The 120 new rental tenancy standards that come into effect from 29 March will trigger uncertainty, confusion and an unbalanced regulatory burden on the market.

With nearly 12-months of reduced rent due to COVID-19, many landlords will be simply unable or unwilling to bear the increased costs and onerous obligations that accompany the new laws. It’s an unfortunate fact that many landlords, particularly those that self-manage their own property, are either blissfully unaware of the imminent changes, or totally naïve as to their impact.    

The changes will be a deterrent for investment. They will see rents increase and ‘mum and dad’ investors exit real estate. And this isn’t just the REIV’s prediction; this was, in fact, the government’s view at the earliest stages of consultation on the new laws. 

In January, REIV data showed the regional rental vacancy rate at record lows of 1.0 per cent as more Melbournians opted for a regional sea change. With even fewer people prepared to own residential investment property, we can only expect these changes will put even further pressure on an already squeezed market. These new laws will most definitely result in rent increases. 

The Victorian Government has squarely targeted landlords to bear the brunt of these new laws; a disappointing disproportionate impost immediately following the one-year moratorium on rent increases and evictions. In effect, the private sector has been forced to accept reduced rental income with little or no support where tenants refused to pay any rent or even to negotiate. It was seemingly ‘forgotten’ that these people also had mortgages and expenses to meet.

Suggestions from some quarters that the new laws will benefit renters are without any major substance and can often be contradicted; in the end, someone has to pay for new equipment, materials and services, such as energy-efficient gas heaters, ventilation inspections, gas safety-checks and re-painted walls as part of make-good requirements. 

Landlords in Victoria will have just 60 days to prepare for the new standards. They will require a complete change in processes and documentation, together with substantial cost increases and greater exposure to risk. Extensive training and education will be required to ensure the supply side is equipped to implement the changes effectively. 

Over the years, real estate in Victoria has managed to play well with the cards it has been dealt, with the market’s strong performance in a coronavirus-stricken 2020 a good example. 

This means that, despite the future policy settings, the public should have confidence that the profession will manage through these changes and continue to contribute to a thriving sector.

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