Legislation for Long Term Rental Agreements But Sector Sounds Warning

The Victorian government has introduced legislation for new long-term tenancy agreements but advocacy groups have warned the move only “tinkers around the edges” instead of looking at the bigger picture of tenancy reform.

The Residential Tenancies Amendment (Long-Term Tenancy Agreements) Bill 2017 introduced into the Victorian Parliament this week would change the current Residential Tenancies Act to allow landlords and tenants to enter into agreements of more than five years. Currently, the Residential Tenancies Act only covers rental agreements of up to five years.

The legislative changes would also include the creation of an online matching service to connect tenants and landlords interested in long-term leases.

However, Mark O’Brien from the Make Renting Fair Campaign and the Tenants Union of Victoria told Pro Bono News that they understood what the government was “trying to do” but they didn’t think “it’s the best way to do it”, agreeing that the move “just tinkers around the edges”.

“These changes are useful but are a very limited first step in improving protections [for tenants],”  O’Brien said.

“We are concerned that longer fixed term agreements [are] creating variations to the rights that the tenants have under the Act. It seems odd to us that you would go through the process of allowing for longer term agreements but then vary the rights within those agreements… that seems contradictory.”

O’Brien said the main game was the current review of the existing Residential Tenancies Act which had been going on for 18 months and resulted in an options paper that the sector was responding to.

Last week 54 not-for-profit CEOs and community leaders wrote to the premier warning that prospective changes to the Residential Tenancies Act could impact 1.5 million Victorians who rented their homes and would lead to greater housing insecurity and homelessness.

The open letter stated that some changes to the act “would significantly reduce the safety, stability and privacy of Victorian renters, particularly those who are already socially and economically disadvantaged and/or at greater risk of homelessness”.

The letter called on the premier to rule out changes such as reducing the grounds for breaches and evictions to include minor complaints from neighbours and rent payments that are one-day late.

The letter said: “The Make Renting Fair Campaign welcomes and strongly supports many of the options for reform that are currently on the table. This includes introducing mandatory minimum property standards, removing ‘no reason’ eviction notices, reforming unjust tenancy database practices, allowing reasonable modifications, creating incentives and enforceable responsibilities around repairs, introducing a ‘reasonableness test’ for all evictions, and implementing the Royal Commission into Family Violence’s recommendations.

“However, there are also options that, if adopted, would significantly reduce the safety, stability and privacy of Victorian renters, particularly those who are already socially and economically disadvantaged and/or at greater risk of homelessness.”

O’Brien said on Tuesday: “Some of those options were terrible. The government needs to rule out those options. The review should be going in the other direction of enhancing safety, security and privacy and not diminishing it.

“The other problem is that with long fixed-term agreements the rights that are commonly talked about are things like the tenant taking more responsibility for repairs and maintenance or longer notice periods for either parties to get out of the leases or the possibility of having to top up the bond.

“The problem is that the groups that are generally wanting to have longer fixed-term agreements are groups who are more vulnerable in the market, with less resources to absorb different rights, for example those who wouldn’t be able to take responsibility for repairs because they won’t have the cash to do this.”

He said another problem with long-term agreements was that you have to deal with tenant issues when circumstances change.

“One of the common problems that exists now, even with short-term leases of only 12 months, is a significant number of people who get into [leases] want to get out of them. There’s lots of lease-breaking that occurs already so if you normalise agreements of more than 12 months a lot of things can go wrong such as the rent increases to a level where you can no longer afford it,” O’Brien said.

“Our overarching view then is that the main game is really the review of the Residential Tenancies Act which will affect many more tenants and give much more significant reform and ensure that through that process the government puts in place measures that enhance security, safety and privacy for tenants generally.

“That’s the real challenge. This is a good, initial small step. The main game is the full legislative review.”

Advocacy group CHOICE said it’s latest consumer report found that concern about housing costs were growing, particularly for renters and young Australians.

“While energy prices (82 per cent) remain the number one worry for Australians, the cost of renting or paying off a mortgage has jumped from 71 per cent to 77 per cent for young people,” CHOICE spokesperson Tom Godfrey said.

“This housing concern isn’t just about paying off a mortgage. Renters are also feeling the squeeze with 74 per cent saying they’re worried about the cost of housing.”

The survey found that 9 per cent of renters had to deliberately miss a rent payment because of financial stress, 28 per cent had to borrow money from friends or family and 19 per cent had to live off a credit card until payday.