Victorian new rental laws require minimum standards
The new rental laws introduced in Victoria on March 29, 2021 require minimum standards for all rental properties. Some Residential Rental Providers (previously referred to as Landlords), will have to outlay a substantial sum of money to bring their properties up to the minimum standard.
Many Residential Rental Providers knocked about by COVID-19 are now in a tough situation and may have no choice but sell. People think because they are investors, they are rich. This is far from true. Most residential property investors are your average mum and dad striving to create a better future for themselves. Some are retirees who rely on the rental income to live.
Some Residential Rental Providers who struggled throughout COVID-19 without being able to collect rent or insurance for loss of rental, are now faced with having to spend thousands of dollars fixing up their properties to comply with the new Legislation. Faced with these additional new costs, it would be easier for some to sell instead.
While the reforms aim to make renting in Victoria fairer, the REIV has expressed concern that the reforms might translate to substantial increase in maintenance costs as well as additional complexity to property management for landlords.
If many Residential Rental Providers are forced to sell, it will eventually make it harder for tenants because there will be fewer properties for lease, and rents will rise.
The new regulations also mean that houses earmarked for development may too be taken off the table given the high cost to ensure they meet the new minimum rental standards. These factors will put further pressure on rental availability and affordability.
With 132 new regulations, with some of these changes being quite significant, would come at a cost to adhere to and comply. The increase in processes and procedures makes it difficult for Residential Rental Providers who are managing their own properties. For many, using a property manager to help them navigate through the proposed changes to ensure their properties meet the new rental laws, would be the best option.
The financial penalties for landlords who breach the Residential Tenancies Act could be up to $60,000, depending on the breach.
Not everyone is going to be able to afford to spend the money required to meet the new standards. The additional costs introduced through these new changes are likely to result in higher rents and could see many mum and dad investors selling up. This will put further pressure on rental availability and affordability.
Do you spend up or sell?