The Residential Tenancies Act 1997 (Vic) sets out the rights and duties of landlords and tenants, including the residents of caravan parks and rooming houses. Strict limits are set on bonds. Landlords’ rights of entry are limited by law. Tenants can be evicted only by legal process, but being in arrears on rent can result in a 14-day Notice to Vacate.

When a property is sold, a 60-day notice must be given. Tenants must give 28 days notice to vacate. VCAT can rule on all tenancy disputes, but appeals to VCAT rulings are complex and may be uneconomic.

Contributor

Ben Cording

Principal Solicitor, Tenants Victoria

Starting a tenancy

Last updated

30 October 2020

Residential tenancy agreements

A residential tenancy agreement may be written or verbal. If an agreement has the character of a residential tenancy agreement, it is considered to be such an agreement, even if it is called something else (e.g. a licence or a commercial tenancy).

Terms of the tenancy agreement

If a tenancy agreement is in writing, it must be in the prescribed standard form. The RT Act provides that a term of a tenancy agreement is invalid if it purports to exclude, restrict or modify or purports to have the effect of excluding, restricting or modifying the application of the Act (s 27(1)).

While the RT Act is the main source of rights and duties for landlords and tenants, the parties are able to agree to bind themselves to additional rights and duties in the terms of the tenancy agreement. However, if there is a conflict between the tenancy agreement and the RT Act, the RT Act will prevail.

Under the RT Act (s 28), a tenant can apply to VCAT for an order declaring invalid, or varying, a term of a tenancy agreement that is harsh or unconscionable.

Where the rental property is part of an owners corporation, tenants must also be given a copy of the owner’s corporations rules by their landlord (s 136 Owners Corporations Act 2006 (Vic)).

Implied agreement

In some cases, an agreement may be implied and deemed (i.e. regarded as legally binding) when a party to the agreement acts in a manner consistent with the existence of an agreement. For instance, a landlord letting a tenant take possession of the premises or a tenant taking possession of the premises might be acts sufficient to imply the existence of an agreement between the parties. Possession can mean anything from moving in to taking possession of the key; the meaning of possession depends on the circumstances.

Depending on the finding of fact, the tenant or landlord may then be compelled by VCAT to fulfil obligations under the agreement. They may also be held liable for compensation for any losses suffered by the other party.

Fixed-term and periodic agreements

A fixed-term tenancy agreement specifies the length of time the lease will run (usually 6 or 12months). Fixed-term agreements are usually in writing, although it is possible for an agreement to be oral.

Any tenancy agreement that does not specify a fixed term is a periodic tenancy agreement (s 3). A periodic agreement does not have a fixed term but continues from one period to the next, usually month to month, although it may also be fortnightly or weekly.

At the expiration of the fixed term, if neither party gives notice to end the agreement, the tenancy continues on a periodic basis (s 230). The periodic agreement remains on the same terms as the original fixed-term agreement, unless varied by the parties.

Long-term tenancies

Since 3 April 2019, the RT Act has allowed tenancies for more than five years. There are now two prescribed standard form tenancy types and three categories of tenancy:

  1. A Form 1 tenancy for less than five years (s 26(1));
  2. A Form 1 tenancy for five years or more (s 26(1A)(b)(i));
  3. A Form 2 tenancy, which must be for five years or more (s 26(1A)(b)(ii)).

Forms 1 and 2 are available on the Consumer Affairs Victoria website (www.consumer.vic.gov.au). It is important that prospective tenants read the relevant form thoroughly before entering into a tenancy.

Form 2 must be used for tenancies longer than five years for the rights and duties associated with section 26(1A)(b)(ii) of the RT Act to apply.

A Form 2 tenancy is significantly different from a Form 1 tenancy. For example, a Form 2 tenancy agreement includes fixed rent increases, bond top ups between fixed-term periods (s 34A, B), more detailed arrangements for modifications, a greater latitude of terms (s 27A) and, most notably, a greater range of compliance orders in relation to the lease agreement (s 209AA). Also, Form 2 tenants will be protected by a list of proscribed terms (s 26A) – at the time of writing (1 July 2019), these terms are yet to be drafted.

It is strongly recommended that any parties obtain legal advice before entering into a Form 2 long-term tenancy (see Chapter 2.4: Legal services that can help).

This chapter does not extensively cover Form 2 tenancies or when tenancies under section 26(1A)(b)(i) are specifically regulated.

Sub-letting

Subletting is when a tenant grants exclusive possession of all or part of the premises to another person. The original tenant remains a tenant, and effectively becomes the landlord of the sub-tenant.

