Victoria's COVID-19 Omnibus (Emergency Measures) Act 2020 - residential tenancies

In brief - on 24 April 2020 Victoria introduced the COVID-19 Omnibus (Emergency Measures) Act 2020 (Act) which temporarily amends the Residential Tenancies Act 1997 (Vic) (RT Act) from 29 March 2020

It empowers the making of regulations in respect of residential tenancies to appropriately respond to the COVID-19 pandemic. The temporary provisions will be repealed (cease to have effect) in 6 months

What do the amendments cover?

The Act inserts Part 16 – COVID-19 temporary measures into the RT Act which outlines the temporary provisions to apply for tenancy agreements, residency rights in rooming houses, residency rights in caravan parks, site agreements and SDA residency agreements during the COVID-19 pandemic. 

The Act establishes the office and function of the chief dispute resolution officer (CDR officer) and empowers further regulations to be made under the RT Act .

The Act also brings forward amendments from the Residential Tenancies Amendment Act 2018 (Vic), inserting new family violence provisions. It outlines the circumstances under which applications and orders can be made regarding termination of a tenancy agreement or the entering into of a new tenancy agreement because of family violence or personal violence. 

What is a COVID-19 reason?

The Act defines when a person is considered unable to comply with, or it is not reasonably practicable for a person to comply, with a term, provision or obligation because of a COVID-19 reason if (COVID-19 reason):

(a) the person is ill (whether or not the illness is COVID-19);

(b) the person is unable to comply with, or it is not reasonably practicable for the person to comply with, the term, provision or obligation as a result of the person's compliance with powers of chief health officer and other state government powers (or authorised person), or a recommendation that is publicly announced by the state or made by the chief health officer in relation to the pandemic;

(c) the person is unable to comply without suffering severe hardship; or

(d) the person is unable to comply as a result of exceptional circumstances in relation to the COVID-19 pandemic.

The term 'COVID-19 reason' is quite broad and differs from the approach taken by other states which have prescribed very specific eligibility criteria to qualify for relief that are clearly tied to the economic impact of the pandemic. For example, in New South Wales tenants are protected from evictions and they are eligible for residential rental relief where the household has lost 25% or more of their income during the COVID-19 pandemic. 

What measures does the COVID-19 Omnibus (Emergency Measures) Act 2020 introduce?

For tenancy agreements, rooming houses, caravan parks, site agreements and SDA agreements, various measures have been introduced by the Act which modify the rights and obligations of landlords and tenants. Although the measures are similar to a large extent, they do differ slightly. 

For residential tenancy agreements, the measures include the following:

1. A landlord must not increase rent.
2. The Tribunal may, on application by a tenant, make an order for a reduction in rent for a period specified in the Tribunal’s order and a payment plan for rent and any arrears, and any other terms necessary because of the rent reduction or payment plan.
3. A landlord must allow payment of rent by Centrepay (a bill paying service which is administered by the Department of Human Services) as long as they are eligible to use the payment service.
4. A tenant or landlord who would have breached the tenancy agreement (or a relevant duty provision) is taken not to have breached where the party was unable to comply with, or it was not reasonably practicable for the tenant or landlord to comply with, the term or provision because of a COVID-19 reason.
5. On application of a party to a fixed term tenancy agreement, the Tribunal may make an order reducing the term of the agreement by a period stated in the order and making other necessary consequential variations, provided the Tribunal is satisfied that severe hardship of the applicant (if the term was not reduced) would be greater than the hardship which the other party would suffer if the term were reduced. 
6. A landlord or mortgagee in respect of rented premises must not give a tenant a notice to vacate rented premises, and any notice given is of no effect.
7. Tenants will have additional rights to vacate premises in certain circumstances with much shorter notice periods (e.g. where the tenant is suffering severe hardship).
8. Tenants are not liable to compensate the landlord for loss suffered by the landlord for early termination (including lease break fees) in relation to early termination under the RT Act. The Tribunal is also restricted from making orders for tenants to pay compensation under the RT Act.
9. Tenancy agreements do not terminate unless:

   (a) the Tribunal makes an order; or

   (b) other limited circumstances apply (e.g. by agreement, consent, tenant dies, before tenant takes possession etc.).

10. A landlord or a mortgagee may make an application to the Tribunal for termination of the tenancy agreement. However, the Tribunal may only make a termination order if certain circumstances apply (e.g. use of premises for illegal purposes) and it is satisfied that such an order is 'reasonable and proportionate' in the circumstances (with the term 'reasonable and proportionate' requiring the Tribunal to take into account a broad range of factors). Similar provisions apply to eviction and possession orders (with mortgagee and landlord's being temporarily prevented from relying upon some of their existing rights under the RT Act to seek possession orders).
11. Despite all of the above, the Tribunal must not make an order if a tenant has failed to comply with obligations under the tenancy agreement or the RT Act, including by not paying rent, if the tenant is unable to comply with, or it is not reasonably practicable for the tenant to comply with, those obligations because of a COVID-19 reason.

Residential tenancy databases

Landlords are prohibited from listing tenants on residential tenancy databases (otherwise known as "blacklists") for the non-payment of rent if the tenant was unable to comply with obligations to pay rent because of a COVID-19 reason. 

What are the transitional provisions in the Act?

Where a person has obtained a possession order for premises before 29 March 2020, they are not entitled to a warrant of possession at any time on or after that date, unless the possession order could have been made under the new COVID-19 provisions. 

Where a notice to vacate has been given to a person before 29 March 2020 stating a termination date on or after 29 March 2020, it is of no effect. 

Chief Dispute Resolution Officer and Residential Tenancies Disputes Scheme

The Act establishes the office and function of the Chief Dispute Resolution officer (CDR officer) and outlines that a Residential Tenancies Dispute Scheme (essentially a dispute resolution process to deal with COVID-19 disputes under the RT Act) may be prescribed by the regulations.

The functions of the CDR officer are to administer the Residential Tenancies Dispute Resolution Scheme.

Regulations that further prescribe the functions of the CDR officer and outline essential matters relating to eligible disputes are eagerly awaited. However, the Act provides that regulations may empower the CDR officer to make specified orders, which include: 

(a) changing, limiting or preventing the exercise or enforcement of rights of a landlord or tenant under the RT Act or a tenancy agreement;
(b) exempt specified persons under the RT Act from compliance with the RT Act or common law in relation to tenancy agreements or residency rights;
(c) to modify the operation of modify tenancy agreement or an eligible residency right;
(d) to modify the application of the RT Act or the Victorian Civil and Administrative Tribunal Act 1998 (VCAT Act) (or subordinate instruments made under them), or the common law in relation to eligible tenancy agreement or an eligible residency right;
(e) to extend the term of a tenancy agreement or the period that a residency right exists.

Any such regulations made under the new provisions introduced by the Act will have effect despite anything to the contrary in the RT Act or the VCAT Act. 

Where to from here?

The Act has changed the immediate landscape for landlords, mortgagees, room housing owners, caravan park owners, site owners, SDA providers, tenants and residents. We expect that over the coming weeks and months, many parties will be seeking to negotiate their agreements. 

These are challenging economic times where the financial interests of landlords and lenders are competing with people's basic needs for accommodation. The introduction of the Residential Tenancies Disputes Scheme is a welcome one to enable the quick and efficient processing of likely disputes in the wake of these changes.

Regulations that further prescribe the functions of the CDR officer and outline essential matters relating to eligible disputes are eagerly awaited and are an important piece in the holistic implementation of Parliament's purpose - to respond to the circumstances created by the COVID-19 pandemic.