New tenancy laws will come into effect in 2018 in Victoria, following the announcement of the Residential Tenancies Amendment (Long-Term Tenancy Agreements) Bill 2017 at the end of August.
A massive 83 per cent of all Australians renters have a fixed-term lease shorter than 12 months, or none at all, according to a report produced by Choice and other tenants advocacy groups in February. Of those who have been renting for fewer than five years, 19 per cent have moved home three or more times.
The Amendment is part of the Labour government's Homes for Victorians strategy, and provisions regarding long-term leases aim to improve the security of tenures.
"Long term leases will give tenants the stability, certainty and time they need to make their house into a home," says Premier of Victoria, Daniel Andrews.
While the intentions are unquestionably admirable, what are the implications of these updates for landlords?
Creating security for renters
Previously, tenants were able to sign leases for longer than five years – however, as the standard tenancy agreement did not cover longer periods, these agreements were unprotected by the Residential Tenancies Authority.
The Amendment removes the section of the Residential Tenancies Act 1997 which excludes fixed terms longer than five years, and updates any relevant sections to support this. The change is expected to encourage more tenants and landlords to enter longer term arrangements, but some are sceptical of its promised effectiveness.
Limitations of the Amendment
Chief executive of the Real Estate Institute of Victoria, Gil King, claims that the Amendment was rushed, and failed to take into account the opinions of those who own investment properties.
While longer-term agreements may provide a stable income for landlords, the key complaint was the new legislation's capping of bond at an equivalent of four weeks' rent. Mr King claims that this amount is inappropriately low compared to the long-term cost of maintaining a property that could be held up for considerably longer than five years.
As a result, long-term leases could remain unattractive to landlords unless adequate protections are put in place for lessors engaged in long-term arrangements.
While better stability may be on the cards for renters, are you likely to consider long-term leases for your rental property? If you're unsure how best to handle future tenancy agreements, consider talking to the experts at Ray White Brunswick. Our team of experienced property managers will offer professional advice to ensure the best security for you and your tenants.