victoria’s new rental laws - what it means for tenants
Many believe that the 132 new regulations would strengthen the rights of renters and help them feel more secure in their homes.
The new rental laws would allow tenants to be able to make small changes to a property without needing to ask their landlord.
‘No reason’ notices to vacate will be abolished while new minimum property standards to address health and safety concerns will be introduced.
It’ll also become far easier to rent a property with pets.
Many while many industry participants, such as the Victorian Council of Social Services and Tenants Victoria, applaud the measures, others claim they don’t go far enough.
Better Renting executive director Joel Dignam told Domain Group that while these regulations include some positive measures, in some cases they could actually make things worse.
“The new regulations allow landlords to insist upon professional cleaning to be paid for out of the pockets of people who rent,” he said.
“Not only will this new burden cost renters, it will slow down bond recovery, putting more pressure on people living pay cheque to pay cheque.”
Leanne Jopson is National Director of Property Management at Metropole, and has 20 years’ experience in real estate.
Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for her clients.
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.