A rental agreement, sometimes called a lease or residential tenancy agreement, is a contract between a renter (tenant) and a rental provider (landlord). It outlines the terms and conditions for renting a residential property, such as a house, unit, or apartment.

Different types of agreements are used for rooming houses, caravan parks, and site tenants in residential parks and villages and that is why it is so important to learn the steps for creating a legally compliant lease.

What to Include in a Rental Agreement (Lease)

Rental agreements should include:

• the amount of rent and how it will be paid
  
• how rent increases will be calculated
  
• the length and type of agreement
  
• the amount of bond required
  
• any rules or conditions
  
• any special terms.

You can learn more about renters’ rights when signing a rental agreement.

When entering into a written rental agreement, you must use the ‘prescribed form’ required by Victorian rental law.

Extra terms can be added to the agreement, as long as they are not against the law. You cannot include terms that take away any legal rights or responsibilities.

There is no cooling-off period for rental agreements, so you should fully understand and agree to the terms before signing.

Types of Residential Rental Agreements (Leases)

There are three types of residential rental agreements:

• Short fixed-term agreements
  
• Long fixed-term agreements
  
• Periodic (month-to-month) agreements

Short Fixed-Term Agreements

These are the most common and usually last 6 or 12 months, but can be for up to 5 years. They can be written or verbal, but written agreements are recommended.

You should use this form:
Form 1 – Residential Rental Agreement (Word, 1.5MB)

If the agreement ends and the renter stays without signing a new one, it becomes a periodic (month-to-month) agreement.

Long Fixed-Term Agreements

These agreements last for more than 5 years.

Some renters choose this type of agreement for added security and stability. It also allows both parties to agree on things like rent increases and property changes before signing.

Special rules for long-term agreements include:

• Bond top-ups: After 5 years, the rental provider can ask for more bond if the new agreement is also for 5 or more years.
  
• Changes to the property: Renters can agree on changes (like fixtures) before signing. If included in the agreement, no further permission is needed.
  
• Breaking the agreement: If a renter leaves early, they may need to pay one month’s rent for each full year left on the lease, up to 6 months.

These agreements must be in writing. If not, the renter can end the agreement at any time with 28 days’ notice and without a penalty.

You should use this form:
Form 2 – Residential Rental Agreement for a Fixed Term of More Than 5 Years (Word, 632KB)

When a long fixed-term agreement ends, and the renter stays without a new agreement, it becomes a periodic agreement. The rules for this new agreement will follow the standard rules for a 5-year or shorter fixed-term agreement.

Periodic (Month-to-Month) Agreements

These agreements do not have a set end date.

When a fixed-term agreement ends, it turns into a periodic agreement unless the renter or rental provider ends the agreement or agrees to a new fixed-term lease.

Usually, renters don’t sign a new agreement when this happens. However, if either party wants a written agreement, they must use the correct form:
Form 1 – Residential Rental Agreement (Word, 1.5MB)

If the previous fixed-term agreement was for 5 years or less, the same terms will apply to the new periodic agreement.

If a long fixed-term agreement becomes periodic, the terms of the new agreement will follow the standard rules for a fixed-term agreement of 5 years or less.

Before Moving In

Before a renter moves in, the rental provider or agent must give them:

• a copy of the rental agreement (if it’s written)
  
• a copy of the Renters Guide (paper or digital, depending on the renter’s preference)
  
• a phone number for urgent repairs outside business hours
  
• the rental provider or agent’s full name, mailing address, and email address (if documents will be sent electronically)
  
• a set of keys for each renter who signed the agreement
  
• a condition report (two copies or one digital copy)

Reporting Issues with Advertised Rental Properties

If you’re a prospective renter and have concerns about an advertised property, you can report it. Learn more by viewing Report an Issue with an Advertised Rental Property.

Changing Agreements (Leases)

Renters and rental providers can switch from one type of agreement to another. This can happen in two ways:

• by agreeing to end the current agreement early and start a new one
  
• by waiting until the current agreement ends before starting a new one

When a fixed-term agreement ends, it becomes a periodic agreement unless either party gives notice or starts a new fixed-term agreement.

Conditions That Cannot Be in an Agreement (Lease)

While extra conditions can be added if both sides agree, some conditions are not allowed. If any of these are included, they are not valid, and the rental provider could face penalties.

Renters cannot be required to:

• take out insurance
  
• pay extra rent or penalties for breaking the rules
  
• pay for preparing the agreement
  
• pay rent in a way that adds extra costs (except for normal bank or account fees)
  
• use a third-party service provider chosen by the rental provider (except embedded networks)
  
• pay for or arrange safety equipment maintenance if it’s the rental provider’s responsibility
  
• indemnify the rental provider

The agreement also cannot state that:

• rent will be reduced if the renter follows the rules
  
• the renter will get rebates or payments for following the rules
  
• the renter is bound by another contract they didn’t agree to in writing
  
• the renter cannot ask for compensation if the property isn’t available on the start date
  
• the renter must pay the rental provider’s costs of applying to VCAT
  
• the renter must pay an insurance excess on the rental provider’s policy
  
• the renter is automatically responsible for an insurance excess under the provider’s policy (each case must be considered)
  
• the renter must pay a fixed fee for ending the agreement early (unless the way it’s calculated is clearly explained in the agreement)

Seth Erhart