ANGLICAN DIOCESE OF MELBOURNE. Procedures for Property Management. Approved by General Manager of Business Services. Effective: 26 May 2011

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1 ANGLICAN DIOCESE OF MELBOURNE Procedures for Property Management Approved by General Manager of Business Services. Effective: 26 May 2011 Background The Anglican Diocese of Melbourne is committed to ensuring that all property agreements are appropriately documented and are in accordance with both Diocesan policy and applicable laws. Purpose The procedures contained within this document apply to parishes that are seeking to enter into (or renew) a residential tenancy agreement, licence agreement, hall hire agreement, commercial lease, telecom lease, ground lease or memorandum of understanding for use of parish facilities. It is important for parishes to enter into formal agreements relating to property in order to maximise the return on property assets but also to minimise the risks associated with the use of church properties. It is essential that these guidelines are followed to ensure that rental agreements are approved by the Diocese and are legally binding. Hence, this document provides property management guidelines for parishes to follow when contemplating any property agreement. Parishes are encouraged to contact the Property Department of the Diocese for additional support and advice and reminded that they must discuss their intentions prior to any contractual negotiations taking place. These procedures encompass the following types of agreements: Residential Tenancy Agreement Licence Agreement Hall Hire Agreement Commercial Lease and Disclosure Statement Telecom Lease Ground Lease Memorandum of Understanding Application These procedures are applicable to all parishes entering into property rental agreements either as landlord or tenant. For the purposes of this document, the word parish is deemed to include all church entities under the control of the Melbourne Anglican Trust Corporation (MATC). Procedures for Property Management Anglican Diocese of Melbourne Page 1 of 41

2 Related Legislation Residential Tenancies Act 1997 Retail Leases Act 2003 Owner Property Department Lesley Tarves, Chief Operating Officer Lynn Saldanha, Property Officer Review Date Procedural changes require the approval of the General Manager of Business Services. Important Disclaimer The information provided in this document is intended to provide assistance. Leasing law is complex, and it is vital that any parish proposing to enter into a lease or vary a lease or who is experiencing difficulties with other parties in relation to a lease, contact the Property Department. Further Information Contact the Property Department (03) Procedures for Property Management Anglican Diocese of Melbourne Page 2 of 41

3 Table of Contents SECTION A. DIOCESAN APPROVAL PROCESS... 6 Overview of the Diocesan Approval Process for Property Agreements... 6 Step 1 Archdeacon Approval... 6 Step 2 Parish Reporting to the Property Department... 6 Step 3 Seeking Approval from a Diocesan Committee... 6 Step 4 Execution of Lease Documents... 6 SECTION B. DIOCESAN ASSISTANCE WITH PROPERTY AGREEMENTS SECTION C. RESIDENTIAL PROPERTY LEASE ARRANGEMENTS... 8 Overview of a Residential Lease What is a Residential Lease? What is a Residential Tenancy Agreement ( RTA )? What is the Residential Tenancies Act 1997 ( the Act ) Types of Residential Tenancy Agreements Residential Leases If a Parish is the Landlord Entering into a Residential Tenancy Agreement Renting a Home: A Guide for Tenants ( Renting a Home ) The Law Handbook Property Management Instructing a Managing Agent Self Managing the Property Property Management Requirements During a Tenancy Landlord s Duties Notice Requirements to Inspect Rented Premises Rent Increase Assignment and Sub Letting by a Tenant Repairs Smoke Alarms Ending a Residential Tenancy Agreement Early How to End a Residential Tenancy Agreement? Serving a Notice to Vacate Notice to Vacate Notice Periods At the End of a Residential Tenancy Agreement How much Notice must be given? Residential Leases If the Parish is the Tenant Entering into a Residential Tenancy Agreement During a Residential Tenancy Agreement Duties of the Landlord or Managing Agent Your Privacy Tenants Responsibilities If a Landlord or Managing Agent does not meet their responsibilities Urgent Repairs Non Urgent Repairs Assignment and Sub Letting by a Tenant Ending a Tenancy Early Procedures for Property Management Anglican Diocese of Melbourne Page 3 of 41

4 7.11 What can the Landlord Claim? At the End of a Residential Tenancy Agreement Diocesan Approval Process SECTION D. USE OF LICENCE AGREEMENTS What is a Licence Agreement? What does a Licence Agreement do? When does a Licence Agreement need to be used? Diocesan Approval Process SECTION E. USE OF CASUAL HALL HIRE AGREEMENT When should a Hall Hire Agreement be used? SECTION F. COMMERCIAL LEASE AGREEMENTS Overview of Commercial Leases What is a Commercial Lease? What is the Retail Leases Act 2003 ( the Act ) What is a Retail Lease? Exceptions where a Lease is not Covered by the Act Retail Leases must be a Minimum of 5 Years Outgoings Legal Costs to Prepare the Lease Landlord s Obligation to Repair Security Deposits Holding a Security Deposit What happens at the end of the Lease? What can the Security Deposit be used for? Entering into a Retail Lease Documentation Retail Leases Act Information Brochure ( Information Brochure ) Disclosure Statement Retail Lease ( Lease ) Steps for a Landlord to Follow When Entering into a Retail Lease During a Retail Lease Estimate of Outgoings Statement of Outgoings Assignment of Lease Rent Review Market Review Renewal of a Retail Lease Renewing a Retail Lease Renewal Agreement Renewal by Exercise of an Option Contained in the Lease Notice to the Small Business Commissioner At the End of a Retail Lease Granting an Option to Renew at the End of a Lease Expiry of Lease Sample Text Letters Expiry of Lease Summary of Retail Leases Diocesan Approval Process Procedures for Property Management Anglican Diocese of Melbourne Page 4 of 41