The RT Act states that a tenant must not assign or sub-let the whole or any part of rented premises without the landlord’s written consent. Any assignment or sub-letting that is done without the landlord’s consent is invalid and unenforceable (s 81). Generally, consent cannot be retrospectively obtained. If the tenant has or tries to assign or sub-let the premises by giving exclusive possession without the landlord’s consent, the landlord can give the tenant a 14-day Notice to Vacate (s 253) (see ‘14-day Notice to Vacate’, below).

This is a complex area of law, and tenants who receive a Notice to Vacate on these grounds should seek legal advice. 

While there are no definitive indications to distinguish a lease and license, the act of hosting, providing services and dominion are substantive indicators against granting a lease. However, each decision is made in consideration of its particular circumstances. See also Janusauskas v Director of Housing [2014] VSC650 (17December 2014) and Swan v Uecker [2016] VSC313 (10June 2016).

Assignment

Assignment differs from subletting. Assignment is when a tenant transfers their interest from themselves to another. The original tenant does not remain a tenant.

Parties being assigned a tenancy should exercise caution, as they may inherit the liabilities (debts) of pre-existing tenants. Similarly, exiting tenants may still be pursued by the landlord or tenants assigned into the property. The latter may seek to be indemnified for losses they have suffered in relation to the land. The relationship between tenants is treated as a private civil matter and will not be heard by VCAT.

A landlord cannot unreasonably withhold their consent to the assignment or sub-letting of a tenancy (s 81). If the tenant believes that the landlord has unreasonably refused to consent, the tenant may apply to VCAT for an order that the landlord’s consent is not required (s 82).

The landlord must not demand a fee for their consent or refuse to consent because the tenant has refused to pay a fee. If the tenant does pay such a fee, they can apply to VCAT for an order that the landlord refund the fee (see Jupp v Chambers (Residential Tenancies) [2010] VCAT36 (15January 2010)).

While the RT Act only requires the landlord’s written consent, the Residential Tenancies Bond Authority’s (RTBA) tenant transfer form requires the consent of all existing and proposed tenants and the landlord. Parties should not vacate and allow a proposed tenant to take over the property until they are certain the assignment has been processed, and the bond transferred. If there is delay by a landlord, they may wish to apply to VCAT pursuant to section 82.

Usually, no money is released from the bond held by the RTBA for assignments. Rather, pre-existing tenants are paid out their proportion of the bond, in exchange for the outgoing tenant transferring their interest in the bond either to the existing parties, or the income tenant. It is advisable to consider a written agreement between incoming and outgoing tenants about the bond.

When the landlord is the Office of Housing, the Director may withhold consent to any assignment or sub-letting on the grounds that the assignment or sub-letting would disadvantage people on public housing waiting lists (s 83).

Assignment under a Form 2 long-term tenancy agreement

Unlike a standard lease, under clause 14(3) of Form 2, if a request for assignment or subletting is made in writing and the landlord does not respond within 30 days of the request, the landlord’s consent is deemed to have been provided. Caution is still advised given the consequences of a failed assignment or sublet.

Fees, costs and charges

Costs of preparing the tenancy agreement

A landlord cannot make the tenant pay any fees, costs or charges associated with the preparation of the tenancy agreement (s 27(4)).

Application and holding deposits

If the landlord or agent receives a payment from a tenant in relation to a proposed tenancy agreement as a sign of good faith, the landlord or agent must refund this payment:

  • when the tenancy agreement is entered into, if this occurs no later than 14days after the payment was received; or
  • on the next business day after the 14days, if the tenancy agreement is not entered into.

Tenants who pay money before signing an agreement should make notes or correspondence to confirm that this money is a holding deposit.

Commissions and inspection charges

The landlord, or agent, is not entitled to ask for or receive from a tenant a payment that is a premium, bonus, commission or key money in relation to the making, continuation or renewal of a tenancy agreement (s 51(1)).

The landlord, or agent, is not entitled to ask for or receive from a tenant under a proposed tenancy agreement a charge in relation to the inspection of the premises (s 51(2)). It is generally accepted that a request for a tenant to provide a deposit to ensure the return of keys used for the purpose of inspection does not breach this provision.

Rent cards and direct debit facilities

The landlord or agent is not entitled to charge the tenant for the first issue of a rent payment card, or the establishment or use of direct debit facilities (s 51(3)). This means that a tenant cannot be charged for using a direct debit facility. Further, a tenant cannot be forced into signing up to a specific contract that requires a fee to be paid, unless other means of payment are provided.

Even where a new real estate agency has taken over management, of a property, a landlord or real estate agent cannot unilaterally change the terms of a tenancy agreement to require the tenant to use a particular method of payment.

