Vic’s latest rental reforms, giving tenants access to a scheme that will let them transfer their bond rather than have to pay for two, kicks off on July 1.
Victorian landlords and tenants have just two weeks to prepare for the next change to the state’s rental market, with a new Portable Rental Bond Scheme to start on July 1.
The Allan government confirmed the launch date today, noting that the change would provide a chance for renters to save money on the cost of moving home.
Under the scheme, which has the potential for the state to be picking up a $1bn interim liability by September, tenants will be able to have their bond transferred to a new home via the state’s bonds system, instead of paying their next bond while they wait for their old bond to be returned.
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As of October, landlords will have to show evidence justifying claims for money out of a bond before they can make the claim.
For a median priced Melbourne rental home, which costs about $580 a week for a house according to PropTrack’s latest data, the bond would be about $2500 — equivalent to one month’s rent.
In regional Victoria the $490 a week typical rental would have a $2100 bond.
Minister for Renters Paul Edbrooke said the change would mean that change would provide fairness and security for tenants.
“Moving house shouldn’t mean paying two bonds at once – from July 1, it won’t,” Mr Edbrooke said.
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Minister for Renters Paul Edbrooke believes the changes will mean big savings for renters.
The latest Rental Report from Department of Families, Fairness and Housing, which only covers the rental market to September last year, suggested that in Melbourne 8.9 per cent of rental properties turned over in the past three months. In regional Victoria the turnover was 7.3 per cent.
With 657,000 bonds active, that would suggest anywhere up to 58,000 tenants could be using the transfer system within a few months.
Given the state government will act as guarantor over the bonds during the transfer, that would pave the way to them picking up interim liabilities for close to $1bn in bonds by September if the scheme is used universally by renters moving home.
The exact figure will depend on the nature of turnover, with some likely to go to new tenants paying a bond for the first time, and others will see renters moving back in with family or buying a home and no longer needing a bond.
Former Real Estate Institute of Victoria president and dedicated property management firm boss Leah Calnan said the two-week timeline had “not surprised” her, but with major question marks still unanswered it could have ramifications for tenants and landlords alike.
Former REIV president Leah Calnan has concerns about the timeline for the changes with key questions still unanswered.
Ms Calnan forecast that almost every tenant would use the new system, and said one of the biggest concerns was that it wasn’t clear who or what event triggered the bond transfer.
At present a tenant typically is informed they have been accepted as a tenant before being asked to provide the bond within a short time frame.
The Metro Property Management boss said it was not clear yet if the team or landlord managing the property the renter was leaving would put in for the transfer, or if that would be done by the future landlord or their agent — meaning additional paperwork for the industry somewhere in the scenario. It could also fall to the tenant.
“So, from an implementation perspective, that seems a little more challenging for the property management industry — particularly in light of all the other challenges they are trying to navigate,” Ms Calnan said.
“But we hope it runs smoothly and we don’t have another VicRoads incident.”
Renters will soon be able to transfer their bond without having to effectively pay for one twice when they move home.
An upgrade to VicRoads’ digital services left their website unable to handle key functions for about a week earlier this month.
The Victoria government has implemented more than 150 rental industry reforms inside the past decade, with recent changes including a final step to outlaw rental bidding, the end of no-fault evictions and minimum rental standards as well as standardised application forms for tenants.
Ms Calnan added that she also wasn’t sure how tenants would navigate changes to how end of bond cleaning arrangements were sometimes made — noting that in many instances a tenant opted to have the property manager facilitate this and to deduct the money from their bond.
At this stage, the expectation is that the tenant will be required to repay that deduction, or any other costs taken from their bond, to the government facilitating the bond transfer within eight weeks.
Ms Calnan questioned how the government would pursue tenants who did not make those payments.
However, she noted that in three quarters of leases the tenancy ended with no contest over the bond.
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