5 SECTION G. TELECOM CELL TOWER LEASES What is a Cell Tower Lease? Negotiating a Cell Tower Lease Diocesan Approval Process SECTION H. GROUND LEASE AGREEMENTS What is a Ground Lease? Negotiating a Ground Lease Diocesan Approval Process SECTION I. ENTERING INTO A MEMORANDUM OF UNDERSTANDING ( MOU ) What is an MoU? Why choose an MoU? Diocesan Approval Process APPENDIX A Procedures for Property Management Anglican Diocese of Melbourne Page 5 of 41

6 Section A. Diocesan Approval Process Overview of the Diocesan Approval Process for Property Agreements The approval process for all property agreements, regardless of type is as follows: Step 1 Archdeacon Approval The parish should ensure that the Archdeacon responsible for their parish is made aware of the details of all leases/licences. The Archdeacon must provide the Property Department with his/her approval in writing prior to entering into the lease/licence. In the event that the Archdeacon is also the vicar of the parish, the parish must seek the approval of the Regional Bishop to enter into the lease/licence. Lease/Licence agreements received without the endorsement of the Archdeacon / Regional Bishop will not be able to be processed by the Property Department. Step 2 Parish Reporting to the Property Department The parish is asked to convey all of the details of the proposed lease/licence to the Property Department. Details include the terms and conditions of the lease or licence as well as the reasons the property is not required for use by the parish over the time frame proposed by the lease or licence. For example If the parish has decided to lease the vicarage, it should provide the following information to the Property Department (the Archdeacon/Bishop will also require this information for his/her approval): Why is the vicarage not being used by the parish? What does the parish foresee as the future use of the vicarage? Does the vicarage meet Diocesan standards (as outlined in the Churchwardens and Treasurers Manual). Has the vicarage been leased in the past? If so, please provide the Property Department with details of the lease i.e. tenant, term, rent. Also provide a copy of the previous lease. All original copies of the lease or licence should be sent to the Property Department. Once the Property Department has received the original copies of the lease or licence and the Archdeacon approval in writing, the Property Officer will prepare a report which outlines the relevant details required for approval. Step 3 Seeking Approval from a Diocesan Committee The Property Department will seek approval from either one of the following Diocesan Committees as applicable. Authorisation Sub Committee (ASC) The ASC consists of 5 members (the Registrar, the Advocate and 3 members of the AiC). The ASC has delegated authority from Archbishop in Council to approve any leases up to a maximum term of 5 years (including options). Archbishop in Council (AiC) The AiC has authority to approve any leases, but typically only focuses on leases / licences of more than 5 years duration (including options). Step 4 Execution of Lease Documents Once the lease/licence is approved, the document will be signed under seal by two of the Melbourne Anglican Trust Corporation (MATC) Trustees. The signed and sealed copies of the lease/licence will be returned to the parish and the tenant. A copy will be retained by the Diocese. Procedures for Property Management Anglican Diocese of Melbourne Page 6 of 41

7 Section B. Diocesan Assistance with Property Agreements. The Property Department welcomes the opportunity to assist parishes in the preparation, approval and execution of all property agreements. In this regard, we have an in house paralegal who has responsibility for leasing and licensing arrangements. Having such expertise available does however mean that the Property Department will be required to charge a fee for the preparation of these documents. The fee structure which applies assists in cost recovery. The costs levied for this service are at a much reduced charge than if the parish were to engage a solicitor directly. Our fees are outlined as follows: Residential leases $100 Commercial lease and associated documents $500 to $1,000 (dependent upon complexity) Licence agreements $100 to $500 (dependent upon complexity) Some Commercial Leases, due to their complexity, and all Ground Leases (for the same reason) will require the engagement of an external solicitor. However, we can still assist the parishes in negotiating the lease and organising the external solicitor. In these cases, we will generally prepare the lease documentation for review by an external solicitor and are able to retain these services at a much reduced cost. If a parish decides to engage an external solicitor independently, the parish must contact the Property Department prior to the appointment to confirm the appropriateness of the appointment. Procedures for Property Management Anglican Diocese of Melbourne Page 7 of 41

