-->

Creation of a residential rental agreement

Last updated: 29 Mar 2021

Note: In instances of family violence or personal violence, it is generally better to use the new Family Violence tenancy creation and reduction powers under ss 91V91Y of the Residential Tenancies Act 1997 (Vic) (RTA). See Family Violence Provisions.

Creation of a residential rental agreement

Under s 91S RTA, a person who is residing in rented premises but who is not a party to the lease can make an application to the Tribunal to have a new residential rental agreement created in respect of that premises if certain criteria are met.

An application under s 91S requires the Tribunal to balance the hardship that an applicant would likely suffer if compelled to leave their place of residence, compared to the hardship the residential rental provider would suffer should they be forced to enter into a residential rental agreement with the applicant.

Applications for the creation of a residential rental agreement can be quite complicated and tend to be vigorously defended by residential rental providers, including the Director of Housing.

An applicant under s 91S must be a person who has been residing at the rented premises as their principal place of residence but who is not a party to a residential rental agreement.

An applicant can only apply in limited circumstances. The Tribunal will only make a creation order if one of the following situations apply:

  • an application for a possession order for the premises has been made under Part 7 of the RTA (s 91S(1)(a));
  • the renter has abandoned the premises (s 91S(1)(b));
  • the renter has delivered up vacant possession of the rented premises (s 91S(1)(c));
  • the renter has given a notice of intention to vacate the premises (s 91S(1)(d)); or
  • the renter has died and there is no surviving renter (s 91S(1)(e)).

Practice tip

There is no automatic right to representation at the Tribunal in creation applications under s 91S RTA. Accordingly, leave will be required under s 62(1)(c) Victorian Civil and Administrative Tribunal Act 1998 (Vic) for the applicant to be represented if the other party does not consent or is not represented by a professional advocate. See further Where do I go? What do I say?. Who can apply for the creation of a residential rental agreement?

How are creation of residential rental agreement matters decided by the Tribunal?

The following three matters must be demonstrated for the Tribunal to make a creation order (s 91T):

  1. the applicant could reasonably be expected to comply with the duties of a renter under a residential rental agreement to which the RTA applies; and
  2. the applicant would be likely to suffer severe hardship if they were compelled to leave the premises; and
  3. the hardship suffered by the applicant would be greater than any hardship that the residential rental provider would suffer if the order were made.

Compliance with the duties of a renter

To satisfy the first criterion (s 91T(1)(a)), the applicant will need to demonstrate to the Tribunal their ability to pay rent and comply with their other duties as set out in the RTA.

To demonstrate an ability to pay rent, it is helpful if the renter can provide evidence of their income and ability to meet financial obligations. This could be demonstrated, for example, by showing that the applicant paid rent towards the previous residential rental agreement.

Instructions: If you are advising or representing a renter in relation to an application for the creation of residential rental agreement, you need to obtain instructions and evidence about this issue. You should in particular obtain evidence about their ability to pay the rent – useful evidence can include bank statements, pay slips or proof of Centrelink entitlements.

Practice tip

It is important to be prepared for adverse information to be raised against your client. You need therefore to ask about difficult residential rentals or problems the renter may have had with past residential rental providers or with the current residential rental provider.

The applicant would be likely to suffer ‘severe hardship’

To satisfy the requirements of s 91T(1)(b) of the RTA, the applicant will need to demonstrate that they are ‘likely to suffer severe hardship’ if evicted. The Tribunal will be required to consider the personal circumstances of the applicant and any adverse consequences the applicant would suffer if the order is not made.

The Tribunal will analyse the facts presented by the applicant and then make a determination as to whether those facts amount to severe hardship. It is a fact, degree and value judgment. The use of the word ‘severe’ means that a high level of hardship must be established.

Example: In Cosic v Director of Housing [2007] VSC 486 (Cosic), a decision regarding the repealed s 232, the applicant failed to demonstrate that she would suffer severe hardship if compelled to leave. Relevant factors included the fact that she was a single person with no children and the Court considered she would be able to obtain accommodation by sharing or sub-letting other property.

