In Victoria, Australia, rental property owners and managing agencies have been given until the end of March to ensure rental properties are compliant with the latest renter legislation update. 

Rental tenancy legislation in Victoria: what’s changed?

The latest requirement involves a migration to use modern-style electrical switchboards, which have circuit breakers and electrical safety switches included. 

The upgrade requires the help of a licensed electrician and a certificate to prove the work has been done. The cost of installing a new, modern switchboard is up to $1,500, and it will be compulsory to have one by 29 March this year. 

This initiative is all about safety and preventing potential electrical fires, although some critics have questioned why it’s not compulsory for all homes, not just every rental property. 

Website news.com.au recently reported that one in five rental properties in Victoria was not up to electrical switchboard standard when the new legislation was announced. Instead of a modern switchboard, they had something more like a panel and fuse board or a federal fuse board. This led to thousands of landlords spending millions of dollars to upgrade their investment properties. 

If someone is about to move into a rental property, from 29 March, it will be required by law for the home to be compliant with the new regulation before they do so. 

Penalties for non-compliance

If a rental property does not meet the minimum standards of cleanliness, security and privacy, a renter has the right to end their lease agreement before they move in. If they are already in the home and the switchboard is outdated, they can request an urgent repair, which must be done immediately.

While there isn’t a body responsible for auditing rental properties, renters can apply to VCAT if nobody responds to the request for repair, which will bring the home to the attention of authorising bodies. 

The formal consequences of not being compliant with the new residential tenancy legislation include: 

• being named and shamed on a public register/rental provider database, which lists providers who have breached their duty under the Residential Tenancies Act 1997

• monetary fines.

It’s also worth noting non-compliant properties will significantly affect the value of a rent roll. 

Because it cannot be legally rented, a non-compliant rental home doesn’t count as property. So if you try to sell a rent roll, non-compliant properties cannot contribute to the valuation.

In a rent roll sale, the vendor must confirm all properties are compliant. The valuer and bank will do their due diligence to double check this is the case before a sale is finalised. 

The impact of non-compliant properties flows on to things like bank loans as well. If an agency applies for a loan, the bank can only consider compliant properties as ‘assets’ within the business.

Extra work for property managers

The updated rental tenancy legislations which have been gradually introduced since early 2021 have put property managers and rental property providers under a lot of pressure. 

For investors, there has been no choice but to put money towards upgrades on things like security locks, heaters and now electrical switchboards. 

Over the past two or three years, property managers have faced the additional workload of keeping their investor clients informed, working with renters to gain access to properties so upgrades can be made, and finding providers to get the work done. This has added to their costs as well as their to-do lists. 

Property managers now face the decision of dropping non-compliant properties from their rent roll, even if it means losing revenue. If rental property owners are being difficult, it may be necessary to do this, but doing so will leave room for more agreeable and compliant clients whose properties will lift the overall value of the rent roll.