8 Overview of a Residential Lease Section C. Residential Property Lease Arrangements 1.0 What is a Residential Lease? A lease, sometimes also referred to as a tenancy agreement or tenancy, is an agreement between a landlord and a tenant, which gives the tenant the right to use and occupy rental property for a defined period of time. 1.1 What is a Residential Tenancy Agreement ( RTA )? A Residential Tenancy Agreement contains all the terms and conditions of the arrangement between the parties and must be used for Residential Leases. The official Residential Tenancy Agreement form can be found at the Consumer Affairs Victoria website A Residential Tenancy Agreement outlines: the rent that must be paid and how to pay it; the length of time the tenant will rent the property; the type of RTA; the amount of bond required; and other conditions and rules. 1.2 What is the Residential Tenancies Act 1997 ( the Act ) The purpose of the Act is to define the rights and duties of landlords and tenants of rented premises. This Act only applies for premises that are used primarily as a residence. If a parish requires any information about specific provisions of the Act please contact the Property Department at the Diocesan Registry. 1.3 Types of Residential Tenancy Agreements Fixed Term Tenancy A fixed term tenancy is for a set period of time, usually three, six or twelve months. After a fixed term tenancy expires, a tenant can sign a new fixed term RTA or the lease can roll automatically into a periodic tenancy. Periodic Tenancy A tenant will usually move to a periodic lease when their fixed term RTA ends. In a periodic RTA, the tenant does not sign a new agreement, but must still follow the rules set out in the original RTA. 2.0 Residential Leases If a Parish is the Landlord 2.1 Entering into a Residential Tenancy Agreement When a parish decides to rent out property, there are two options. The parish can either manage the property itself or use the services of a managing agent. In both cases the tenant must receive a copy of the RTA within 14 days of signing the RTA. A copy of an RTA can be downloaded from the Consumer Affairs Victoria website Renting a Home: A Guide for Tenants ( Renting a Home ) If the tenant has signed an RTA, the landlord or managing agent must, by law, give the tenant a printed copy of Renting a Home: A Guide for Tenants on or before the day the tenant moves in. A copy of the guide can be downloaded from the Consumer Affairs Victoria website Procedures for Property Management Anglican Diocese of Melbourne Page 8 of 41

9 2.3 The Law Handbook The Law Handbook is a practical guide to the law in Victoria free for all Victorians. Please visit Property Management 3.1 Instructing a Managing Agent When utilising the services of a managing agent to manage the property on behalf of the parish, there are a number of fees payable. Parishes should be aware that managing agents generally charge a letting fee, re letting fee, managing fee and marketing fee, all of which are subject to negotiation. It is common industry practice for managing agents to charge a letting or re letting fee when new tenants are placed in a rental property. The normal fee is one to two week s rent. These are not compulsory fees and can be negotiated. Most managing agents charge a managing fee based on a percentage of the gross weekly rental. This can be negotiated, but it is usually between 5 10%. A managing agent usually sends the landlord a monthly account showing the amount of rent paid to the landlord less any costs and agency fees. Please ensure that all accounts are mailed directly to the parish. The cost of minor repairs is usually deducted from the rent and listed in the monthly statement as a separate item. Most managing agents will provide copies of receipts for repairs upon request. It is also possible for a parish to engage a managing agent to source the tenant for a fee and then to manage the tenancy itself. 3.2 Self Managing the Property If the parish manages the property, the churchwardens are responsible to coordinate and manage the daily tasks associated with the leasing of property. Parishes should be equipped with the required knowledge and skills with particular emphasis on the legal requirements of the Act. 3.3 Property Management Requirements Whether a parish chooses to engage a managing agent or self manage the property, the requirements are the same as below: (a) Find a Tenant When using the services of a managing estate, ensure that the prospective tenant s rental history is reviewed. Estate agents can conduct a search through the The National Tenancy Database (NTD) for tenancy information. Information on the database is only available to licenced estate agents and approved property managers by way of membership subscription. Normally tenants are sourced through online listings, and newspaper advertisements. (b) Prepare an RTA Ensure an RTA is correctly completed and signed. The landlord under an RTA must be the Melbourne Anglican Trust Corporation A.B.N of 209 Flinders Lane, Melbourne Vic Estate agents sometimes use their own agreement forms which include extra conditions. These are valid as long as they comply with the Act. Procedures for Property Management Anglican Diocese of Melbourne Page 9 of 41

10 (c) Bond Collect and lodge the rental bond with the Residential Tenancies Bond Authority (RTBA) within 7 days. If the rent is $350 per week or less, the bond cannot be more than one month s rent. The Act allows for any amount of bond if the rent is over $350 per week. The parish or managing agent must give the tenant a completed and signed official Bond Lodgement Form. A copy of the RTBA form can be downloaded from the Consumer Affairs Victoria website (d) Condition Report Complete three copies of a condition report at the start of each tenancy and give two copies of the completed report to the tenant, at or before the beginning of the tenancy. The tenant is required to review the report, indicate whether or not they agree with the listed descriptions of the condition of the property, sign both copies and return one to the parish within 7 days. This procedure should be explained to the tenant. The condition report section of the RTA must include a specific reference to smoke alarms so that tenants and landlords are able to note and comment on the presence of smoke alarms at the beginning and end of the tenancy. A copy of a Condition Report can be downloaded from the Consumer Affairs Victoria website (e) Entry Costs Provide the tenant with a list of all services that need to be connected at the premises i.e. water consumption, electricity, gas (if applicable), maintenance of the garden, bond, etc. (f) Safety of Premises Thoroughly check that the premises are completely safe. (g) Cleanliness Ensure the residential premises are reasonably clean and fit to live in. (h) Rent and Rent Receipts Collect the rent and maintain accurate rent records and receipts. If rent is paid directly into the parish bank account, it is the churchwardens responsibility to check the balance regularly to ensure that rent is being deposited. The landlord or managing agent who receives the rent must: give the tenant a receipt immediately upon payment if the payment is made in person; give the parish a receipt within five business days if a receipt is requested and the rent is not paid in person; or keep a record of the payment for 12 months and, on request, provide the tenant a copy of the receipt within five business days. (i) Rent Increases A rent increase is allowed at the end of a fixed term RTA provided that the parish has given 60 days notice in the prescribed form of a proposed rent increase. Procedures for Property Management Anglican Diocese of Melbourne Page 10 of 41

