Victorian tenancy law changes

A slew of new regulations governing residential tenancies in Victoria has been in effect for three months. But not all landlords and tenants have come to grips with the nitty gritty. Here’s what you need to know and what it means for insurance cover.

132 new regulations – it’s a lot to get your head around. If you have a property manager, you rely on them to understand the legislation, but it is also wise to be across the main changes yourself to ensure you meet your obligations. If you are a self-managing landlord, then you need to be up to speed with the legislation, as ignorance of the law is no excuse for non-compliance!

Since 29 March 2021, new regulations have been in effect in Victoria that guide and control residential tenancies across the State. The new requirements address matters such as minimum standards but also landlord/tenant interactions.

Why is a landlord insurance provider telling you this? Because landlord insurance policies are tightly tied to tenancy law, for example, in relation to evictions, bonds, minimum standards and damage claims. If a landlord fails to meet their obligations under legislation, there is a good chance they will fail to meet their obligations under their insurance policy too.

Heads up: One  of the changes in Victoria’s new Residential Tenancies Act 1997 is the terms used to refer to landlords and tenants. Landlords are now called ‘residential rental providers’ and tenants are called ‘renters’. Here are the key changes, broken down in stages.

Pre-tenancy

• Rental property must be advertised at a fixed amount (e.g. it cannot be advertised for rent with the costs listed within a price range). Top tip: ensure the rental amount listed in the landlord insurance policy is accurate, it will save time if you need to make a claim.
• Rent bidding is banned (e.g. a provider cannot solicit or invite offers of rent higher than advertised price).
• Inappropriate information cannot be requested in the rental application (e.g. renter’s bond history or whether the renter has had a previous dispute with a landlord). Nor can renters be asked to provide credit or bank statements detailing daily transactions.
• The facts must be disclosed, if the property is on the market for sale or being repossessed, if the provider is not the owner, and any information about any embedded energy network. Top tip: policyholders also need to notify their insurance provider about any material changes to the property.
• A maximum of one month’s rent can be asked/accepted as a bond, and renters cannot be asked to pay more than one month’s rent in advance if the property is rented for $900 per week or less. Top tip: most landlord insurance policies require a bond to be in place at the start of a tenancy.
• An additional bond can be requested, in long-term rental agreements of more than five years, if the renter has lived at the rental property continuously for at least five years, and the rental provider has given at least 120 days’ notice.
• The property must meet 26 minimum standards relating to door locks, ventilation, vermin-proof bins, toilets, bathroom facilities, kitchen facilities, laundry facilities, structural soundness, mould and dampness, electrical safety, window coverings, windows, lighting, and heating. Top tip: Failing to comply with legislated standards could impact a landlord insurance claim.
• A set of keys or security device must be provided free of charge to renters. A reasonable fee can be charged for additional or replacement keys/devices. 
• If a renter has signed the rental agreement but the rental provider has not and the rental provider (or their agent) has accepted rent or allowed part performance of the agreement by the renter, then the agreement is enforceable. Top tip: except in the case of short-term rentals, a rental agreement must be in place for a tenant-related claim (e.g. damage or rent default) to be made against a landlord insurance policy.

During the tenancy

• Renters can make certain modifications (e.g. picture hooks, child safety devices, locks on mailboxes) without the rental provider’s consent. Other modifications cannot be unreasonably refused. Top tip: if it is written in the tenancy agreement that the tenant must revert the property back to its original condition, and the tenant fails to make good on this, the landlord may be able to submit a tenant damage claim. However, in other instances where the tenant is not required to do so, landlords are unlikely to be able to make deliberate/intentional damage claims on their insurance for any such modifications.
• Renters can keep pets at a rental property with the written consent of the rental provider. A rental provider can apply to VCAT for an order that it is reasonable to refuse permission. Top tip: EBM RentCover provides up to $70,000 for pet damage claims in the event the renter doesn’t make good on their responsibilities.
• More things are considered an urgent repair (e.g. broken cooling appliance, pest infestation, mould, malfunctioning smoke alarms).
• Renters must be reimbursed for costs incurred for urgent repairs within seven days of giving written notice of the reasonable cost of the repairs. Top tip: EBM RentCover policyholders do not need to get permission from us to arrange urgent repairs but must provide the tax invoices/receipts when submitting a claim.
• Condition reporting is required regardless of whether a bond is taken. The condition report must be completed at the start and end of the rental agreement. Top tip: condition reports may also be required as supporting evidence for insurance claims.
• For rent increases that occur during a fixed-term rental agreement, the amount or calculation method for the increase must be set out in the agreement and this amount or calculation method must be used.
• Renters must be given at least seven days’ notice of a general inspection and must be paid at least $30 for each sales inspection that takes place.
• Renters can object to advertising images or videos being produced that show their possessions in certain circumstances.
• More detailed rules around rights of entry must be complied with, including a longer notice period for some grounds, restrictions for renters protected under personal safety and family violence legislation, and length and frequency of entry.
• Electrical and gas safety activities must be set out in the rental agreement and carried out, and providers must keep records about safety checks. Top tip: insurers may ask to see these reports as part of a claim as the policyholder is required to maintain the premises.

