What residential tenancy reforms are proposed in Victoria in 2018?

In a press release dated Sunday 8 October 2017, the Victorian Premier Daniel Andrews announced what was described as an "unprecedented package of tenancy reforms."

The press release alleges that the Andrews Labor Government will make renting fair.

The legislation to achieve these reforms is expected to be introduced into the Victorian Parliament in 2018. It will take effect, if passed, in 2019.

The government has created a new website about the reforms - www.rentfair.vic.gov.au

THE DETAIL

So far, there is actually very little detail about the proposed reforms. 

Broadly speaking, they fall into the six categories:

1.     Rental security;

2.     Tenant rights;

3.     Faster payments and rental bonds;

4.     Fair priced rent;

5.     Pets are welcome; and

6.     Modifications.

RENTAL SECURITY

Under this heading, the proposed reforms are as follows: 

(a)   Landlords must give a reason to end a tenancy

(b)   Limit the use of the ‘end of fixed term’ notices to vacate

(c)   False, misleading or deceptive representations are proscribed

(d)   Pre-contractual disclosure

(e)   Long term leases are encouraged

TENANT RIGHTS

Commissioner for Residential Tenancies

A Commissioner for Residential Tenancies will be appointed to champion the rights of Victorian tenants in the private sector.

The Commissioner will consult widely with tenant and consumer advocacy groups  across the rental sector to identify systemic issues and will give tenants a voice in seeking changes to renting laws.

Landlord blacklist

Currently, tenants who breach their obligations under the Residential Tenancies Act 1997 may find their names on a tenancy database, sometimes referred to as a ‘blacklist’.

Landlords and real estate agents will now be subject to similar measures.

The government claims it will create a landlord and agent ‘blacklist’ that will be available to all tenants so they can identify landlords and agents who have previously breached their obligations under the Residential Tenancies Act 1997.

FASTER PAYMENTS AND RENTAL BONDS

14 day automatic bond repayment

Under this proposal, either party will be able to apply to the Residential Tenancies Bond Authority (RTBA) at the end of the tenancy to have all or part of the bond released either with or without the other party’s consent. 

If both parties agree, the RTBA will pay out the bond within 14 days in full or in accordance with instructions from the parties as to any apportionment.

If one party has not consented to the bond being paid out, the RTBA will notify the other party, who then has 14 days to notify the RTBA if they are disputing the claim. If not the bond will be automatically paid out.

Early release of bond

Currently, the parties to a tenancy can mutually agree to the release of the bond at any time before a tenancy has ended. A tenant can also apply for their bond to be released seven days before the end of the tenancy, subject to the landlord’s agreement.

To help alleviate financial stress, and to better facilitate these private agreements between exiting tenants and landlords, the government proposes to amend existing provisions in the Residential Tenancies Act 1997 that govern the return of the bond where a tenancy has not yet ended.

The proposal is that tenants will be able to seek agreement from their landlord up to a month before the end of the tenancy for their bond to be released early. If the landlord agrees, the bond can be paid out as agreed up to 14 days before the end of the tenancy, rather than the current period of 7 days.

Updated bond cap & up-front rent cap for most properties

The government asserts that current arrangements for the cap on maximum bonds and up-front rent are out-dated and apply to less than half of all rental properties in Victoria. This means that many tenants are exposed to paying more than one month’s bond and rent in advance. 

The proposed reforms will ensure that bonds will be no more than one month’s rent for any property where the weekly rent is less than double the median weekly rent. Only landlords who have obtained an exemption from VCAT will be able to require a bond of more than one month if the weekly rent is below this limit.

Upfront rent will also be limited to one month’s rent for these properties.

By linking reforms to the median weekly rent – which is currently $385 - the cap on bonds and up-front rent will cover the vast majority of rental properties in Victoria into the future.

The government claims that these reforms are needed to improve the affordability of the upfront costs of renting, while still allowing landlords to protect truly high-value properties.

Faster repairs reimbursement 

One of the most frequent concerns expressed by tenants requesting a repair was that urgent repairs take too long to resolve. Some repairs require immediate attention and it may not be reasonable for a tenant to wait until the landlord can resolve it. 

Tenants who have paid for urgent repairs up to the current authorised limit of $1,800 will be able to seek reimbursement from the landlord for the reasonable costs of repair within 7 days, instead of 14 days.

This will reduce the amount of time tenants are out of pocket for urgent repairs that the landlord should have covered.

