13 November, 2017 / Category: News
‘Making Rent Fair’ is the byline for the Andrews Government’s Rent Fair Vic project, which will culminate in a series of sweeping changes to the existing Residential Tenancies Act.
At face value, ‘making renting fair’ is a fine aim. Who wouldn’t agree that equity is important when it comes to housing our community? Upon further examination, however – the proposed reforms actively pit tenants against landlords, creating an imbalance of rights that disadvantage property investors. In this month’s Infolio blog, we examine the imbalance of the incumbent reforms and ask: if this is what our Government considers fair, why be a landlord?
Australians love investing in property. Everyone from Mums and Dads through to real estate moguls feel confident putting their money into ‘bricks and mortar’, simultaneously building their own wealth while providing accommodation for lease to the community. In an age where Government-led development has all but stalled, property investment places additional real estate into a tight market for tenants to lease. It addresses a shortage of housing. The proposed reforms to the Residential Tenancies Act fails to acknowledge the risk involved in becoming a landlord. Investors make a deliberate decision to buy property – but will they have the confidence to do so if these changes come into law?
The proposed rental reforms don’t take into account the sheer diversity that make up Victorian properties for lease. They seem to suppose that properties for lease are ‘investor grade stock’, without recognising that many homes offered for lease are brought to the market because their owners have moved interstate or overseas for work: the owners intend to reoccupy their properties before long. Under new legislation, landlords will be committed to longer lease terms paired with fewer rent increases. They’ll have less ability to access their properties, and fewer attempts to recourse should something go awry with their lease. Of course, not all tenants are good tenants, just as not all landlords are good landlords: making renting fair should be about legislating to balance the needs of the broader community of well-meaning tenants and landlords.
Changing legislation around bonds is of great concern to landlords and property management professionals: currently, rental bonds taken are unlikely to cover costs if a lease ‘goes bad’ or a tenant damages a property. Making bonds less expensive is hardly addressing market realities. A landlord needs to wait 14 days before making an application to VCAT – by this time, half the bond is lost to cover unpaid rent. A further two weeks could elapse before a VCAT hearing is scheduled to deal with the tenancy matter – and just like that, the bond is gone altogether. If claims then need to be made for property damages or cleaning, no further funding is available and the landlord is often left out of pocket. In my opinion, if a tenant intends on doing the right thing throughout the duration of their lease, they shouldn’t have any concerns about providing an adequate bond (and indeed a more substantial one if there will be pets in-situ).
These are just a few examples of a slew of proposed changes that reflect wilful ignorance about the realities of the leasing market on behalf of the Government. Another is the ‘carte blanche’ acceptance of pets in properties, a matter of serious concern for many landlords. Not all properties are made for pets – and not all pets are made for properties! When it comes to the matter of equity in housing, we’re all for making renting fair. Fairness means ‘a good deal’ for all parties – and in the case of these proposed rental reforms, the benefits lie with tenants alone. Many prospective landlords will be taking a long, hard look at property investment in Victoria: the unreasonable loss of control over their rental property may well be too much to bear.