What the Allan government’s rental reforms mean for Victoria landlonds

From ending no-fault evictions to covering the cost of key fobs — Victorian landlords are being hit with a slew of changes to how they manage their property. Get all the details here.

The Victorian Labor government recently announced a raft of new rental reforms, the latest changes coming on top of the more than 130 that have been introduced since 2021.

And Premier Jacinta Allan has flagged further measures to strengthen tenant rights are in the pipeline.

It’s difficult to keep up.

If you’re a landlord read on — here’s what has been proposed and what it means for how you will need to manage your property.

What rental reforms have been proposed?

END TO NO-FAULT EVICTIONS

Under the current laws, a landlord can ask a tenant to leave the property at the end of their first fixed-term lease without providing a reason — their only opportunity to do so including if the tenant is on a month-to-month contract.

The government is now moving to end so-called no fault evictions.

If legislated, tenants will need to be given a “valid reason” for being evicted no matter the agreement they have with a landlord.

Valid reasons include a tenant who consistently does not pay rent, uses the property for illegal purposes, or puts their neighbours or landlord in danger.

The government also wants to make it clear tenants can’t be kicked out for requesting repairs, asking to have a pet or challenging a rent increase.

Premier Jacinta Allan is pushing to end no-fault evictions. Picture: Nadir Kinani

EVIDENCE REQUIRED

Landlords may soon be hit with financial penalties if they don’t provide evidence during disputes with tenants.

Landlords are already asked to provide evidence when making a claim against a tenant — such as covering the cost of damage to a property — in the Victorian Civil and Administrative Tribunal (VCAT).

But under the proposed changes they could be fined if they fail to do so.

Evidence includes photographs or receipts for repairs if a landlord is making a bond claim.

BANNING HIDDEN FEES

Some real estate agencies use third-party apps like Kolmeo and Alio for tenants to pay their rent.

These third-party apps can charge fees to process the rental payments.

The Allan government wants to ban tenants being charged any kind of fee to pay their rent, no matter what type of payment method is used.

Under the current legislation, tenants must have one fee-free way of paying their lease commitments available to them.

BACKGROUND CHECK COSTS AXED

Landlords are facing a further sting with a move to stop tenants being hit with the cost of running a background check.

At the moment, a real estate agency or landlord can pass the cost of a background check — looking up a tenant’s rental history on a residential tenancy database, for example — to the tenant.

They will no longer be able to do so under the government's proposed measure.

CAP ON FEES FOR BREAKING A LEASE

Tenancy laws state that if a tenant breaks their lease before the end of their agreement, they may have to cover some costs the landlord incurs, depending on their agreement.

For renters on a fixed-term agreement of more than five years, VCAT cannot require tenants to pay more than one month’s rent for every 12 months remaining on the agreement.

A tenant may also be asked to cover any costs that the landlord or agent has paid to readvertise the home.

Some agents charge landlords a fee to find a new tenant for their property which usually depends on how much of the agreement is left.

Under the proposed measures a tenant breaking their lease before the end of their agreement will only have to pay their landlord one week of rent for each of the remaining months, limited to a maximum of four weeks worth of total rent.

There will be caps on breaking a lease. Picture: Andrew Henshaw

LOST FOB FOR APARTMENT RENTERS

Landlords will soon be on the line to cover the cost of lost fobs.

Under this reform, if a tenant lives in an apartment complex and loses their fob to access the building, the state government will require the landlord provide a new one at no charge.

Landlords won’t be able to deny the request as well.

RENTAL DISPUTE RESOLUTION VICTORIA (RDRV)

The Rental Dispute Resolution Victoria (RDRV) was proposed in last year’s Housing Statement and is set to commence in mid-2025.

Sitting under VCAT, it will be a free public dispute resolution service to help mediate simple issues between landlords and tenants such as repairs, maintenance, damage, bond claims and rent increases.

The Allan government expects more than 60 per cent of disputes will be resolved through RDRV.

When will these changes take place?

These new reforms will be introduced into the Victorian parliament in stages over the next year, with legislation to ban unreasonable evictions set to start before the end of 2024.

Why is the government making the changes?

Minister for Consumer Affairs Gabrielle Williams said the government is working to create a more fair and respectful property market.