11 (j) Market Rent Ensure that the parish is receiving market rent for the residential premises. A market rent valuation can be done by contacting estate agents to get an estimate of the rent for the rented premises. The churchwardens can also value the rent for the premises themselves by comparing similar properties on the Real Estate rental listing website (k) Repairs Arrange for repairs to keep the property in a safe and liveable condition. (l) Dispute Resolution Take necessary steps to handle disputes that may arise. 4.0 During a Tenancy 4.1 Landlord s Duties A landlord or managing agent is responsible to undertake the following: Maintain the premises in a reasonable state of repair with non urgent repairs completed in a timely manner. Organise urgent repairs as soon as reasonably possible after having been notified by the tenant of the fault or damage. Issue receipts for all payments made by the tenants, except where rent is paid into an account or by direct debit or is electronically transferred. Pay for all council rates, land taxes, sewerage and water service charges (excluding water usage charges). Ensure the property is safe and secure by providing locks to secure all doors and windows. Ensure the tenant s reasonable peace, privacy and quiet enjoyment of the rented premises is not interrupted by the church officers or any other person authorised by the parish to enter the premises. Give the tenant 60 days written notice of any rent increase. 4.2 Notice Requirements to Inspect Rented Premises A landlord is only authorised to enter the premises at certain times and dropping in unannounced, except in an emergency, is not permitted. A landlord has a right to enter a rented premises together with any persons who are necessary to achieve the purpose of the entry at any time agreed with the tenant if the tenant has consented not more than 7 days before the entry. The landlord can enter if they give the tenant 24 hours written notice, in order to: carry out duties listed in the tenancy agreement, the Residential Tenancies Act 1997 or any other Act value the property show prospective buyers or financial lenders through the premises show prospective tenants through the premises (within 14 days of a current lease termination date) verify a reasonable belief that the tenant has not met their duties as a tenant make one general inspection in any six month period, but not within the first three months of the tenancy. The inspection can take place at any time between 8 a.m. and 6p.m. on any day (except a public holiday). Refer to the Law Handbook for further details Procedures for Property Management Anglican Diocese of Melbourne Page 11 of 41

12 4.3 Rent Increase (a) Rent Increase Fixed Term Tenancy A landlord under a fixed term RTA must not increase the rent before the term ends unless the agreement provides for a rent increase within the fixed term. A landlord must not increase the rent payable under an RTA at intervals of less than 6 months. On average the rent is increased by a maximum of 5% in a twelve month period. However, it should be higher than this if the current rent is significantly below commercial rates. (b) Rent Increase Periodic Tenancy During a periodic agreement a landlord must not increase the rent payable at intervals of less than six months (c) Written Notice of Rent Increase A landlord must give a tenant at least 60 days notice in the prescribed form of a proposed rent increase. A notice of a proposed rent increase may only provide for one rent increase. The notice of a proposed rent increase must include a statement informing the tenant of the tenant's right to apply within 30 days after the notice is given to the Director of Housing to investigate and report on the proposed rent increase. A copy of this notice can be downloaded from the Consumer Affairs Victoria website Assignment and Sub Letting by a Tenant 4.5 Repairs A landlord must not unreasonably withhold consent to the assignment or sub letting of the whole or any part of the rented premises. For further information please refer to the RTA and contact the Property Department at the Diocese. The landlord is liable for carrying out repairs to the rented property. The following two processes apply to repairs at a rented property: (a) Urgent Repairs Urgent repairs listed in the Act include the following: A burst water service. A blocked or broken lavatory system. A serious roof leak. A gas leak. A dangerous electrical fault. Flooding or serious flood damage. Serious storm or fire damage;. A failure or breakdown of any essential service or appliance provided for hot water, water, cooking, heating. An appliance, fitting or fixture provided by a landlord, that uses or supplies water and that is malfunctioning in a way that results or will result in a substantial amount of water being wasted. Any fault or damage that makes rented premises, unsafe or insecure. A serious fault in a lift or staircase. The tenant must take reasonable steps to arrange for the landlord to carry out the repairs. This will ordinarily involve attempts to advise the landlord or managing agent of the repair by telephone. If the tenant is unable to Procedures for Property Management Anglican Diocese of Melbourne Page 12 of 41