Assignment fees

While a landlord must not demand or receive a fee for consenting to an assignment, the RT Act does not prevent a landlord from requiring the tenant to bear any fees, costs or charges incurred by the landlord in connection with the preparation of a written assignment of a tenancy agreement (s 84(3)). This is usually referred to an ‘assignment fee’.

Usually, an assignment is done using the prescribed tenant transfer form available from the RTBA (see ‘Contacts’ at the end of this chapter). It is therefore arguable, that there is little or no preparation of a written assignment of a tenancy. Parties seeking to challenge unreasonable fees in connection with the preparation of a written assignment may apply to VCAT be compensated (s 84(2)). As a rough and non-legal estimate, assignments should not exceed around $110 (GST inclusive).

Bonds

Overview

A tenant is required to pay a bond only if this is required by the agreement between the parties. A bond must be lodged with the RTBA. Once lodged, a bond can only be released with the tenant’s consent, or by order from VCAT. Landlords and real estate agents cannot deduct money from bonds without the tenant’s agreement.

A person must not demand/accept a bond greater than the amount of one month’s rent when the weekly rent does not exceed $350 (s 31). The landlord may apply to VCAT for an order increasing the amount of bond that may be charged (ss 32, 33). There is no restriction on the amount of bond where the rent exceeds $350 per week.

A person must not demand or accept more than one bond for the continuous occupation of premises. However, if rent exceeds $350 perweek and a tenant and landlord enter a new tenancy agreement for the same premises, then an additional bond may be sought by the landlord (s 34).

The tenancy agreement should set out the date by which the payment of the bond is required. Tenants who are occupying a premises, but who have not paid the bond in accordance with the agreement, may be given a 14-day Notice to Vacate(see ‘14-day Notice to Vacate’, below).

At the time the bond is paid, the landlord must complete and sign a bond lodgment form (s 405). The form must state if the Office of Housing has paid the bond on behalf of the tenant. The landlord must give the tenant a copy of the signed form for the tenant to sign. Failure to do so is an offence. Once the tenant has signed the form, the landlord must give them a copy. Failure to do so is an offence. 

Tenants should never sign a blank bond lodgment form or bond claim form, as this allows unscrupulous landlords to provide false or misleading information to the RTBA. The landlord then has 10business days to lodge the bond and the completed form with the RTBA. Failure to do so is an offence (s 406).

The RTBA has sevendays after it receives the bond to give a receipt to the landlord, tenant and Office of Housing (if applicable) (s 407). If the receipt has not been received within 15days of paying the bond, the tenant should contact the RTBA (see‘Contacts’ at the end of this chapter).

It is an offence for a tenant to refuse to pay rent on the grounds that they intend to use the bond money as rent (s 428).

If the landlord fails to lodge the bond, even after the tenant has notified the RTBA, the tenant should apply to VCAT for an order compelling the landlord to lodge the bond. The tenant should also refer the matter to CAV (see‘Contacts’ at the end of this chapter).

Long-term tenancy bonds

If a tenancy is longer than five years and rent is $760 a month or less, then the bond cannot exceed one month’s rent (ss 31, 34(1)(a)(ii) RT Act; reg 9 Residential Tenancies Regulations 2019 (Vic)). However, if the lease is a long-term lease under section 26(1A)(b)(ii) of the RT Act, a further bond can be sought if the rent is increased to above the $760 threshold (ss 34(2), 34A).

Subsequent bonds or bond top ups during a section 26(1A)(b)(ii) lease are dealt with in clause 3 of Form 2. Tenants must be given 120 days’ notice of a bond top up; the notice must be in the prescribed form. A landlord cannot demand a bond top up for the first five years of the tenancy and the future lease must have an unexpired fixed-term period of at least five years. Additional bonds must be lodged with the RTBA.

Tenants who believe the bond top up amount is excessive, or who wish to otherwise challenge the bond increase, can apply to VCAT. VCAT can make any order it considers to be appropriate if it is satisfied that not intervening would cause severe hardship to the tenant. In making an order, VCAT can consider the financial circumstances of both the tenant and the landlord, the condition of the premises, and whether either party has breached any terms of the agreement.

Specialist disability accommodation residents

SDA residents are prohibited from paying a bond (s 498ZL(1) RT Act).

Condition report

A condition report that is signed by the landlord and tenant is conclusive evidence of the state of repair of the property, except for problems that could not have reasonably been discovered on inspection (e.g. the roof leaks when it rains (s 36)). At the end of the tenancy, the condition report helps determine liability if there is any dispute about damage or cleaning.

If the tenant pays a bond, the landlord must give the tenant twocopies of a completed and signed condition report before the tenant occupies the premises (s 35(1) RT Act). Within three business days of moving in, the tenant must return one signed copy of the condition report to the landlord.