There is no definition of ‘hardship’ in the RTA. Generally, courts have taken a common sense approach, asking what a reasonable bystander with knowledge of all the facts would conclude (Rukat v Rukat [1975] 1 All ER 343). ‘Hardship’ has also been interpreted to comprehend any matter of ‘appreciable detriment whether financial, personal, or otherwise’.

Hardship

Factors that may be relevant to the Tribunal’s assessment of hardship include:

  • physical or mental illness, which might limit an applicant’s ability to find alternative accommodation, and which may be aggravated should the applicant be forced to move;
  • ability (or lack thereof) to find alternative accommodation;
  • the consequences of eviction (ie homelessness);
  • income, which may limit the applicant from obtaining a rental property at market rates;
  • number and status of any dependent children;
  • need to remain in the area where the applicant currently resides; and
  • ties to the local area including medical / therapeutic / community / sporting involvement.

What evidence?

The applicant need only establish that they would ‘likely’ suffer severe hardship. This means the applicant must show that there would be ‘a real and not remote’ chance of suffering severe hardship.

It is important to identify the evidence required to establish each aspect of hardship. If the client has a mental health issue that would be exacerbated by eviction – a medical report should be provided to the Tribunal. If the client has community / treatment / family relationships in the area, evidence of these relationships should be provided to the Tribunal.

Example

If your client makes the submission that they would be homeless if a residential rental agreement is not created, your client will need evidence to support this. Clients should be assisted to make contact with housing agencies and to search property listings in order to locate affordable alternative housing. If these attempts are unsuccessful it is possible to say with greater confidence that the renter would be at risk of homelessness if evicted. Written records / clippings should be taken for use as evidence in proceedings.

The applicant’s hardship would exceed that of the residential rental provider

Section 91T(1)(c) requires the applicant to show that the hardship they are likely to suffer would be greater than any hardship that the residential rental provider would suffer if the order were made. This mandates a comparative exercise, comparing the evidence of the applicant with the strength of the evidence and argument presented by the residential rental provider.

In Cosic, the Supreme Court held that the concept of ‘hardship’ under the RTA must take into account the fact that many residential rental providers will be corporate entities, and ‘hardship’ must therefore be construed broadly to cover various types of hardship a corporate body may experience. This may be particularly relevant where the residential rental provider is the Director of Housing. In Cosic, for example, the Court considered that it was appropriate for the Tribunal to take into account the impact creating a tenancy would have on the orderly management of the public housing waiting list. The Court considered that the hardship faced by those actually on the waiting list would not be a valid consideration to s 91T(1)(c), but could be potentially taken into consideration under the residual discretion (see below).

In the event that the residential rental provider does not provide evidence of their hardship, you should advocate that the renter’s hardship should therefore be preferenced.

Residual discretion – if all three criteria are satisfied, must the Tribunal create a residential rental agreement?

Section 91T of the RTA sets out the elements that VCAT must be satisfied of before it has the discretion to order the creation of a residential rental agreement.

The Tribunal nonetheless has a residual discretion as to whether to make an order (see the use of ‘may’ in s 91T). The residual discretion enables the Tribunal to consider any other relevant matter in deciding whether to make a creation order.

Can the Tribunal consider hardship to anyone?

As noted above, the Tribunal in considering hardship under s 91T(1)(b) and (c) is confined to considering the hardship of the renter and the residential rental provider.

However, the Tribunal may consider hardship suffered by other people under its residual discretion. This may include the hardship that would be suffered by people connected to the applicant, such as the applicant’s children, or on other people potentially impacted by the decision such as those on the public housing waiting list.  

This page contains legal information only. View our disclaimer.

Not a lawyer?

Homeless Law in Practice provides resources and tools for Victorian lawyers and advocates. If you’re looking for help, visit Justice Connect.