For the written reasons provided, the Tribunal orders that:

1. Caryl Danrell, Brendan Downes and Kristy Downes (the rental providers), want to sell their investment property with vacant possession.
2. However, in the current rental market in regional Victoria, the consequence for renters, Belinda Gordon and Tony Morris, is that their family of five will be rendered homeless by a possession order.
3. For the reasons that follow, I am not satisfied that it is reasonable and proportionate to make a possession order and the application by the rental providers is dismissed.

1. On 22 February 2022, the rental providers sent the renters a notice to vacate under section 91ZZB of the Residential Tenancies Act 1997 (Vic.) (the RT Act), by registered post, asking the renters to vacate by 1 May 2022. The notice stated as follows:

I am giving you this notice for the following reason: > > Section 91ZZB Premises are being sold > > 91ZZB(1): The premises are to be sold or offered for sale with vacant possession immediately after the termination. > > The rental provider has signed an exclusive sale authority with Stockdale & Leggo. The sale authority was signed on 07/02/2022 by the vendor. The property is to be sold with vacant possession.

2. The notice was accompanied by mandatory documents as approved by the Director of Consumer Affairs, being a signed sale authority.[1]
3. The renters do not challenge the validity of the notice to vacate or the rental providers' entitlement to give it. The evidence produced at hearing is that the rental providers are wanting to sell the premises with vacant possession as soon as possession is returned and have placed the same in the hands of a real estate agent for that purpose. I find that the grounds provided in the notice to vacate are proven and am also satisfied that the notice was given to the renters in accordance with the RT Act, and in particular section 506(3).
4. The rental providers gave the renters a valid notice to vacate and were entitled to make this application to the Tribunal for possession.

Is it reasonable and proportionate to make a possession order?

1. An application for possession under section 322 of the RT Act, based on a notice to vacate given under section 91ZZB, requires the Tribunal to make a possession order, if:

.... in the circumstances of the particular application, it is reasonable and proportionate having regard to section 330A, to make a possession order taking into account the interests of, and the impact on, each of the following in making the possession order-

(i) the residential rental provider, rooming house operator, caravan park owner, site owner or mortgagee, as the case requires;

(ii) the renter, resident or site tenant;

(iii) any co-tenants or co-site tenants or other residents;

(iv) any neighbours or any other person who may be, or who has been affected by, the acts or behaviour of the renter, resident or site tenant to whom the notice to vacate was given.[2]

1. What is reasonable and proportionate is defined under section 330A of the RT Act:

For the purposes of determining whether it is reasonable and proportionate to make a possession order, the Tribunal must have regard to the following-

(a) the nature, frequency and duration of the conduct of the renter, resident or site tenant which led to the notice to vacate being given, including whether the conduct is a recurring breach of obligations under a residential rental agreement, residency right or site agreement;

(b) whether the breach is trivial;

(c) whether the breach was caused by the conduct of any person other than the renter, resident or site tenant;

(d) whether the renter, resident or site tenant has made an application for a family violence intervention order, non-local DVO or personal safety intervention order and-

(i) if an application has been made, whether a family violence safety notice, family violence intervention order, recognised non-local DVO or personal safety intervention order has been made and whether the notice or order is still in force; and

(ii) if a notice or order was made, whether it included an exclusion condition; and (iii) any other matter in relation to family violence or personal violence the Tribunal considers relevant;

(e) whether the breach has been remedied as far as is practicable;

(f) whether the renter, resident or site tenant has, or will soon have, capacity to remedy the breach and comply with any obligations under the residential rental agreement, residency right or site agreement, as the case requires;

(g) the effect of the conduct of the renter, resident or site tenant on others as a renter, resident or site tenant;

(h) whether any other order or course of action is reasonably available instead of making a possession order;

(i) as the case requires, the behaviour of the residential rental provider, the provider's agent, the rooming house operator, the caravan park owner, the caravan owner or the site owner;

(j) any other matter the Tribunal considers relevant.

1. Each of the matters identified above is to be considered in the context of the application for possession, which is based on the sale of the premises.
2. Section 330A subsections (a) through to (g) relate to the conduct of a renter and the nature of any breach of duty owed by a renter under the rental agreement. The rental providers grounds for seeking a possession order in this case are not founded on a breach by the renters. Unlike some applications at the Tribunal where the reasons for selling a property are related to an owners inability to pay the mortgage due to a renter's failure to pay the rent, that is not the situation with this application. The renters are complying with their obligation to pay rent to the rental providers. In a similar vein, the rental providers have been complying with their obligations under the rental agreement and as such section 330(i) is not engaged by the facts in this case.
3. This application for possession could easily be described as a "no fault" application. The Tribunal is required to balance the competing interests of both the rental providers and the renters, and the impact on each of them, in determining whether it is reasonable and proportionate to make a possession order. In this case it requires a consideration of the reasons why the rental providers need to sell the rented premises, why they would like to sell with vacant possession, whether there is any other course of action open to enable the sale without making a possession order, the renters' actions in assisting with a sale while in possession, efforts made by the renters to find alternative accommodation and generally the rental market and economic climate.
4. The rental providers recently sold an investment property at a loss which necessitated an increase to the mortgage of their primary place of residence. The rental providers say that with interest rates going up, they cannot afford to service the mortgage and need to sell the rented premises.
5. The rental providers have not attempted to sell the rented premises with the renters in possession. They say this is because the home is not presented well in its current state, both due to the age of the premises and because the renters have a large number of items throughout the house and yard which clutter the property. The rental providers agent says it is anticipated that minor maintenance works need to be undertaken and it would be more convenient to do this while the renters aren't in occupation.
6. The rental providers are also wanting to sell the property with vacant possession as they say it will attract a wider market of purchasers, including owner/occupiers, and they will be able to achieve the best price available. They submitted a letter from the sales consultant of Stockdale & Leggo in support of this contention:

