By Jim Malo
Tom French received a 48 per cent rent increase from his corporate landlord, but that’s not why he’s upset.
He says the property manager didn’t inform tenants of all their options and attempted to evade Victoria’s ban on no-grounds evictions.
Tom French said the rent increase process felt coercive. Credit: Joe Armao
The allegations have raised concerns about the conduct of corporate landlords, a type of rental provider that could become more widespread in Australia following recent moves to bolster the build-to-rent sector.
Many residents of a block of apartments in Parkville, owned by Wentworth Capital through a chain of subsidiaries, have been notified of rent increases, with a statement that the landlord “will be issuing new fixed term agreements” and setting a date for when the “executed lease will come into effect”.
Tenants were given “two agreeable options” of a more expensive lease, fixed for 10 months, or another cheaper lease, fixed for four months, on the proviso that if a tenant took the latter, they must leave after the lease expires.
Both options would take effect two months after the tenant was notified, meaning they amount to six and 12 month terms. But the emailed notice did not use a formal notice to vacate form, which lists the allowable reasons for terminating a rental agreement.
French said he felt they were not informed of their rights, which include staying on their current month-to-month leases, which he said many tenants in the 175-unit building were on.
“I think a rent increase is reasonable, of course. Especially in our circumstance when we haven’t had a rent increase in two years,” he said. “I don’t yet feel hard done by, except the fact that this email was clearly trying not to give us all our legal options.
“I think they should tell us what all our options are. I don’t think they should tell us that we have to leave if we don’t have to leave. I don’t think they should pretend they can kick us out, when they can’t.”
Senior research fellow at the UNSW’s city futures research centre, Dr Chris Martin, said the landlord had no right to ask the tenants to leave the property at the end of the tenancy, and if it wanted to evict the tenants, it should do so by giving a valid reason under the Residential Tenancies Act.
French said he wanted all tenants to have been fully informed of their rights instead of being railroaded into agreements the landlord prefered. Credit: Joe Armao
These reasons include non-payment of rent, needing the premises for use for business purposes or damage to the property.
“What they shouldn’t be doing is bullying tenants into agreeing to give vacant possession and move out, which is what this tactic is doing,” he said. “What they’re doing is pretty disgraceful. If the landlord wants to increase the rent they can give a proper rent increase notice. That email in [and] of itself is not in the prescribed form.”
RMIT emeritus professor Michael Buxton said the tenants’ interpretation of the emails was correct.
“They say they’re rent reviews, but they’re giving them two options … And then they say at the end of the new lease you will provide vacant possession,” he said. “That notice is not just a rent review, they’re trying to get them out.
“That’s how I would interpret that.”
Better Renting executive director Joel Dignam agreed the emails were troubling.
“It’s less about the big rent increase but more about what feels like a dishonest way [to go] about getting a rent increase,” he said. “The communication we’ve seen misleads tenants about what their rights and options are.
“It seems deliberately designed to mislead renters about their rights in this situation.”
The apartments were purchased late last year from the Victorian government by a subsidiary of Wentworth Capital in a sale handled by JLL agents Josh Rutman, David Hill and Noral Wild. Building management rights have been transferred to UKO.
UKO and Wentworth Capital were contacted for comment. The fund did not respond, but UKO defended the landlord’s decision to offer the unorthodox lease because it thought the periodic leases and low COVID-era rents its tenants enjoyed were unusual.
“It was decided that the prescribed conditions within the Victorian legislation would not be fair to our tenants given the sensitivities and unique circumstances of each of them,” a spokeswoman said.
UKO said the landlord also offered tenants a third option to remain on a month-to-month lease, for which rents would be lifted to the “market rent”. But tenants dispute this was offered upfront, and emails seen by this masthead only offer the two choices.
French said tenants were told that those who did not take either of the two prescribed leases with weekly rents of $495 or $595 would have their rent raised even higher to the “market rate”, which UKO put at up to $625.
French and his partner asked to remain on their month-to-month lease and later received the correct rent increase notice with an increase to $595 per week, up from $400.
“They haven’t framed that as an option but as far as we know, we don’t have to sign a new lease,” he said. “It seems coercive the way that they’re doing it. They didn’t tell us what legal options we have. They didn’t tell us we can apply for a rent review. They didn’t send out the official form for a rent increase.”
Tenants who spoke with this masthead said management of the property was worse under the new owners, and sub-par maintenance work was being used to justify the rent increases and new leases.
“When the government owned the building they were pretty good landlords,” French said. “They didn’t seem to be in the business of making money off you. If we needed things fixed, they kind of got fixed.”
This masthead has spoken to two other tenants who had been sent similar emails to French.
It comes as many tenants face rising rents and a shortage of vacant rentals. Melbourne unit rents rose 23.1 per cent in the year to March, on Domain data.
Corporate landlords could soon be a larger presence in the Australian rental market. More build-to-rent towers could be on the way given incentives announced in this month’s federal budget.
Martin and Dignam said the fracas in Parkville showed corporate landlords may not help ease the tensions between landlords and tenants.
“Being a big operator doesn’t guarantee professionalism, and they will still need close scrutiny,” Martin said.
Buxton said the landlord was within its rights to extract as much return on its investment under current policy settings, but warned the advent of build-to-rent and corporate landlordism would be a “disaster” unless closely regulated.
“They just do not want to regulate,” he said. “The government’s going to have to change its mind. It’s going to have to regulate in certain ways to ensure the build-to-rent model isn’t perverted like this seems to be.“