New Residential Tenancy laws in Victoria and Buyer Beware for Purchasing property subject to Lease
Due to the COVID-19 pandemic, residential landlords have been riding the wave of rent reduction, rent freezing, mortgage freezing as well as a hiatus on eviction notices (with a few exceptions). On top of this, the Victorian Government has set up a system of new rental rules and requirements. These new rules came into place on 29 March 2021 and are having an impact on not just current Landlords, but people purchasing property subject to Lease.
Applications:
Rental properties must now be advertised with a fixed price, which means that inviting rental bids on any given residential property is prohibited. It will be unlawful for any real estate agent or landlord to advertise a property for rent within a price range. It will also be unlawful to request or solicit bids for rent. Landlords can accept a higher, unprompted offer made by a prospective renter, but the rental provider must not ask or invite offers of a higher rent than the advertised fixed price.
Landlords or their agents can no longer ask the following details when prospective tenants are applying for a rental property:
If the applicant has ever had a dispute or legal action against a rent provider;
If the applicant’s bond was fully returned;
Any financial statements showing transactions made by a prospective tenant;
Any private information about the prospective tenant which would be deemed protected by the Equal Opportunity Act 2010.
Landlord Disclosures:
Landlords are being asked to provide further disclosures before they enter into a lease agreement with a prospective tenant. Before an agent has been engaged to sell the property, or if a contract of sale has been prepared, the landlord needs to inform the prospective tenant. Plus, any legal action underway to enforce a mortgagee sale over the property must be disclosed by the landlord.
From 31 December 2021, landlords must provide any prospective tenant any information concerning a repair notice within the last 3 years related to mould or damp in the premises as well as the date of the most recent gas safety check, electrical safety check and pool barrier safety check (if relevant).
Landlords will be required to disclose whether there had been a homicide in the property in the last 5 years, whether the property is contaminated or been used for trafficking or cultivation of a drug of dependence is the last 5 years, has asbestos (based on an inspection by a suitably qualified person) and been affected by a planning or building application.
If there is an owners corporation governing the property, there is now a requirement for the landlord to disclose to the tenant any applicable owners corporation rules that apply to the premises and if so, provide the prospective tenant with a copy.
Selling the rental property:
If the landlord wishes to sell the property, the landlord must arrange to show the property to a prospective buyer or conduct an open inspection of the property once they have provided the renter 14 days notice of intention to sell the property. The landlord must engage a selling agent and have a signed authority prior to giving the notice to the tenant.
All landlords must make “reasonable efforts” to agree with the tenant on suitable days and times for inspections. Right of entry for sales inspections can be exercised only up to twice per week, with at least 48 hours written notice of entry.
For each inspection, the landlord must pay the tenant either half a days rent or $30.00, whichever is greater in compensation for each sales inspection that takes place. This works out to be $71.00 per inspection for a property that is $1,000.00 per week.
Notices to Vacate:
Importantly, there are also changes to certain types of notices to vacate. If the lease is a fixed term rental agreement, that fixed term rental agreement still requires a notice to be given at the end. A landlord will now only be able to issue a term of fixed term notice to vacate at the end of the first fixed term of a rental agreement. They will not be able to issue an end of fixed term notice to vacate at the end of any subsequent fixed term.
Bond Refunds:
Tenants will be able to apply for the bond refund directly to the Residential Tenancies and Bonds Authority (RTBA) and a bond can no longer be any more than the equivalent of one month’s rent.
If you wish to speak to us on anything regarding your property or your leasing arrangements, please contact:
Vittoria De Stefano
Principal Lawyer
M: 0407 091 301
T: 03 5226 8520
E: vdestefano@ha.legal
