In Good Repair: No Ifs, And or Buts

Regardless of what 60 Minutes or Today Tonight might suggest, most landlords and tenants act with good will. Not all, but most. There are always a few bad apples in the mix, some of which I’ve come across in my many years of property management experience.

Those rare individuals are the ones who trash houses into a state of squalor, or refuse to ensure their investment property is in a state of good repair – endangering the lives of their tenants and putting themselves at risk into the bargain. In this month’s blog, I want to examine the notion of ‘good repair’ as it applies to the Residential Tenancies Act, and why all landlords should heed a recent ruling concerning a Port Melbourne landlord named Phil, and his tenant, Vikki.

Back in 2008, Phil decided to lease his run-down rental property. Comparatively speaking, even for 2008 standards, $125 a week in Port Melbourne was inexpensive. Vikki was looking for accommodation, and was in dire straits – living from her car. She learned about Phil’s property and knew that it was not in great shape, but decided to take a lease on it. Vikki paid $125 a week at Phil’s property before moving out around five and a half years later.

Phil thought that was the end of the matter, until Vikki decided to take him to VCAT seven months after leaving the Port Melbourne premises. She claimed $14,050 in compensation, alleging that Phil had neglected to ensure the property was in good repair both when she moved in and throughout the duration of her lease. Long story short: VCAT rejected her claim, noting that Phil was required to take steps to ensure his property was in good repair. Section 68 of the act did not require he upgrade the premises without an appropriate increase in rent.

The plot thickens: Vikki – backed by Victorian Legal Aid – lodged an appeal at the Victorian Supreme Court. The Court decided that VCAT had erred in their interpretation of Section 68 and support Vikki. If you’re a landlord, you’ll want to take keen note of their remarks:

• The duty imposed on a landlord to ensure rental premises are in good repair is strict and absolute. Landlords must identify and rectify any defects of which they are aware or ought to be aware.
• ‘Good repair’ means ‘tenantable repair’. It must be reasonably fit for occupation. Any obligation to maintain good repair cannot be waived by charging low rent.
• A landlord’s obligation to maintain a property in good repair cannot be qualified by the condition of the premises at the commencement of tenancy, or the rent charged.
• The Residential Tenancies Act does not allow landlords or tenants to contract out of their responsibilities. It invalidates any term of a tenancy agreement that tries to exclude, modify or restrict the application of the Act to the agreement.

Phil and Vikki’s case is now likely to inform most cases reflecting on residential landlords’ responsibilities for the state of repair of their investments. If you’re a landlord, putting off repairs is more than just being a dodgy move – it also endangers you financially as you are not maintaining ‘good repair’. You could end up with a hefty bill, or time at VCAT. This case more than any other illustrates the value of expert property managers, who will inform landlords about necessary repairs, allowing them to take action and maintain their property in ‘good repair’. You may think that your property manager is doing a great job – after all, you receive rent every month and you never hear from them. In my professional opinion, this lack of communication is a warning sign. No communication may very well mean that your property is on ‘cruise control’, and no routine inspections are being conducted. No routine inspections means that you don’t know what is happening at your investment property. It could be a meth lab. It could be a slum house. You simply don’t know. A communicative and diligent property manager – like those at Infolio – stay in contact and keep tabs on your asset.

So landlords: next time you feel frustrated at needing to upgrade or refresh aspects of your rental property consider Phil and Vikki, and remember that the onus is on you to maintain good repair.