A recent ruling by the Court of Appeals strips the Victorian Civil and Administrative Tribunal (VCAT) of the power to decide on rental disputes involving interstate landlords.

Leah Calnan, president of the Real Estate Institute of Victoria (REIV), said the decision "will create more questions than answers" for landlords who reside in other states but own properties in Victoria.

"Restricting landlords that don't reside in Victoria from being able to access VCAT creates a multitude of problems for both landlords and tenants," she said.

Furthermore, Calnan said the decision casts doubt on whether interstate landlords are susceptible to Victorian rental laws. It could also result in tenants involved in disputes being forced to travel interstate to have their cases heard.

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These new rulings could also potentially discourage new investors from participating in the market.

"Victoria is a strong real estate market that has attracted investors from across the globe; having interstate owners of Victorian rental properties is extremely common. We want Victoria to remain open for business; a lack of legal clarification has the potential to spook off new investors," Calnan said.

Interstate investors in borders towns like Wodonga, Echuca, and Mildura would be affected the most. Calnan said the new ruling creates stress and confusion not just to landlords but also to property managers and tenants.

"They all deserve to know which judicial body they are covered by," Calnan said. "The REIV will seek urgent action by the Victorian government to investigate this matter and ensure the Victorian investor market isn't adversely affected.”