13 get the landlord or managing agent to carry out the repairs, and the cost of the repairs is not more than $1,000, the tenant can carry out the repairs or arrange for the repairs to be dealt with by a tradesperson. (b) Non Urgent Repairs Non urgent repairs are those repairs that are required in order to maintain the premises and those fixtures and appliances supplied by the landlord in a state of good repair. The tenant must give the parish or managing agent 14 days written notice that non urgent repairs are needed. If the repairs are not completed within 14 days, the parish will be in breach of the RTA and the tenant has a right to contact Consumer Affairs Victoria to carry out an inspection and prepare a report. 4.6 Smoke Alarms The following requirements apply for smoke alarms: Landlords are responsible for the installation of smoke alarms in rented premises. Landlords have the right of access to rented premises to fit smoke alarms after giving the tenant at least 2 days notice. Neither the landlord nor the tenant is, except with reasonable excuse, permitted to remove or interfere with the operation of a smoke alarm fitted in the rented premises. Where a smoke alarm is of the type that has a replaceable battery, the landlord must put a new battery in at the commencement of a tenancy. After the tenancy begins, the tenant is responsible for replacing the battery if needed. However, if the tenant is physically unable to change the battery the tenant is required to notify the landlord as soon as practicable after becoming aware of the need for it to be replaced. The tenant is not responsible for the replacement of batteries in hard wired smoke alarm systems that have battery back up. This is the responsibility of the landlord. 5.0 Ending a Residential Tenancy Agreement Early 5.1 How to End a Residential Tenancy Agreement? Generally, there are three main ways to end a RTA: With mutual agreement from all parties. When a landlord or owner gives a Notice to Vacate to the tenant. When a tenant gives notice to the landlord or owner that they intend to vacate. 5.2 Serving a Notice to Vacate If a landlord wants the tenant to vacate, the landlord or the managing agent must give the tenant an official Notice to Vacate to Tenant/s of Rented Premises. A copy of this notice can be downloaded from the Consumer Affairs Victoria website Notice to Vacate The Notice to Vacate must: be in the prescribed form (a copy of this notice can be downloaded from the Consumer Affairs Victoria website be addressed to the tenant; be sent to the tenant at the premises by registered post or given to the tenant in person between 8:00am and 6:00pm; give a specific reason or state that no reason is given; Procedures for Property Management Anglican Diocese of Melbourne Page 13 of 41

14 be signed by the landlord; allow the correct amount of time to give the notice; and give the date for the tenant to leave. 5.4 Notice Periods Tenancies can only be terminated when the correct written notice is given. A notice of termination must be in writing and can be posted or given personally. A notice cannot be stuck to or put under a door by the person giving the notice. If the notice is posted, at least 4 working days should be added to the amount of notice, to allow for delivery. The timeframes for serving a Notice to Vacate under the Act differ, depending on the reason. Minimum Notice Period Reason for giving a Notice to Vacate to Tenant/s of Rented Premises Immediate Notice to Vacate The premises and common areas are damaged by the tenant or tenant s visitor. The tenant or tenant s visitors endanger the safety of neighbours. In such cases substantial proof from landlords is required. Please seek legal advice and contact the Property Department at the Diocese. 14 Day Notice The tenant owes at least 14 days rent. The tenant has breached a Victorian Civil and Administrative Tribunal (VCAT) compliance order or compensation order. The tenant has already been given two valid Breach of Duty notices and the same breach re occurs. The tenant uses the premises for an illegal purpose (or allows someone else to do so). The tenant brings other tenants into the premises without consent. The tenant does not pay the bond as agreed. The tenant has a child living at the premises when the RTA does not allow children. The RTA has a fixed term or set end date and states that the tenant has rented the landlord s principal place of residence (own home) and the landlord will occupy it at the end of the RTA. 60 day notice The premises are to be demolished. (there is no fixedterm lease or when the termination date on the Notice to Vacate is after the expiry of the fixed term) The premises are to be used for any purpose other than as a rented residence (such as a business). The premises are occupied by the landlord, or the landlord s spouse, son, daughter, parent or spouse s parent, or someone who normally lives with the landlord and is dependent on the landlord. The premises must be sold with vacant possession. The premises are to be repaired, renovated or reconstructed (for which all necessary permits have been obtained), and this cannot be done without the premises being vacant. Premises to be used for public purposes (if it is public property). It is the end of a fixed term RTA of six months or less. 90 day notice Note: If the landlord serves a notice for any of the reasons above, they cannot re let the premises again for 6 months after the notice is given. A 60 day Notice to Vacate can also be given if the landlord has entered into a contract of sale of the rented premises. At the end of a fixed term RTA of six months or more. Procedures for Property Management Anglican Diocese of Melbourne Page 14 of 41

