Victorian Residential Tenancies Act Changes: What Landlords Need to Know

NAVIGATING THE PROPOSED CHANGES TO THE VICTORIAN RESIDENTIAL TENANCIES ACT

The Victorian Labor Government's recent proposal for changes to the Residential Tenancies Act has sparked significant concern among private Rental Providers. Since 2021, Rental Providers have faced increasing challenges due to regulatory changes and additional taxes imposed by the state government. These measures have strained the financial capacity of property owners and contributed to a worrying decline in the rental housing supply. It's crucial for Rental Providers and all stakeholders in the real estate market to voice their opinions on these proposed changes by participating in this survey.

The Impact of Recent Regulations on Private Landlords

Since the implementation of new regulations in 2021, private Rental Providers in Victoria have experienced several challenges:

Windfall Gains Tax: Introduced in 2021, this tax is levied on properties that benefit from significant value increases due to rezoning, imposing up to 50% on the uplift in land value
Vacant Residential Land Tax: Applies to homes in inner and middle Melbourne that are vacant for more than six months in a calendar year, amounting to 1% of the property's capital improved value
Land Tax Surcharges: Additional surcharges imposed on properties owned by absentee owners and foreign investors
Increased Land Tax Rates: Higher land tax rates for all investment properties, significantly impacting landlords' profitability

These changes have led to a notable decrease in the rental housing supply as many Rental Providers have exited the market, exacerbating the current demand for homes in Victoria.

Government's Stance on Private Rental Providers

The Victorian Labor Government has shown a disregard for the vital role private landlords play in the housing market. Despite increased demand for rental properties, the government's actions have demonized Rental Providers, portraying them as adversaries rather than essential contributors to the housing solution. This stance has discouraged investment in the rental market, further reducing the availability of rental homes.

The Proposed Changes and Their Implications

The proposed changes to the Residential Tenancies Act aim to introduce new minimum standards for rental properties. Key changes include:

Blind Cord Safety Anchor: Required by 30 October 2025
Ceiling Insulation: From 30 October 2025, required at the start of a new lease if there is no existing insulation
Cooling: From 30 October 2025, required at the start of a new lease if there is no existing cooling. All rental properties must have a fixed cooling system by 30 October 2027
Draughtproofing: From 30 October 2025, required at the start of a new lease
Heating (Residential Properties): From 30 October 2025, required at the end of life of the existing fixed heating system
Heating (Rooming Houses): By 30 October 2025, required if there is no existing fixed heating system; from 30 October 2025, required at the end of life of the existing fixed heating system
Hot Water: From 30 October 2025, required at the end of life of the existing hot water system
Shower Heads: From 30 October 2025, required at the start of a new lease

Additionally, Rental Providers will need to replace hot water and heating systems with energy-efficient electric appliances when their current appliances stop working. The standards will also introduce a 3-star cooling rating for systems in the main living area and 4-star shower heads in all showers.

Energy Efficiency and Its Implications

While the intention behind these changes is to promote energy efficiency and reduce household bills, significant concerns exist about the financial burden on Rental Providers and the potential impact on the rental market. The upgrades required to meet these new standards can be costly, and there is a risk that these costs will be passed on to tenants, exacerbating the housing affordability crisis.

The Importance of Providing Feedback

It is imperative for Rental Providers and stakeholders to actively participate in the feedback process for these proposed changes. By voicing your concerns and providing constructive feedback, you can help shape policies that are fair and sustainable for both Rental Providers and Renters. Completing the survey is a crucial step in this process. The deadline for submitting feedback is July 2024.

First National Real Estate: Advocating for Fair Policies

At First National Real Estate Neilson Partners, we are committed to advocating for fair and balanced policies that support the interests of both Rental Providers and Renters. We are actively engaging with policymakers and providing our feedback on the proposed changes. We encourage all Rental Providers and stakeholders to join us in this effort. This is vital in ensuring that the Government understands the challenges faced by Rental Providers and the importance of creating an environment that encourages investment in the rental market.

Let’s work together to ensure that the voices of private Rental Providers are heard and that policies are implemented to support a thriving and sustainable rental housing market in Victoria.

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To discuss this matter further please contact Allison Holzer, Rental Division Director at First National Real Estate Neilson Partners Narre Warren, Berwick and Pakenham on 03 9705 4888