The Law Handbook 2024

498 Section 6: Houses, communities and the road fixed term (or other options) but were not aware of their lawful options. The renter should be as co-operative as possible with the rental provider’s or agent’s attempts to find new renters. For example, undertaking additional advertising and co-operating with inspections by prospective renters will help to minimise the rental provider’s loss for which the renter may be liable. The renter should also apply to have their bond returned as soon as possible after the termination of their rental agreement. While it is unlikely that the rental provider will agree unless the renter agrees to pay lease-breaking costs, a renter can make application to VCAT or claims to the RTBA without the rental provider’s consent (see ‘Recovering bond money’, below). Renters may also claim compensation where the rental provider has, by an act or omission, caused a rental agreement to terminate during the fixed term. Such examples include mortgage default, or letting of premises that are not zoned for residential use, and being required to leave (see ‘Compensation claims’, below). Breaking a Form 2 long-term rental agreement Renters who want to get out of a long-term rental agreement should apply for a reduction of the fixed term (see below), rather than breaking the lease. Clause 16 of Form 2 provides that a rental provider is entitled to ask for one month’s rent for every full year remaining on the rental agreement. If VCAT is determining a compensation claim for breaking a rental agreement for a fixed term of more than five years, it must only award compensation of one month’s rent for every full year remaining on the rental agreement (s 211A(4) RT Act). Hardship application for reduction or termination of a fixed-term agreement A renter with a fixed-term tenancy agreement may apply to VCAT for an order reducing or terminating the agreement because of hardship (s 91U RT Act). An application of this type may be useful for a person who has lost their job, or who needs to relocate for work or to care for a family member. These applications can be used for any reasons where there is an unforeseen hardship, and it would cause the renter severe hardship if they had to continue in the rental agreement. Applications are made using the general application form on VCAT’s website (www.vcat.vic.gov.au) . The renter may apply under section 91U of the RT Act only while they remain in possession of the premises. Once the renter has given up possession of the premises, the rental agreement is terminated and therefore cannot be varied or reduced. Thus, it is critical – if a renter intends on making such an application – that they keep the keys until the hearing is determined. If the reduction is granted, they should return the keys on the day that the tenancy is to end, according to the order. VCAT may only reduce the term of an agreement – and make any necessary variations or terminate a fixed-term rental agreement – if it is satisfied that: • there has been an unforeseen change in the applicant’s circumstances; • the applicant would suffer severe hardship if the term was not reduced or the agreement was not terminated; and • the applicant’s hardship would be greater than the hardship suffered by the other party if the term was reduced or the agreement terminated (s 91U(2) RT Act). VCAT may determine what compensation, if any, should be paid to the rental provider due to the reduction of the fixed term or the termination of the agreement (s 91U RT Act). In some cases, VCAT may award compensation equivalent to the renter’s liability for lease-breaking costs. However, in many cases, the amount of compensation is relatively low compared to a standard lease break. When determining the compensation payable, VCAT must consider any severe hardship the renter would have been expected to suffer due to an unforeseen change in circumstances, if the rental agreement had continued (s 211A(3)(c)). The renter should present an argument that they should not pay compensation or they should pay minimal compensation due to the hardship. Renters affected by personal or family violence where the person who committed the violence is not on the rental agreement should consider a section 91U application. A final intervention order or an interim intervention order is not necessary for the application to be successful. However, VCAT will need to be convinced of the circumstances relating to the hardship. Consideration