New rental reforms will give tenants more scope to block rent rises. Picture: NCA NewsWire / Diego Fedele.
Victorian landlords are now facing an even bigger battle to increase rents for homes with the state’s key consumer agencies able to reject rent rises for an expanded list of reasons.
And the state’s primary tenants group is urging every renter in the state who gets a rent rise above the Consumer Price Index of 3.3 per cent to challenge it as they look to assess how the new measures can be used to put “downward pressure on rent increases”.
As of March 31, Consumer Affairs Victoria and the Victorian Civil and Administrative Tribunal are able to consider if a rent increase is fair based on additional factors such as the specific amount and the percentage of the increase, the property’s state of repair, how many increases there have been in the past two years and the renter’s circumstances.
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Tenants Victoria believe any increase above CPI, currently 3.3 per cent, should be sufficient for a challenge — and are urging anyone who gets one to do so, via a free Consumer Affairs Victoria service, to “ensure that the new laws are working”.
“If your landlord is proposing an increase above inflation, challenge it by asking Consumer Affairs Victoria for a free assessment,” said Tenants Victoria chief executive Jennifer Beveridge.
“We’re eager to see how the new CPI measure is applied, and how this can put downward pressure on rent increases that have been very high in recent years.
“This is an important fairness measure, and gives renters a much-needed new way to push back against the relentless increases that have smashed household budgets.”
Also from today, Victorian landlords must use a standard form for all rental applications — and no further information can be sought from tenants.
In addition, it is now against the law for rental platforms and apps that charge renters fees.
Fines for breaches as a business stand at $12,000, while individuals who err could be facing a $2400 payment to the government.
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Consumer Affairs minister Nick Staikos has made a slew of announcements around renters rights since November. Picture: NewsWire / Diego Fedele
Victorian Consumer Affairs minister Nick Staikos said the changes were intended to protect the growing share of Victorians who rent.
“These new laws will protect Victorians from unfair and excessive charges during the current cost of living crisis,” Mr Staikos said.
But other industry groups are worried about what the changes will mean for landlords and for tenants.
Todays changes follow a long list of rental regulatory changes that have kicked in since November, including a requirement that rental properties meet minimum standards before they are advertised, the banning of rental bidding in all forms, and the end of no-fault evictions.
As of last year, tenants must also now be given 90 days notice before a notice to vacate or a rent increase.
Landlords are also risking fines if they have unsecured blind cords around their home
Earlier this year, the state government also announced a $98m fund to help boost renters’ awareness of their rights and to help connect them with support programs to ensure they are upheld.
Under current regulations, Victorian tenants who believe they are being hit with an unfair rent increase have 30 days to put it to Consumer Affairs, where it will be assessed as a free service for renters.
The expansion in reasons CAV, or VCAT if the matter proceeds there, can consider has investors worried.
Property investor and industry commentator Cate Bakos has warned the changes could wind up hurting tenants.
Property Investment Professionals of Australia chair Cate Bakos said the new raft of regulations was “not positive” for investors, who would find themselves on increasingly stressful ground when trying to manage their finances.
“It should be purely a commercial arrangement,” Ms Bakos said.
“I have never seen other standard commercial arrangements that took into account the consumer’s circumstances. You don’t get a discount on your groceries because of XYZ.”
She warned the upshot could be that the government would “further disenfranchise Victorian investors”.
“It just feels like the government is viewing investors like a charity organisation, if they are enforcing regulations like this,” Ms Bakos said.
It was also possible that if a property manager had to prepare additional documents or to attend VCAT on their landlord’s behalf as a result of the changes, that property owners would wind up paying an administration fee on top of their typical management costs.
She added that with the prospect the quantum of rental increases would become a factor, landlords and property managers would now be incentivised to ensure they raised rents every year when they could so that they remained in line with market rents — which could stop them being open to helping out a good tenant who asks for a reprieve.
Tenants might find they are facing more frequent rent rises as a result of the changes.
Ms Bakos added that she believed rental providers while not allowed to say no to pets, were able to exercise some discretion to ensure a Great Dane wouldn’t wind up living in a one-bedroom apartment — which would be cruel for the pet.
However, with pet ownership not included on the rental application form, she warned it was likely this discretion would be effectively lost — which could lead to damage to homes, as well as poor outcomes for pets.
As a result, she said she was expecting more investors to sell up.
“And that’s terrible timing from the state government,” Ms Bakos said.
“They would be well aware of the pressures that households are under, many of them facing increases in their own mortgage as well as their rental property, as rates rise. And they are already dealing with increased costs from requirements to be compliant with minimum standards and land tax.
Property Investor Council of Australia president Ben Kingsley said it was very unclear how some of the new regulations could or would be interpreted, which was giving landlords concern.
Property Investors Council of Australia president Ben Kingsley has warned the changes will add to the list of reasons motivating landlords to sell up in Victoria.
“Risks are increasing for landlords and agents, and that type of power imbalance is going to have a continual impact on the supply of rental accommodation,” Mr Kingsley said.
“In concert with the inability to remove a tenant, I’m 100 per cent concerned about this. This gives no flexibility to landlords.”
Noting that investors were already tapping out of the market, particularly those who had offered homes to renters long term, he warned the supply impact would be a real risk for tenants — with the prospect many would be coached to dispute every rental increase.
“This could turn into chronic rental shortages, caused by a quasi-rental freeze,” Mr Kingsley said.
The latest Homes Victoria Rental Report showed the number of active residential tenancy bonds in Victoria dropped by several thousand in the 12 months to September 30.
Real Estate Institute of Victoria chief executive Toby Balazs said while they broadly supported most of today’s changes, they did so noting that the cost of living and interest rate cycle were an almost daily changing prospect that could impact rental providers.
Real Estate Institute of Victoria chief executive Toby Balazs has said while they mostly support the reforms, they worry about the volume of changes landlords are grappling with.
Mr Balazs also said time would be needed to see if CAV and VCAT treated fairly with landlords over rent rise disputes, as some of the terms being applied were a bit “nebulous”.
“We hope that it’s fair and equitable, and considers the real need for private rental providers to continue to provide properties to the rental pool,” he said.
“But the sheer rate of change and increased regulations is difficult to manage and increasing the pressure on property managers and rental providers, to ensure they are compliant.”
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