In Shields v. Deliopoulos [2016] VSC 500 the Victorian Supreme Court clarified the landlord’s legal obligation to maintain a residential property in good repair. Specifically, section 68(1) of the Residential Tenancies Act1997 (Vic) provides:
“A landlord must ensure that the rented premises are maintained in good repair.”
In this case it was agreed that the regional property was in poor condition at the outset – mould, holes in the walls and floors, rats and a shed that apparently collapsed a few weeks after the tenant moved in. The rent at $100.00 per week reflected this. The tenant, a disability pensioner, could not afford to rent any other property and rented the property for more than 5 years.
In an application that was funded by Legal Aid, the tenant applied to the Victorian Civil and Administrative Tribunal claiming compensation for the landlord’s failure to maintain the property in good repair. The Tribunal found there was no failure as the premises were in poor condition at the outset. It is worth noting that the landlord had spent approximately $10,000 on repairs of different sorts over the term of the lease.
Legal Aid funded an appeal to the Supreme Court.
The Supreme Court rule that the landlord was legally obliged to maintain the property in a good condition regardless of the condition of the premises at the outset. The Court awarded the tenant substantial compensation. The Court noted that this decision would have the effect of essentially removing a quantity of low cost, but poor quality, rental accommodation from the market. The Court noted that this was not the Court’s problem – rather a problem for Parliament to fix.
As the Residential Tenancies Act is in the process of being reviewed we look forward to Parliament’s solution to this problem.
In the interim, landlords are on notice that they are obliged to maintain rental properties in “good repair”. This may well include substantial capital expenditure to bring rental properties up to an acceptable standard. I expect that Legal Aid and other community legal organisations will be active in seeking compensation for tenants in such cases.