Is it better to allow renter choice between different properties and the standard of amenity or services that they provide? Or should we have government impose standards that renters ulitimately pay for? I think we all know the answer. But where do you draw the line between basic amenities or saftey standards and things that are more of a personal preference with a price trade off?
The minimum standard a rental property needs to meet in Victoria is being updated again this week and there are more changes set for March 2027.
The intention behind minimum standards is perfectly reasonable. In the past, some properties were not up to scratch and an owner may have refused to repair them. This left some rental property unsafe and well below an acceptable standard.
A rental property must be safe. It needs to have the basics like compliant plumbing, electricals, hot water, a functioning toilet, secure doors and windows plus the other normal facilities.
The current minimum standards however go beyond the basics and into environmental standards and comfort level preferences.
So what if the current prescribed minimum standard were split into two groups.
- Basic safety and livability standards that a property must meet.
- Features based on personal preference and environmental standards that were disclosed but not compulsory.
The first group would be not negotiable and must be provided.
The second group would be fully disclosed in the current disclosure statement that is already provided to a renter. The renter could then decide with full knowledge if they wanted to rent that property or not.
The current enforced minimum standards incur costs which get passed onto the tenant. In a market where cost of living is high and housing is tight, some tenants may prefer to pay a bit less and not have an anchored blind cord or an energy star rated heater or block out blinds in the loungeroom.
Property managers are already required to provide a disclosure statement to new renters (on behalf of the owner). It would be very simple to add a check list to that disclosure statement with the “nice to have” items that fit into environmental or comfort levels. Then with full knowledge of a property’s features and price (rent) a tenant can choose.
We can tell a renter clearly what the property has and what it doesn’t have.
- Energy-efficient heating: yes
- Fixed cooling: no
- Ceiling insulation: no
- Blockout blinds: yes
- Draughtproofing: partial
The renter then makes an informed decision.
This week’s updates cover more operational issues rather than hard property issues and are more work for the property managers. They include:
- A tighter bond claim process
- Detailed record keeping of compliance standards
- A ban on charging application or rent payment fees to tenants and
- Gas and electrical safety checks for all property (not just ones leasee from March 2021)
From March 2027, another series of minimum energy efficiency standards will be phased in covering heating, cooling, hot water, showerheads, ceiling insulation and draughtproofing.
Somewhere along the way, we seem to have moved from setting a minimum standard for basic safety and habitability, to increasingly prescribing the standard of living, comfort and environmental standard that every renter must have and therefore needs to pay for.
Let’s hand back the choice of living standards to tenants and strip the costs out of the system.
Sometimes that cost of compliance might only be a few hundred dollars. Sometimes it will be many thousands. This is on top of other rising costs like land tax, owners corporation fees, repairs and maintenance, utility rates and interest rates.
Ultimately someone has to pay. The landlord may absorb it initially, but the rent needs to increase over time to keep the investment working.
Otherwise the owner may decide the increasing cost and complexity of owning a rental property is no longer worthwhile and sell. As we know this reduces the supply of rental housing and pushes rents up further.
At a time when Victoria needs more housing we should make rental accommodation easier and cheaper. We can help this by simply giving people the information and allowing them to decide for themselves.
