Five strike rule

The "Five Strike Rule" for rent arrears in Victoria is a crucial piece of legislation that rental providers need to understand. This rule outlines the steps and rights involved when a renter falls behind on their rent, and what you can do as a rental provider to address the situation.

Step 1: What is the Five Strike Rule?

The Five Strike Rule is designed to manage situations where renters fall behind on their rent. It’s called the Five Strike Rule because it specifically addresses what happens if a renter is issued with up to five notices to vacate for non-payment of rent within a 12-month period.

Step 2: Understanding the process

Here’s how it works:

Strikes 1 to 4: If a renter fails to pay rent and is issued a notice to vacate, they have until the termination date on that notice to pay the overdue rent. If they pay in full before that date, the notice to vacate becomes “of no effect,” meaning it’s dismissed and the renter can stay in the property. If they don’t pay, the rental provider can apply to the Victorian Civil and Administrative Tribunal (VCAT) for a possession order.

5th notice to vacate: If a renter receives a fifth notice to vacate due to rental arrears within the same 12-month period, things change. Even if the renter pays the overdue rent, the rental provider can still apply for a possession order. At this point, VCAT will assess whether granting the possession order is “reasonable and proportionate” based on various factors.

Step 3: The role of VCAT

When a rental provider applies for a possession order, VCAT must consider whether it’s reasonable and proportionate to end the tenancy. They will look at factors such as:

• The impact of the eviction on the renter and their household

• The impact on the rental provider if the eviction doesn’t occur

• The nature and frequency of the rent arrears

• Any efforts by the renter to resolve the issue, such as entering into a payment plan

If VCAT decides it’s not reasonable or proportionate to evict the renter, they may dismiss the application or order a payment plan instead.

Step 4: Payment plans and financial counselling

VCAT might also decide to put the renter on a payment plan. If this happens, the application for a possession order will be adjourned, and the tenancy will continue as long as the renter complies with the payment plan. If the renter fails to meet the terms of the payment plan, the rental provider can return to VCAT to seek a possession order.

We hope this guide has helped clarify the Five Strike Rule for rent arrears and how it affects both rental providers and renters. Understanding this process is essential for managing your rental properties effectively and ensuring that you’re prepared to navigate the challenges that can arise with rent arrears.