“By banning fees and charges on rental payments and applications, and cracking down on unfair bond claims, we’re putting more money back in the pockets of renters,” Ms Williams said.

Attorney-General Jaclyn Symes said the RDRV would provide faster, fairer and a cheaper avenue for dispute resolution, a critical step to ensuring everyone had access to safe and secure housing.

Premier Allan has declared she wants to be “the Premier who got Millennials into homes.”

“I consider that to be the fight of my life,” she said.

What do landlords and property managers say?

Unsurprisingly, landlords and property managers aren’t happy about the measures.

Metro Property Management director Leah Calnan said the government was taking a “really strange approach” to landlords particularly given property investors were already exiting the state.

“We’re seeing such low vacancy rates and endless lines of prospective tenants queuing for properties, why would a government want to make it harder?” Ms Calnan, a former Real Estate Institute of Victoria president, said.

In regards to the proposed cap on what a tenant owes if they break their lease, Ms Calnan said there was already an expectation in lease break situations that the property needed to be released within six weeks and that the tenant paid that amount in rent.

“I think reducing it to four weeks just emphasises the need to ensure that you’re mitigating any loss for both the owner and renter,” she said.

“But it does raise the question, what’s the point of even having a lease anymore if a renter can lease break and give four-weeks notice, yet an owner can’t get out of a tenancy without jumping through an enormous amount of legislation requirements?”

Metro Property Management director Leah Calnan. Picture: Supplied

Ms Calnan said she was also concerned about the removal of a landlord’s ability to be able to end tenancies after the first 12 months.

Property Investors Council of Australia chair Ben Kingsley said the latest reforms were another sign the Victorian government doesn’t want property investors and landlords in the state.

Mr Kingsley said while the reforms may be well meaning, they didn’t give investors confidence to invest or maintain their investment in the state.

“Investors are running a business and all they feel like is being pushed out of Victoria,” he said.

“We’ve already lost about 22,000 rental properties based on the bonds data. So how many more is enough?

“Less investment means less supply. Less supply means tighter rental accommodation, and ultimately higher rents and lower choice for renters.”

Property Investment Professionals of Australia chair Nicola McDougall said it “beggars belief” the Allan government had imposed further anti-investor policies given it was the least favourable state or territory for property investment already.

A landlord the Herald Sun spoke to said she felt like the deck was being stacked against property investors.

“VCAT should focus on upholding the law rather than acting as social justice advocates – this is driving people to sell and seek properties in states with fairer regulations,” she said.

What does the Real Estate Institute of Victoria think?

REIV chief executive Kelly Ryan said none of the latest six measures would support rental providers.

Victorian property investors had also been hit with a slew of changes around real estate, prompting them to sell up and invest in other states, Ms Ryan said.

“We certainly do advocate for renters having a safe, secure property … (but) the unintended consequences (of these measures) is if there’s less investors in the market, then there’s less properties,” she said.

“Most renters would prefer to be able to have a house that they can afford as opposed to not having access to potentially one at all.”

REIV chief executive Kelly Ryan. Picture: Supplied

Ms Ryan said the government must look at ways to improve investor confidence, a critical ingredient to boost rental supply and build a resilient rental ecosystem.

“At a time when Victoria needs greater rental supply, these announcements again target a market that has seen constant regulatory change,” she said.

“A good rental ecosystem depends on both rental providers and renters receiving mutual benefit.

“We urgently need the introduction of incentives that keep rental providers in the market and supplying homes, rather than more change. What we don’t need is more regulation that makes it harder to build investor confidence.”

What are renters saying?

Lobby groups representing renters have welcomed the changes.

Tenants Victoria chief Jennifer Beveridge said the reforms were part of paradigm shift towards renters’ having stronger rights.

“There is a growing acceptance of a community expectation that renters shouldn’t have to move all the time from rented home to rented home, and be able to choose how long they stay,” Ms Beveridge said.

“These reforms do not solve the issue of tight supply to help curb the rental crisis in Victoria, but they do help reduce the churn that affects so many renters who end up moving homes far too often.”

Better Renting executive director Joel Dignam said the headline reform of ending no-grounds terminations would, in practice, make tenants more confident about exercising their rights because they wouldn’t have to worry about being kicked out their rental without a reason.

Mr Dignam pushed back against the idea the reforms would see landlords sell up, saying it would be a “pretty crazy” to the changes.