Tenants should make a thorough inspection of the property before they move in and note any problems (e.g. carpet stains) in detail on both copies of the report. If there is not enough room on the report to record all disagreements, the tenant may write ‘see attached’ in the appropriate section and attach a separate sheet.

Tenants should pay special attention to the walls, floors, and bench tops as these are items commonly disputed. Tenants may also wish video of testing items such as heaters, cooking elements or other mechanical services as these items are also frequently disputed. While not required by the RT Act, the tenant may also wish to attach copies of their own photos to the condition report.

If the landlord fails to provide a condition report at the start of the tenancy, the tenant should still record their observations of the condition of the premises. It is strongly recommended that tenants take photographs of all parts of the property at the start and termination of the lease.

Tenancy databases

Being listed on a tenancy database can prevent a person from obtaining private rental accommodation. The RT Act regulates:

  • when a person may be listed in a database;
  • when a listing must be removed;
  • requirements prior to listing; and
  • applications to VCAT regarding a listing.

When a listing may be made

Personal information must not be listed on a database unless two conditions are satisfied:

  1. the person was named as a tenant in a tenancy agreement that has ended; the person breached the tenancy agreement or certain provisions of the RT Act; and the person owes the landlord an amount that is more than the bond or a possession order was made for specific reasons; and
  2. the person has been given a copy of the information; has been given 14days to consider the information and object to it; and any objections have been considered.

Even if these conditions are satisfied, the listing must be accurate, complete, unambiguous and relate only to the breach. A listing can remain on a database for only threeyears.

Notification requirements

When a person applies for a rental property and the landlord uses a tenant database, the landlord must provide written notice of the database operator’s contact details. If the applicant is listed on the database, the landlord must provide written notice of the listing and how it may be amended or removed.

Before making a listing, the landlord must give the person a copy of the information, allow 14days for the person to consider the information and object to it, and consideration of any objections.

Checking and amending a listing

If a person makes a written request for information relating to them on a database, the operator must provide the information within 14days. A fee may be charged, but it must not be excessive.

If a landlord becomes aware that information they have listed is inaccurate, incomplete, ambiguous or out of date, the landlord must give written notice to the database operator to amend or remove the listing. The database operator must amend or remove the listing within 14days.

A listing must be removed if:

  • it arises from a debt which was paid within three months of falling due; or
  • it arises from a possession order that has been revoked on an application for review.

Applying to VCAT about a listing

A person may apply to VCAT for an order removing or amending a listing (s 439L RT Act) on the following grounds:

  1. non-compliance with notification requirements;
  2. the matter is not a matter permitted to be listed;
  3. the listing is inaccurate, incomplete, ambiguous or out of date.

For more information, contact Tenants Victoria (see‘Contacts’ at the end of this chapter).

Privacy laws

Tenant databases are subject to the Australian Privacy Principles in the following ways:

  • tenants have a right to access data held about them;
  • any data held must be complete, accurate and up-to-date; and
  • tenants must consent to information being passed on to third parties for ‘secondary purposes’.

An agent may ask a tenant to sign a consent form to release their personal information to third parties, including database companies. 

Alternatively, agents may think that they don’t need the tenants’ consent to pass on information to databases because looking at a tenant’s history to assess risk could be seen as a primary, not a secondary purpose.

Compliance processes

Protection under the Privacy Act 1988 (Cth) is only effective if people make complaints when their privacy is breached. Tenants who think their personal information is being misused should contact the Australian Information Commissioner (see ‘Contacts’ at the end of this chapter). 

Complaints should be made in writing. To make a complaint, visit the ‘How do I make a complaint?’ page of the commissioner’s website, or call the enquiries line.

Landlord’s duty to provide information

If the landlord has no agent they must, on or before the day the tenant takes occupation, give the tenant:

  • written notice of their full name and address for service of documents; and
  • an emergency telephone number to be used in case of urgent repairs.

Failure to do so is an offence (s 66(2) RT Act).

If the landlord has an agent acting for them, the landlord must give the tenant:

  • written notice of the agent’s full name, address and phone and fax numbers;
  • a written statement as to whether the agent can authorise urgent repairs and the maximum cost of urgent repairs they may authorise; and
  • the phone or fax number for urgent repairs.
  • Failure to do so is an offence (s 66(3)). If this information changes, the landlord must notify the tenant within seven days. Failure to do so is an offence (s 66(4)).

Statement of rights and duties

The landlord must give the tenant CAV’s written statement of the rights and duties of landlords and tenants (s 66(1) RT Act). This may be sent electronically if the tenant has consented.

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