15 6.0 At the End of a Residential Tenancy Agreement 6.1 How much Notice must be given? When the period of the RTA is coming to an end, 14 days notice prior to the end date, must be given by either party. When the period of the agreement has already ended i.e. periodic tenancy: a tenant must give 28 days notice (Notice of Intention to Vacate); and a landlord must give 60 days notice. A landlord cannot lock out or evict a tenant without an order from the Victorian Civil and Administrative Tribunal (VCAT). The role of the VCAT is to quickly and effectively resolve disputes between tenants and landlords. 7.0 Residential Leases If the Parish is the Tenant 7.1 Entering into a Residential Tenancy Agreement Some points to consider when entering into a Residential Tenancy Agreement are as follows: (a) Parties The tenant under an RTA must be the Melbourne Anglican Trust Corporation A.B.N of 209 Flinders Lane, Melbourne Vic (b) Bond Most landlords will ask the tenant to pay a bond which acts as security during the RTA. If the rent is $350 per week or less, the bond cannot be more than one month s rent. The bond money must be held by the Residential Tenancies Bond Authority (RTBA). If the landlord receives the bond, he/she must give the parish/church officers a completed and signed official Bond Lodgement form to sign and the parish must retain a copy of the form. (c) Rent The tenant is responsible for paying rent on time. The parish must continue paying it until the tenancy ends. The tenant cannot stop paying rent, even if: the landlord refuses to do repairs; the parish are in the last month of the rental agreement; the parish has given the landlord Notice of Intention to Vacate; or the parish has been given a Notice to Vacate. (d) Rent Receipts The tenant is entitled to receive a receipt for each rent payment unless the payment is made electronically. (e) Condition Report If the parish has paid a bond, the landlord must prepare a Condition Report, which notes the property s general conditions, including fittings and fixtures. Even if the parish has not paid a bond, it is still a good idea to get a Condition Report. The landlord must provide the parish with two copies of the signed Condition Report before occupancy commences. The landlord may be fined if this is not done. Review and, if necessary, add comments to the Condition Report. Return one copy of the report to the landlord within three business days of moving in. All parties should keep their copy of the Condition Report until the end of the tenancy. Procedures for Property Management Anglican Diocese of Melbourne Page 15 of 41

16 (f) Water Meter Readings In the Melbourne metropolitan area, if the property has a separate meter, the landlord: can arrange for the parish to be billed for water usage and sewage disposal; and must give his/her contact details to the water provider, who will read the meter and commence billing. If the property is outside the Melbourne metropolitan area the water provider must be notified at least two business days before occupancy. If this is not done the new occupant will be required to pay the total amount of water supplied to the premises since the last meter reading. It is a good idea to confirm the details in a letter to the water provider and keep a copy. (g) Utility Connections When starting a tenancy a parish must: ensure that gas and electricity services are connected; and arrange for bills to be in the name of the parish. Remember to leave enough time to arrange any connections prior to commencing occupancy. Some estate agents will offer a connection service via an external company. The parish does not have to tick the box on the property application form for this service as this only provides consent to having the connection company calling the parish. 7.2 During a Residential Tenancy Agreement Tenant s Duties As a tenant the parish must: keep the premises reasonably clean; not cause damage; notify the landlord of any damage as soon as possible; ensure visitors of the parish respect the rights of neighbours in regard to privacy, peace and comfort; and ensure the property is not used for any illegal purpose. 7.3 Duties of the Landlord or Managing Agent The landlord and managing agent must: give the parish a copy of the Renting a Home: A Guide for Tenants on or before the day of occupancy ; keep the premises in good repair; ensure any replacement water appliance, fitting or fixture meets energy efficiency standards; give the parish representative a key as soon as possible after changing any lock; let the occupants have peace and quiet in the premises; not carry out an inspection of the premises until after the end of the first three months of continuous occupation; and follow the rules about proper notice periods for ending a tenancy. 7.4 Your Privacy Landlords or managing agents who collect personal information from the parish may be bound by privacy laws, placing restrictions on how this information is passed on to third parties. If the parish believes that there is a Procedures for Property Management Anglican Diocese of Melbourne Page 16 of 41

