The Victorian government’s review of its currents residential tenancy legislation could result in significant reduction in the size of the state’s rental market.

In the latest step in its Plan for Fairer Safer Housing review program, the government is calling for responses to a recently released discussion paper which focuses on the condition of rental properties in the state.

A key point in paper is whether Victoria’s residential tenancy legislation should be updated to come in-line with jurisdictions such as South Australia and Tasmania and enforce minimum standards a dwelling must meet before it can be offered for lease.

The discussion paper puts forward 15 points that have suggested as possible minimum standards to the government by stakeholders groups, such as ensuring the property can be connected to utilities, is safe and secure, weatherproof and fitted with kitchen and laundry facilities and a hard-wired smoke alarm.

Other points include fitting rental properties with a temperature control device and making rental properties energy efficient through the use of insulation, water saving tapware and draught-proofing.

Cameron Osborne, director of property management firm Melbourne Asset Management, told Your Investment Property that the minimum condition standards would likely be a step forward for Victoria, though there is a need for balance.

“Currently in Victoria you can rent out a cardboard box. There’s no minimum standards at all which is pretty crazy and unfortunately people are renting out things like caravans and shipping containers,” Osborne told Your Investment Property.

“It’s probably going too far when it comes to things like energy efficiency. If an owner has to do that sort of thing then they’re going to have to put the rents up to cover costs or they’ll choose not to rent a property out. Either way that’s probably going to impact the number of properties available to rent at the cheaper end of the market,” he said.

From the point of view of a property manager, Osborne said minimum condition standards would make his life easier, though he questioned who would be responsible for ensuring properties that aren’t up to scratch aren’t put up for rent.

“It would make things easier if there was a standard because it wouldn’t be us telling the property owner that a building isn’t suitable, it would be the law,” he told Your Investment Property.

“I’ve had a few times where somebody has got in touch saying they have a property they would like to rent out and when you go to have a look at it and they point to a caravan or an old shed in the backyard.

“But it’s then a matter of enforceability as well, who’s going to go round and inspect all these places to make sure they’re up to scratch?”

While the condition of a property before a lease is signed is a major part of the discussion paper, it also looks at property conditions at the end of the lease period, specifically the issue of property cleanliness and the differentiation between fair wear and tear and damage.

Current legislation in Victoria states tenants must return the property in a “reasonably clean” and Osborne would like to see that strengthened in favour of landlords.

“VCAT’s stance seems to be as long as it’s had a regular Saturday clean then that’s ok and if the owners have to send cleaners in between tenancies then so be it.

“If I put in that the carpet has to be professionally steam cleaned then I’m actually legislating outside the act.

“Ninety-nine per cent of real estate agents would put that sort of thing in a lease with the expectation tenants would do it at the end, but if they don’t there’s nothing you can do about it.

“I don’t think it’s too excessive that after a year of tenancy that someone should clean the carpets, that shouldn’t be the owner’s responsibility.”

On the issue of fair wear and tear or damage, Osborne said that is likely to remain contentious no matter what happens.

“It’s always going to be a debate as to what’s wear and tear and what’s damage.

“We always have the argument with the owner who will come in and say they want a spot on the carpet cleaned or something like that and we have to explain to them that you’ve leased it out for a year or two years and to a certain extent you have to accept that there might be handprints or some damage to the skirting boards.”

Submissions on the discussion paper can be made until 11 August through the Plan for Fairer Safer Housing web page.