It’s been a long couple of months for Victoria and change is now something we have needed to get used to as its become part of daily life.
The property management industry has needed to adapt and evolve very quickly in regards to covid, including contactless and restricted inspections, the rise in unemployment and its effects on rental payments and landlord income and now the Omnibus bill introduced on April 20th.
So what is the Bill and how does it effect the way your property is managed? After 10 days of combing the bill we have the answers for you.
The bill has been introduced to protect both landlord and tenant in the current pandemic from the 29th March to the 29th September 2020. It does have its bonus’ but also it’s flaws.
As a landlord you can no longer send notice to vacates for any reason to a tenant, however this is not something to be scared of. The process has just changed in gaining possession of your property. Where you would have sent a notice, waited the correct amount of days and had a tenant vacate or apply to VCAT if they didn’t, you now just lodge your intention of requiring possession of your property with consumer affairs then apply straight to VCAT for a order which the member will give the tenant a date they need to vacate by.
As an agent I believe this may make the process more streamlined for landlords on the proviso that they are requiring possession for the correct reason and have evidence to back up the case.
There is even provision under section 549(1) for landlords to request termination of a tenancy where a tenant is not paying rental and has not proved hardship- this is noted as wilfully not paying rental.
It’s interesting to note that this does not include terminations for end of lease and 120 days notices for no reason to vacate. Also in addition to this, if a notice to vacate was sent to a tenant prior to the 29th March and had a vacate date after the same date it is invalid and you would need to start your process again under the new guidelines of the omnibus bill.
What about rental payments or tenant arrears?
The omnibus bill set out strict guidelines on landlords requiring them to negotiate any rental reductions if their tenant met the Covid 19 hardship requirements. This included showing that their rental payment is more than 30% of the weekly income and they have less than $5000 in savings.
The bill placed consumer affairs Victoria in charge of any negotiations on this to help each party if they can not agree on a rental reduction mutually before mediation will need to start. Once again the tenant and landlord both need to prove their cases much like a VCAT hearing.
There is a reduction in land tax on offer to landlords who lodge their rental reduction negotiations with Consumer Affairs Victoria, and likewise with the tenant a $2000 grant paid directly to the agent if they are in hardship and have a rental reduction put in place to help with payment of the negotiated rental.
Notices to vacate from tenants- can they still vacate under 28 days notice?
There is conflicting information regarding this and the Bill is written to say No tenant can vacate unless they are effected by Covid hardship. Government authorities have since come forward and are looking at changing the wording of the bill to show that tenants can still give 28 days notice if they are on a periodic lease only- we are awaiting official confirmation on this at this time. However to avoid unpaid rental and possible abandonment we would suggest if your tenant is on a periodic lease and wishes to give their notice you do so by mutual agreement.
Rental increases? Any rental increase that was due to commence on or after the 29th of Match is now invalid. Rental increase are restricted until 29th September 2020.
The most important thing to remember as a landlord is to make sure your agent is following due process for every notice to vacate from tenant, lease breaks, termination order requests, rental reductions and general contact with the tenant. All this needs to be lodged at CAV prior to going forward with any of the new processes.
All in all for this bill as a landlord and tenant you can expect to be at VCAT a lot more often over the next few months. Your cases will need to be stringently prepared and due process followed in all cases to be able to stand strong and prove your case to the member.
As an agent with 20 plus years of experience my advice to landlords would be that VCAT is not something to be scared of, it is generally a straight forward process whereby if you are prepared you have a great chance of a fair hearing.
Some good news however, is that the July 1st changes to the act which included minimum standards etc to a rental home have been pushed back due to covid, giving you as a landlord more time to prepare your tenancy to meet the new guidelines.
The new bill along with restrictions on inspections due to social distancing has seen the industry change, learn and grow to adapt to our landlords needs and requirements quickly. Communication with your tenant and experience in negotiations and vcat is the key at the moment to making sure your tenancy continues to be a valuable investment to you.
We will be holding a webinar for all landlords to prepare and go into more details regarding Covid and the day to day management of your property during this period- it’s a great chance to ask your specific question and get an answer from our panel of experts.
More details to come.