17 likelihood of personal information being misused, contact the Federal Privacy Commissioner on or visit Tenants Responsibilities The landlord/managing agent can issue the tenant with a Breach of Duty notice if he/she does not meet certain responsibilities. The notice will ask the tenant to rectify the problem. If the problem continues, the landlord/managing agent could ask the Victorian Civil and Administrative Tribunal (VCAT) to make an order. 7.6 If a Landlord or Managing Agent does not meet their responsibilities The parish can also send its landlord/managing agent a Breach of Duty notice under certain circumstances if it is believed they are not meeting their responsibilities. Before a Breach of Duty notice is issued, it is recommended to contact Consumer Affairs Victoria or a tenancy advocacy service for more information. 7.7 Urgent Repairs As the tenant, the parish must take reasonable steps to arrange for the landlord to carry out the repairs. This will ordinarily involve attempts to advise the landlord/managing agent of the repair by telephone. The tenant should keep a record of all telephone calls both answered and unanswered and any other attempts to contact the landlord/managing agent. If the landlord/managing agent is unwilling or not able to carry out the repairs, and the cost of the repairs is not more than $1,000, the parish as tenant can carry out the repairs or arrange for the repairs to be dealt with by a tradesperson. It is important to make sure that the cost of the repairs will not amount to more than $1,000. If an arrangement for urgent repairs is to be done and the cost is more than $1,000, the landlord is only liable to pay the cost of repairs up to $1, Non Urgent Repairs The tenant must give the landlord 14 days written notice that non urgent repairs are needed. The notice must be addressed to the landlord rather than the managing agent, however, it can be sent care of the managing agent s address. The notice should be given to the landlord/managing agent personally or sent by ordinary or registered post and a copy kept by the tenant. It is recommended to send it by registered post. If the landlord has not carried out the repairs within 14 days, or has not done so to a satisfactory standard, the tenant can apply in writing to the Director of Consumer Affairs Victoria requesting that an inspector investigate. If the repairs still have not been done after receiving the inspection report, the tenant has 60 days from when the report is received, to apply to VCAT for a repair order. The parish must continue to pay rent even if the landlord has not arranged for the repairs. 7.9 Assignment and Sub Letting by a Tenant A tenant under a RTA must not assign or sub let the whole or any part of the rented premises without the landlord s written consent. The landlord must not unreasonably withhold consent to the assignment or subletting of the whole or any part of the rented premises. Procedures for Property Management Anglican Diocese of Melbourne Page 17 of 41

18 7.10 Ending a Tenancy Early If the parish decides to terminate an RTA before the end of the term, the parish must promptly serve a notice in writing to the landlord/managing agent specifying an intention to terminate. This written notice should include any agreed costs, terms and conditions, and the date the lease is to end. Breaking a lease may require the payment of compensation to the landlord. The tenant may decide to vacate before the end of a fixed term RTA. This may involve the moving out with or without notice and incurring lease break liability. If the parish is breaking the lease, consideration should be given as to whether to continue paying rent to the landlord after vacating the premises. Once the parish has vacated the premises, the RTA has terminated and there is no further liability to pay rent. However, the landlord is entitled to make a claim for compensation for any period of lost rental that has resulted from the parish ending the lease early. The landlord will be required to justify to VCAT the reasonableness of the amount claimed for lost rent. If the parish continues to pay rent after the premises has been vacated, the landlord may not be so enthusiastic about finding new tenants for the property. Only when the property is re tenanted is the claim finalised What can the Landlord Claim? If a fixed term RTA is broken by the parish, the landlord can make a claim for compensation for any loss or damage that result from the lease ending early. Such costs may include: a pro rated amount of any re letting fee; advertising costs; and rent for a reasonable time until new tenants move in, or until the end of the fixed term RTA, whichever is less. The landlord is not automatically entitled to have these costs met out of the bond At the End of a Residential Tenancy Agreement Termination of residential tenancies can take place in a number of ways, namely: by agreement between landlord and tenant; by consent of the landlord; or by creation of periodic tenancy A tenant must give a notice of intention to vacate which must specify a termination date that is not less than 28 days after the date on which the notice is given. If the parish or landlord does not give written notice to end a fixed term RTA, the parish will automatically roll over to a periodic RTA Diocesan Approval Process Approval procedures to enter into or renew a RTA are under Section A of this document. Procedures for Property Management Anglican Diocese of Melbourne Page 18 of 41

19 Section D. Use of Licence Agreements 8.0 What is a Licence Agreement? A Licence Agreement is an agreement between the landlord and tenant for the non exclusive use of property. Unlike a lease agreement in which the tenant has exclusive use of the property, a licence agreement allows for shared use of the property between the parish and the tenant. For example, the parish seeks to grant the tenant the use of office space between Monday Friday only or the use of the hall on Tuesday and Thursday afternoons. 8.1 What does a Licence Agreement do? A Licence Agreement is a legally binding document which protects the interests of the Diocese and parishes. It is tailored to reflect the arrangement between the parties. It is an agreement that outlines all the terms and conditions between the Licensor (owner of property) and the Licensee (hirer of property). This includes, for example, what the facility will be used for, the days and hours of use, the rental amount, the term, etc. The agreement allows for annual rent increases. For example: increase of 5% annually. The Diocese recommends that the Licensee must have Public Liability insurance for a minimum of $10 million, however, an insurance policy for a minimum of $5 million will be acceptable. A Certificate of Currency (document of insurance cover) must be provided to the Licensor. Contact the Property Department at the Diocese for assistance in preparing a Licence Agreement. 8.2 When does a Licence Agreement need to be used? A licence agreement must be used where a tenant occupies certain space on a regular basis. Examples of use are: a. Use of office space between Monday Friday by a small business or Anglican agency. b. The use of a hall on weekday mornings by a playschool or childcare operator. c. The use of a hall on Tuesday and Thursday afternoons by a dance school. d. The use of part of the parishes parking lot by a neighbouring business. e. The use of a meeting room by a weight watchers group on Saturday afternoons. 8.3 Diocesan Approval Process Approval procedures to enter into a Licence Agreement are under Section A of this document. Procedures for Property Management Anglican Diocese of Melbourne Page 19 of 41

