Victoria announces long-term leases to protect renters, scepticism abounds

Victoria announces long-term leases to protect renters, scepticism abounds
Victoria announces long-term leases to protect renters, scepticism abounds

The Victoria government recently announced new renting laws enabling long-term residential leases for more than five years which it says will help renters “lay down roots” and give investors a steady source of income.

The new optional form agreement will be developed this year and made available in 2018, the government said in a news release.

But landlords and industry players are already sceptical.

Property mangers say landlords are unlikely to offer leases more than five years because personal circumstances are likely to change given such a long period, such as financial difficulties, job relocations or other family matters.

Even the Tenants Union of Victoria, which welcomed the changes, said longer-term leases may not be the best answer for more security for the growing cohort of Melbourne renters, according to a post in www.domain.com.au.

The changes are part of the Residential Tenancies Act 1997 (RTA) and will include an online matching service for landlords and tenants who want to enter into long leases.

The government says families are the “most common renters in Victoria and there are many who are interested in a long-term lease to be able to lay down roots – to find a local job, enrol their kids in school and establish themselves in a community”.

The government said it is part of its Homes for Victorians housing strategy and supports the government’s Plan for Fairer, Safer Housing.

It says long leases will also benefit investors as they will have a steady source of income.

Long-term leases have formed part of broader consultation during the review of the RTA, which began in mid-2015 and still going on. The government has provided funding of $1.25 million over four years to support these changes. 

However, the Real Estate Institute of Victoria, which is working with the government on its tenancy review, said though it supported the change but it was unclear why the decision was taken in the middle of an ongoing consultation process.

REIV chief executive Gil King was quoted by Domain as saying it was more broadly concerned with how other parts of the review may drive up rents and force landlords to exit the market.

Yaelle Caspi, policy officer at the Tenants Union of Victoria, said the best way to improve security for renters would be to repeal no-reason eviction notices and provide increased protections from unfair and unnecessary evictions.

“We know that tenants want more security, but that doesn’t necessarily mean longer fixed-term leases,” she said.

Also, fairer processes for rent increases and limits on lease breaking costs was needed, added Caspi.

Nelson Alexander Ivanhoe’s Jason Pettit said demand for leases of more than five years would be extremely slim. It was difficult for landlords and tenants to know what their circumstances would be in 12 months, let alone five years, he said.

“If either parties locked themselves in for a period of that length, it could get them into more trouble than it’s worth,” Pettit.

“I’ve had tenants request leases for two or three years on occasion – more often than not, the landlords refused and preferred to just do the 12 months with recurring renewals.

“You can get relationship breakdowns, financial difficulties, job relocations and family matters – there’s so many different variables outside of just living in a property that could cause a move.

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Victoria Property Management

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