The Victorian Government recently updated the Residential Tenancies Act due to the high number of rental properties not meeting the minimum living standards.
The new legislation aims to bring all rented residential properties up to meet new minimum living standards, compliance will be mandatory. The start date for the new legislation is currently under review due to COVID-19 complications but will be on or before April 27th 2021.
For Real Estate Agents, the new legislation puts more pressure on property managers to stay ahead of the changes and ensure their entire rent roll is compliant with the new standards and ongoing maintenance requirements..
The changes are now required by law, and non-compliance will attract heavy fines, public blacklisting on the Consumer Affairs website and the very real possibility of insurance policies being voided in the event of damage, injury or death. These penalties not only apply to the property owner, but to the managing agency as well.
What this means is, if your rent roll is not 100% compliant by the as yet to be confirmed start date, it will instantly devalue due to the inherent risk of managing non-compliant properties.
What you need to do now
Ensuring your entire rent roll is compliant will take time so getting ahead of the game now will make life easier further down the road.
1. Understand what the new legislation means and what the new minimum standards are - There are 130 points to meet, with requirements around mandatory new safety standards of particular interest to keep insurance policies valid. Read more about all the new requirements here.
2. Put a communication plan in place to ensure all property owners are fully informed of the changes and understand why they must act. Many property managers are anticipating push back from property owners around the assessments and compliance measures they will have to take. Because the changes also expose your agency to risk, it is partly your responsibility to ensure property owners are well educated on the topic. Make sure they are fully aware the changes are mandatory, there are severe penalties and this new legislation is now part of owning and renting a residential property in Victoria.
3. Create a policy within your own Agency so you know what to do about non-compliant properties. There may be situations where you will need to let go of property owners who refuse to comply with the new legislation.
4 Set up an automated system for ongoing compliance to reduce future work and the risk of your rent roll falling below 100% compliance. Many of the changes do require ongoing maintenance so finding companies who are able to service your properties under management will make life easier for the property managers and the property owners.
Property Compliance Victoria says the key to getting all the properties on your rent roll up to the standards is to communicate with your property owners as soon as possible and to make it as easy as possible for them to get the assessments done and make any changes needed.
For Agencies looking to either purchase or sell all or part of a rent roll in the next few months, valuers will be starting to look at your current level of compliance as this will impact your valuation. A low rate of compliance will mean a lot of work in the short term to have the properties assessed and certified, whereas a rent roll with close to 100% compliance will present significantly more value to the buyer.
Of course this can work both ways; an agency who is prepared and ready to help property owners reach the new standards can potentially snap up a bargain roll of un-assessed properties.
For more information we recommend you contact Property Compliance Victoria
BDH Solutions are rent-roll agents with over 30 years experience in connecting the right vendor with the right purchaser. Download our information booklet on the new Victorian Minimum Living Standards Legislation