Post-tenancy

• 120-day ‘no specified reason’ notices to vacate can no longer be issued. A valid reason must be provided to end a rental agreement. Top tip: the legislated requirements for ending a tenancy and eviction must be followed if the landlord needs to make a claim on their insurance in relation to tenant damage or loss of rent.
• A new process for repeated late or non-payment of rent has been introduced. If a renter pays back overdue rent within 14 days, any notice to vacate issued by the rental provider for that overdue rent is invalidated (the first four times this happens in a year). If the renter fails to pay rent as required on a fifth occasion in the same 12-month period, the rental provider may give a notice to vacate and apply to VCAT for a possession order. VCAT may adjourn the possession application and place renter on a payment plan to meet the outstanding arrears.
• VCAT must not issue an eviction possession order without first considering whether it is reasonable and proportionate in the circumstances to do so.
• A notice to vacate can only be issued at the end of the first fixed-term of a rental agreement. This does not apply to long-term rental agreements of more than five years.
• A notice to vacate for the end of a fixed-term agreement can specify a date on or after the end date specified in the fixed-term agreement. Top tip: dates are important when it comes to loss of rent claims.
• A notice to vacate can be issued if the renter or their visitor endangers the safety of neighbours, the rental provider or their agent, or a contractor or employee of the provider or agent.
• A notice to vacate can be issued where a renter or their visitor, by act or omission, intentionally or recklessly causes serious damage to the rented property, including to any safety equipment or common areas. Top tip: you’ll need to follow the legislated procedures before submitting a tenant damage claim on your insurance.
• An application to VCAT for compensation if a renter terminates a fixed-term rental agreement before the end date can be made. The amount payable will be determined based on the loss incurred by the rental provider and any hardship suffered by the renter. Top tip: if a policyholder is awarded compensation by VCAT, an insurer may step in and pay out additional funds… but typically only if the compensation doesn’t cover the full loss.
• Renters can give 14 days’ notice of intention to vacate without paying lease break fees in limited circumstances, including when they need special or personal care, have been given certain notices to vacate, need temporary crisis accommodation or have been accepted into social housing. Top tip: this could impact a loss of rent claim.
• Renters can apply to the Residential Tenancies Bond Authority (RTBA) – without the rental provider’s permission – to have all or part of their bond released.
• A term in a rental agreement can only require professional cleaning if it is needed to return the property to the condition it was in at the start of the rental agreement, taking into account fair wear and tear. Top tip: cleaning, except in relation to drug labs, is not covered in EBM RentCover policies. Rental providers may be able to use the bond monies to pay for cleaning if required.

Rental providers should also be aware that civil pecuniary penalties have been introduced for specific breaches of the Residential Tenancies Act 1997, together with a public warning power for the Minister and Director of Consumer Affairs Victoria and other new powers to ensure compliance with key obligations.

In addition, rental providers found by VCAT to have committed an offence, or breached a duty under the Act, will have their name, rental property address, and nature of their offence or compensation or compliance order made listed on the register available from the Consumer Affairs Victoria website. Top tip: Landlord insurance providers may consider the rental provider’s history when deciding whether to offer cover or to renew a policy.

Changes to residential tenancy legislation has implications for landlord insurance cover. Be sure to know your legal rights and obligations, as failure to comply could impact your insurance.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are there, contact 1800 661 662 if you have any questions.