A failure by the landlord to reimburse the tenant will entitle the tenant to seek a compensation order from the Victorian Civil & Administrative Tribunal. A breach of a compliance order would expose the landlord to being ‘blacklisted’.

FAIR PRICED RENT

Rent increases

The frequency of rent increases can impact on a tenant’s ability to meet the ongoing costs of their accommodation.

Less frequent rent increases will help tenants manage cost of living pressures, which are increasing.

The proposal is to limit rent increases to once every 12 months, instead of every 6 months. Rent increases must also be reasonable. Tenants have the right to appeal to the Victorian Civil & Administrative Tribunal if they believe an increase is excessive compared with the market rent for a similar property.

Cracking down on rental bidding

The government claims that rental bidding can lead to reduced transparency for rental applicants and can increase search costs if properties are advertised at a price lower than a landlord is willing to accept.

The reform proposed is that landlords will be expected to set a realistic fixed price, enabling potential tenants to rely on the advertised price when looking for their next rental property.

Therefore, the proposal is that all landlords and agents must:

• advertise properties at a fixed price (no ranges or ’price plus’ advertising); and
• not invite prospective tenants to make an offer at a price higher than the fixed price (including via technology platforms). 

If tenants enter a bidding war that was not initiated by the agent, that seems to be okay under the proposals.

PETS ARE WELCOME

The proposal is that tenants will have the right to keep pets, provided they obtain the landlord’s written consent first. Landlords will not be able to refuse a request for consent unreasonably. 

In the case of an assistance dog, consent cannot be refused at all.

Guidance will be issued to help landlords and tenants understand the types of situations where it may be reasonable to refuse consent.

An outgoing tenant will be required to undertake cleaning and fumigation if there is pet-related damage to the property that goes beyond fair wear and tear. This is consistent with their existing duty not to damage the property and to leave it in a reasonably clean condition.

MODIFICATIONS

Tenants can make minor modifications

A tenant will still require the landlord’s written consent to install fixtures or modify the property, however a landlord will not be able to refuse consent unreasonably to certain types of modifications – for example, modifications needed for safety reasons (i.e. installing furniture anchors), minor modifications (i.e. installing a picture hook), or access to the internet.

Depending on the type of modification requested, the landlord may require the tenant to use a suitably qualified trade person. This would include someone who is licensed or otherwise has the relevant expertise to carry out the modification.

In the case of disability-related modifications, which can be more complex, an assessment may be needed to determine the need for home modifications. This would be conducted by an accredited occupational therapist, or other allied health practitioner as appropriate. Tenants may also rely on an existing assessment.

Conclusion 
Whether these reforms are necessary is presently a matter of debate. 

In any event, when the legislation is passed, I will revisit this topic if the legislation is different to the current proposals. 

WG Stark

Hayden Starke Chambers

What factors does the Family Court take into account when making property orders where one party to the marriage is under a disability?

The factors that the Family Court (and the Federal Circuit Court) will take into account in determining what orders to make on the hearing of an application for final property orders are set out in (among others) Sections 75(2) and 79 of the Family Law Act 1975. 

The High Court in Stanford v Stanford (2012) 247 CLR 108 set out what it considered to be the appropriate way to determine a case, especially in cases where one party to the marriage suffered a disability. 

In Teague v Teague [2017] FCCA 2251, the Federal Circuit Court dealt with a scenario where one party to the marriage suffered a disability. 

Judge Young stated the background as follows (at paragraphs 5 to 8):

5.    The wife was very seriously injured in a single vehicle motor accident in (omitted) 2001. She suffered a severe traumatic brain injury which left her permanently and severely disabled. She has severe cognitive impairment and severe memory loss. She has severe right-sided weakness, permanent sight impairment and impaired mobility. She can walk with a walking stick. She requires assistance with showering, oral care, grooming, dressing and using the toilet. She has diabetes which is well managed. She is otherwise in good health. Her treating GP gave evidence that he was unable to predict her life expectancy but she was, according to him, not likely to die "any time soon". There is no evidence that her life expectancy is reduced and, according to actuarial evidence, normal life expectancy for a woman of her age is a further 19 years.
6.    The wife has been assessed as lacking testamentary and legal capacity.
7.    …
8.    The husband and the wife’s sister cared for the wife at home from 2001 until (omitted) 2009. She then entered a nursing home, initially for respite care, where she has remained since. The sister obtained a Guardianship Board order appointing her guardian and administrator of the wife’s estate in (omitted) 2009. The husband continued to visit the wife in the nursing home until about June 2010 when he was told he was no longer allowed to visit her. The reasons for that prohibition were not addressed in the evidence. The husband, it was clear from his evidence, did not seek separation but acquiesced in the arrangements. In cross-examination it was put to him that “separation” had effectively taken place from that time. He agreed. It seems to have been understood by everyone that the wife’s residence in the nursing home was permanent.