By presenting a property for sale vacant it opens up the opportunity to a wider range of buyers & creates competition, owner occupiers are prepared to pay a premium price over an investor, as an owner occupier buys with emotion. > > With regards to marketing the property for sale, photography, presentation & sales inspections with a renter in place can be a difficult & an inconvenience (sic) process for the renter. > > This particular property in question, requires minor maintenance for presentation to achieve current market value. From a sales perspective, when purchased by an owner occupier there is no guaranteed settlement date, which is set out due to legislation, which can hinder the sale process, for example a renter cannot afford current market rental, cannot find a suitable home for their requirements. > > When presenting a property for sale, investors look for a 5% yield. With a current rental amount of $340 per week, the property with a rental return at 4.62% values the property at $380,000, however comparable sales evidence indicates the property could achieve a sale price of $500,000 as per the appraisal. > > A direct comparable rental in the same estate is (address deleted) which is rented at $395.00 per week, which is featured in the accompanying appraisal.[3]

7. The author of the letter did not attend the hearing to be questioned about his opinions or assessment of buyer attitudes.
8. The rental providers have not issued the renters with a notice of rent increase and the renters acknowledge that the rent they are currently paying is below market value given recent rent rises in the rental market, in and around Shepparton.
9. The renters also acknowledge that the rented premises has not always been presented in a "marketable" state during routine inspections, but that considerable efforts have been made by them recently to keep the place neat and tidy. They say they would make every effort to present the premises in a state that is attractive to a potential buyer. They also say they would be willing to accommodate any repairs or renovations that the rental providers wish to make.
10. The renters gave evidence of their efforts to find suitable alternative accommodation, following receipt of the notice to vacate. The renters make up a family of five, with two of the children having special needs and requiring a room of their own. They also have considerable items, which occupy the double garage and large yard at the rented premises. While they are currently paying $340 a week in rent, they have applied for properties where the rent is up to $475 a week. They say while such a jump in rental payments would be a significant economic stretch, properties under $400 per week are limited in size and are not suitable for their family. Staying with family or friends is not an option for the renters.
11. Despite increasing their rental budget, and applying for close to 90 properties, the renters have been unsuccessful in finding alternative accommodation. The only available rental option is in a caravan park which comes at a cost of $1,000 a week. The renters say $1,000 a week is well beyond their budget.
12. The Tribunal is provided with anecdotal evidence on a daily basis about the housing crisis facing not only Victorians, but all of Australia. There are media reports of rental housing availability being swamped by demand with at least 30 applications for every property that goes on the market. This demand is even greater in regional Victoria. This will no doubt be further impacted by recent flooding events in the north of the state, and in and around Shepparton.

1. There is no doubt that the rented premises is the rental providers' property and they are entitled to sell it. They should also be able to realise the best price possible for their investment - but at what cost to the renters?
2. The reality for the renters, and their family, is that a possession order will make them homeless. The renters are employed locally, their children attend local schools and all their needs are currently being met by local services as they require. A move out of the area is not an option. The renters have also attempted to find alternative accommodation locally, but the rental market, along with the general economic climate, means there is nothing suitable that is available.
3. Selling the premises with the renters in possession is a course of action that is reasonably available to the rental providers and should be explored. The renters have expressed a willingness to assist the rental providers in presenting the premises in a "marketable" state and have also said they would be agreeable to any maintenance works by the rental providers to assist with the presentation of the property.
4. Renters who are accommodating to their rental providers needs and who comply with their obligations under the rental agreement are an attractive proposition for any investor and may even add value to the premises.
5. For these reasons it is not reasonable and proportionate to make a possession order at this time and the application for possession is dismissed.

[1] Section 91ZZO(e) of the RT Act states that a notice is not valid unless it is accompanied by documentary evidence as approved by the Director from time to time which supports the reasons for giving the notice.

[2] See section 330(1)(f) of the RT Act.

[3] Undated letter by Darren Butler, Senior Sales Executive of Stockdale & Leggo.