Terminations and security of tenure
The ‘no specified reason’ notice to vacate for periodic residential rental agreements will be abolished. This is because residential rental providers' (RRP) ability to terminate a tenancy for reasons other than those prescribed by the Residential Tenancies Act does not adequately protect renters against unfair termination of their tenancies, where they can be asked to leave without a reason. This has a significant chilling effect on renters’ behaviour – it can lead to an unwillingness to request repairs, for example, ultimately leading to run down properties and diminished enjoyment of their home. This reform aims to improve the balance of bargaining power between the parties, and to encourage RRPs to be more transparent about their reasons for wishing to end a tenancy. This reform also applies to periodic residency rights in rooming houses and caravan parks, and periodic site agreements in residential parks.
RRPs will be able to issue an ‘end of fixed term’ notice to vacate at the end of the first fixed term of a residential rental agreement, but not for any subsequent fixed terms. Renters will now be able to issue a 14-day notice of intention to vacate before the end of the first fixed term, in response to receiving an end of fixed term notice. This reform reflects the view that the first rental agreement is often a trial period for both the renter and RRP. It may be, by the end of the first term that the RRP does not wish to continue the relationship because they would like to rent the property to a new occupant. For subsequent fixed terms however, the ability to terminate using this notice will be removed, so that the RRP will only be able to terminate for a reason prescribed by the Residential Tenancies Act.
A notice to vacate for the end of a fixed term agreement will be able to specify a date on or after the end of the fixed term. This will allow greater flexibility for RRPs and renters, by allowing the parties to agree to the renter staying slightly longer than the end of the fixed term, if this is needed. This reform also applies to these types of notices to vacate in rooming houses and caravan parks.
Renters will be able to give 14 days’ notice of intention to vacate, without paying lease break fees, in limited circumstances:
To guard against the misuse of notices to vacate, RRPs will be required to attach evidence of a change of use to a notice to vacate for change of use. Examples of required evidence could include a building permit, or a statutory declaration from the family member moving in to the rented premises. This reform also applies to change of use notices to vacate for rooming houses, caravan parks and residential parks.
Currently, renters may be given notice to vacate if they or their visitor endanger the safety of the RRP or agent, or their contractor or employee. The Director of Consumer Affairs Victoria will issue guidelines for interpreting ‘endanger’, which must be taken into account by VCAT when a possession order is sought following a notice to vacate being given for this reason. This reform also applies to rooming houses, caravan parks and residential parks.
This reform clarifies that the meaning of ‘malicious damage’ which is currently in the Residential Tenancies Act covers intentional or reckless serious damage. This reform applies for all tenure types.
A RRP will be able to issue a 14-day notice to vacate if the renter or other person jointly occupying the property has seriously threatened or intimidated the RRP or agent, or their contractor or employee. This reform also applies to residents of rooming houses and caravan parks, and site tenants in residential parks. This is a new termination ground which, in combination with other protections targeting violence and dangerous conduct, is designed to help RRPs and other providers of property to respond effectively to a broad spectrum of unacceptable conduct.
A RRP may issue a notice to vacate when any rent owed is unpaid 14 days or more after it has fallen due. This amendment will address a practice within VCAT of disallowing a notice to vacate where the renter has paid some, but not all of their rent, 14 days after it was due. In practice, this interpretation of arrears results in periods of arrears that are longer than 14 days, and reduces RRP certainty about when they may be able to serve a valid notice to vacate.
The reform will also allow increased discretion to VCAT to give a renter, in appropriate circumstances, an opportunity to catch up on outstanding rent arrears and remain in the rented premises.
Within any 12 month period, on each of the first, second, third and fourth occasion of non-payment of rent, the residential rental provider will be able to give the renter a 14 day notice to vacate. On the first four occasions, if the renter pays the outstanding amount of rent before the expiry of the 14 days, the notice to vacate becomes invalid.
If the renter does not pay the outstanding rent within the 14 day notice period, the residential rental provider can apply to VCAT for a possession order. In determining whether to grant a possession order, VCAT will be able to assess whether to place the renter on a payment plan to meet the outstanding arrears. If a payment plan is not a feasible option for the renter, VCAT will issue a possession order. However, if the renter is placed on a payment plan and complies with the plan by paying off the arrears, VCAT must dismiss the application for the possession order. If the renter does not comply with the payment plan, VCAT can issue a possession order.
If a renter has received four notices in any 12 month period, they will accrue ‘3 strikes’ against their name. If no more notices are received during that period, the strikes will be cleared. However, if the renter fails to pay rent as required on a fifth occasion in the same 12 month period, the residential rental provider may apply to VCAT for a possession order and VCAT can choose to issue the order whether or not the renter pays the outstanding arrears within the 14 day notice period. VCAT must consider whether eviction would be reasonable and proportionate, taking into account a variety of factors, including the frequency of non-payment.
As the proposed model will not provide a termination avenue to RRPs experiencing rent arrears up to 13 days after the due date, an additional amendment to existing compensation provisions for rent arrears will enable RRPs to seek compensation for any amount of unpaid rent and other consequential losses after the payment is at least 14 days late on two previous occasions.
VCAT will be able to refuse to grant a possession order on the basis that it would not be reasonable or proportionate to do so. This will enable VCAT to formally consider such factors as the frequency of a particular breach, whether it is trivial, whether someone else was involved, whether family violence was a contributing reason, whether the breach has been remedied to the extent possible, the effect of the conduct on other people, the respective parties' behaviour, and any other relevant matter.
The aim of this test is to ensure that eviction is a last resort, that rental relationships are not ended unnecessarily and that other avenues for dealing with problematic behaviour are pursued in order to promote greater security of tenure. This reform applies for all tenure types.
VCAT will no longer have discretion to refuse to make a possession order if it considers that there will be no future reoccurrence of a breach, or that a disturbance will not be repeated. Predicting the future conduct of parties is a speculative practice which prevents the termination provisions from functioning effectively in instances of otherwise serious conduct. This reform applies for all tenure types.
A mortgagee in possession of rented premises or a rooming house will be required to give 60 days’ notice to vacate during a periodic or fixed term agreement. This increase (from 28 days’ notice to vacate) will align more closely with other notice periods given for change of use.
If a mortgagee has expressly or impliedly consented to the mortgagor entering into a residential rental agreement in relation to the mortgaged premises, the mortgagee upon taking possession of the rented premises will be subject to all the provisions of the Residential Tenancies Act as though it were the RRP, including honouring any fixed term of the residential rental agreement.
If a mortgagee applies to VCAT for possession of a rented property, the mortgagee will need to evidence their entitlement to possession and to exercise a power of sale with the relevant court order. This reform also applies to mortgagee repossession to rooming houses, caravan parks and residential parks.
Current provisions for a 28 day notice period following the death of a sole renter can result in a property being left vacant unnecessarily and can create unnecessary delays in the creation of a new tenancy for other occupants. The provision for termination after the death of a sole renter will be streamlined and modernised. In these circumstances, either the RRP or the legal personal representative or next of kin of the deceased renter will be able to give a notice to vacate or notice of intention to vacate to the other party, and VCAT will also be able to make orders terminating the agreement.
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