These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.

The Victorian State government recently announced changes to residential tenancy laws that will inevitably limit property investment and drive up rents.

Some of the changes bring Victoria into line with laws already in place in Western Australia such as limiting the amount of Bond payable to four weeks’ rent but some of the other provisions seriously erode the rights of the property owner.

If the laws make it through the Victorian parliament unaltered property owners will no longer have the right to end the tenancy upon finalisation of the lease without giving a legitimate reason. Nor will agents acting for landlords be able to suggest that a tenant may need to offer more than the advertised rent to secure a lease. There’s also plans to introduce a “blacklist” for landlords and agents who breach any tenancy laws.

Other changes include the requirement for property owners to pre-warn tenants if they are intending to sell the property during the lease, allow a tenant to make “reasonable modifications” to the property and keep a pet without the permission of the owner.

Tenants will also be able to have their bond automatically returned in full within fourteen days after the end of the lease unless the landlord objects. And any rent increases will only be able to occur every twelve month period.

Reading through the list of proposed changes, it is evident that the Victorian government is reacting to a market that is in short supply and high demand, where vacancy rates are low and tenants compete to secure a home for a reasonable rent. Changing laws in these conditions is risky because it fails to take into account contrasting market conditions such as those recently experienced in Perth where property owners not only had to slash rents to secure a tenant, they faced months of vacancy and mounting financial strain.

The proposed laws go way too far in favouring tenants and seriously erode the rights of property owners. By effectively taking away the landlord’s right to choose their tenant on reasonable terms resembles a government housing policy by proxy and distorts a naturally occurring cyclical market.

Private investors, most of them “mum and dad” types provide about 80 per cent of rental housing in Australia. In Victoria, with the pendulum of fairness swinging in favour of tenants at the expense of the people who carry all the risk and cost of property ownership, it will be left to government to provide more housing as investors turn to alternate vehicles of wealth creation such as shares, managed funds and superannuation. Rents will inevitably rise as housing supply falls.

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