20 Section E. Use of Casual Hall Hire Agreement 9.0 When should a Hall Hire Agreement be used? When an individual, agency, company, government body or other group uses a hall or other space on a one off basis, a Personal Hire Facility or a Memorandum of Hire of Facility is required. These one off hires are managed by the Insurance Department at the Diocese. The applicable documents as supplied by the Insurance Department are attached in Appendix A. Please contact the Insurance Department if you require assistance. Diocesan Insurance Contacts: Your initial contact for all insurance matters is as follows: Contact: Ralph Halnon Melbourne Diocesan Insurance Contact rhalnon@melbourne.anglican.com.au Phone: Fax: Procedures for Property Management Anglican Diocese of Melbourne Page 20 of 41

21 Section F. Commercial Lease Agreements Overview of Commercial Leases This section sets out the guidelines to assist parishes in the administration and management of commercial leases entered into on behalf of the Melbourne Anglican Trust Corporation. As a member of a parish involved in the management of a retail lease, it is the parish s duty to help the Diocese comply with its legal obligations as a landlord or tenant What is a Commercial Lease? Commercial leases are known as retail leases. Commercial leases cover a wide range of businesses, including opportunity shops, retail outlets, fitness centres, restaurants and others What is the Retail Leases Act 2003 ( the Act ) In Victoria, retail leases are governed by the Retail Leases Act The legislation tells us what constitutes a retail lease, and it sets out the steps that each party must take when entering into, renewing or terminating a retail lease What is a Retail Lease? The Retail Leases Act 2003 does not define retail leases as such. Instead, it simply talks about leases for retail premises. Generally, premises will be retail premises if, under the lease the premises are to be used, wholly or predominantly for the sale or hire of goods by retail or the retail provision of services Goods or services are retailed if they are provided to an end user or the final consumer. For example, an opportunity shop offers pre owned or new goods for sale to consumers. The sale of the goods to consumers would be a retail transaction. That s a pretty straightforward example, of course. Things can become complicated very quickly and it is always best to contact the Property Department for assistance. As a general overview: Premises involving the retail sale of goods may include: retail shops selling commodities such as clothing, food and furniture; bars, restaurants, cafes; nurseries; petrol stations; and new and used car showrooms. Premises involving the retail hire of goods may include: shops hiring equipment such as gymnasium equipment and medical equipment; shops hiring electrical products; car rental outlets; video hire shops; and shops hiring gardening and carpentry tools. Premises involving the retail provision of services may include: medical and counselling suites; post offices and banks; hairdressers and beauty salons; Procedures for Property Management Anglican Diocese of Melbourne Page 21 of 41

22 accounting and law firms; professional services such as architects and surveyors; hotels, bed & breakfasts, caravan parks; smash repairers, panel beaters, and car detailers; dancing schools, gymnasiums and tennis courts; and corporate training facilities Exceptions where a Lease is not Covered by the Act There are a few exceptions to the definition of retail premises in the Retail Leases Act 2003, most of which are aimed at ensuring that it only applies to retail leases for small businesses. For example, the Act will not apply to a lease if: the sum of the annual rent and outgoings exceeds $1,000,000.00; the premises are being used (wholly or predominantly) to carry on a business by a tenant on behalf of the landlord as the landlord s employee or agent; the premises being leased are on the 4th floor or higher (excluding basements); or the tenant is a corporation listed on a financial market, such as the Australian Stock Exchange Retail Leases must be a Minimum of 5 Years One important thing to note about retail leases is that they are required by law to have a minimum term of 5 years. This term can include the options to renew, if any, so a lease that offers an initial 3 year term and an option to renew for a further 2 years will suffice. If a lease does not provide a minimum 5 year term, then the Retail Leases Act 2003 will operate to give it one, regardless of what the lease itself says on the matter. The only way around this is for the prospective tenant to seek a certificate from the Small Business Commissioner that effectively waives the 5 year requirement prior to the lease being entered into Outgoings Leases are important documents because they detail costs incurred by retail tenants. Rent is only a component of the total costs, and landlords will pass on most other costs to tenants. These will be detailed in the disclosure statement and shown as outgoings. The outgoings that a landlord can recover under a lease are defined in the Act as: the expenses directly flowing from the operation, maintenance or repair of the building in which the premises are located or any other building or area used in association with that building or if the premises are in a retail shopping centre any other building in the centre or any areas used in association with the building in the centre; and rates, taxes, levies, premiums or charges payable by the landlord because the landlord is the owner or occupier of the building or the land on which the building is erected. In order for the landlord to be able to recover the cost of outgoings (which may include the costs of maintenance) from the tenant, the outgoings must be specified in the lease. This is usually found in the outgoings section or definition section of the lease. If maintenance costs are not itemised, these costs cannot be recovered from the tenant, and the liability to pay for such costs lies with the landlord. A tenant is not required to pay outgoings (including the cost of repairs and maintenance) unless they have been given an estimate of the outgoings at the start of the lease, and at least one month before the start of each of the landlord's accounting periods (usually the start of each financial year). Under the Act, landlords cannot pass on their land tax liability to tenants. Procedures for Property Management Anglican Diocese of Melbourne Page 22 of 41