At paragraph 14 of Judge Young's reasons, His Honour notes: 

14. After observing that the requirements of subsections 79(2) and 79(4) of the Act should not be conflated the majority in Stanford said that in every case in which a property settlement order under section 79 is sought it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order. They said the expression "just and equitable" does not admit of exhaustive definition and while the power given under section 79 is not "to be exercised in accordance with fixed rules" three fundamental propositions must not be obscured. First, it is necessary to consider whether, having regard to existing interests, it is just and equitable to make a property settlement order. Secondly, "the power is not to be exercised in an unprincipled fashion" and it is not to be assumed that the rights to or interests in marital property  are or should be different from those that then exist. Thirdly, whether it is "just and equitable" to make a property settlement order is not to be answered by assuming that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property fixed by reference to the matters set out in subsection 79(4), including financial and other contributions.15. The majority said that in many cases the just and equitable requirement will be readily satisfied because:

The husband and wife are no longer living in a marital relationship … [and] there is not and will not thereafter be the common use of property by the husband and wife …the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship.

 16. The wife submitted in this case that it was just and equitable to make orders because the common use of property by the husband and wife had ended and the assumptions that underpinned the existing property arrangements have been brought to an end by the separation of the parties. In my view, that submission does not adequately address the circumstances of this case. In Stanford the majority said, after the passage quoted above, that “By contrast, the bare fact of separation, when involuntary, does not show that it is just and equitable to make a property settlement order”. In my view the evidence in this case does not permit the conclusion that the separation of the parties was voluntarily and there are indications that it was involuntary. These include that there is no evidence that the wife evinced any intention to end the marriage before her accident, that the wife was initially admitted to the nursing home for respite care and was, it appears, then too unwell or in capable to return home and that she lacked decision making capacity after her accident. Although I draw no inference from the fact, I note that there was no evidence of any inquiry about the wife's capacity at the time of her application for divorce. 
17. However, an important factor in this case, and a crucial point of distinction from the facts in Stanford, is that the husband did not provide any financial assistance to the wife after she became a permanent resident of the nursing home.18. The majority judgment in Stanford at paragraphs [44] and [45] is apposite to the facts of this case:

When, as in this case, the separation of the parties is not voluntary, the bare fact of separation does not demonstrate that the husband and wife have any reason to alter the property interests that lie behind whatever common use they may have made of assets when they were able to and did live together.  Common use of some assets may very well continue, as it did here when the husband made provision for the wife's care and accommodation.  Past arrangements that the parties have made about their property interests on the assumption, expressed or implicit, that those arrangements were sufficient and appropriate during the continuance of their marriage are not necessarily falsified.  If both parties are competent, it can still be assumed that any necessary or desirable adjustment can be made to their property interests consensually.  And if one of the parties has become incompetent it is not to be assumed that the other party lacks the will and ability to make those necessary or desirable adjustments.  Contrary to the submissions of the husband in this Court, there may be circumstances other than a voluntary separation of the parties marking the breakdown of their marital relationship in which a court may be satisfied that it is just and equitable to make a property settlement order.  For example, demonstration of one party's unmet needs that cannot be answered by a maintenance order may well warrant the conclusion that it is just and equitable to make a property settlement order.  It may be that there are circumstances other than need. 

19. The majority went on to say at paragraph [46] that in the circumstances of that case the needs of the wife might have been met by the provision of full time care, a further provision of money against future contingencies and the possibility, if needed, of making a maintenance order.

In this case, the judge concluded that he was satisfied that the wife's financial needs were not entirely met under the present arrangements. Even though he was not satisfied that the separation of the parties was voluntary,  he was satisfied that some alteration of property interests was just and equitable in order to meet the unmeet needs of the wife. 

This case is a very good example of the factors that the Family Court and the Federal Circuit Court will take into account in determining what orders to make on the hearing of an application for final property orders in cases where one party to the marriage suffered a disability. 

WG Stark

Hayden Starke Chambers