Victorian real estate body contradicts minister over boycott of rent reduction talks

Victoria’s peak body for real estate agents is standing by advice to members not to take part in rent reduction talks, directly contradicting the state’s consumer affairs minister, who claims the Real Estate Institute of Victoria has changed its position.

The confusion comes after Victorian authorities made contact with the REIV, seeking an assurance that it was not asking members to break the law by breaching the profession’s code of conduct.

Evictions in Victoria are frozen until 28 March next year because of the coronavirus pandemic, and the state government has introduced rules to allow residential and small business tenants to either negotiate a rent reduction or have one fixed by the Victorian civil and administrative tribunal.

In a statement issued on Sunday, described by one property lawyer as a “tantrum”, the REIV advised members to tell their landlord clients not to participate in rent reduction talks with tenants.

The REIV said agents should instead tip cases into VCAT, which it claimed was already dealing with a backlog of 4,000 cases. VCAT declined to comment on whether there was a backlog or how big it was.

In an email to REIV members, obtained by Guardian Australia, president Leah Calnan said she was “incredibly disappointed” with a state government decision not to allow property inspections and auctions until the end of October, accusing it of ignoring “the plight of property owners and the real estate sector”.

“As such, we now call upon members to refuse to negotiate rent reductions, forcing every request into the dispute system, a system that has already failed to cope with the caseload,” she said.

The call raised concerns that agents who followed the REIV’s advice might breach professional conduct regulations available on the peak body’s own website.

Consumer Affairs Victoria director Sam Jenkin “has sought assurance from the Real Estate Institute of Victoria that it is not advising estate agents and their representatives to breach their legal obligations, and will consider if further action is required”, a spokeswoman said.

“Estate agents and their representatives are required to abide by professional conduct regulations, including to seek and act in accordance with a client’s instructions, act in the client’s best interests, act fairly, honestly and in good faith and be timely and courteous in all dealings.”

On Thursday, Victoria’s consumer affairs minister, Melissa Horne, said she welcomed the REIV’s “recently amended advice to landlords and agents to continue to assist in negotiating rental reductions”.

It is believed Horne based her view that there had been a change in the REIV’s position on statements made by Calnan in a video posted to a private social media group for REIV members.

Guardian Australia has not viewed any such video.

After being informed of the minister’s statement, an REIV spokesman said the body had not changed its position and stood by the statement made it on Sunday.

“Nothing’s changed,” he said. “All we’ve clarified to members is that it’s up to them whether they participate [in rent reduction negotiations] or not.

“If we change our position we’ll put out a release about it.”

Property lawyer Hana Lee, from Melbourne firm Forty Four Degrees, said she was concerned that agents who followed the advice of the REIV might breach clauses of the regulations requiring them to act in the best interests of clients, be timely and courteous in their dealings with people and not to not engage in conduct that is unprofessional or detrimental to the reputation of the industry.

She said it was “concerning that, as the industry organ, they are advocating for this sort of behaviour”.

“The concern there really is that it’s the peak body of the real estate industry in the state and they are having a little bit of a temper tantrum and saying we are not going to do the work that we are obligated to do if you won’t let us do the work that gets us paid,” she said.

She said her firm was dealing with 30% to 40% more rent disputes than before the pandemic. This included a number of residential tenancy disputes, which were previously rare, she said.

The REIV has previously accused tenants of refusing to cooperate with agents and landlords.

But Lee said there was “consensus across the board that the real estate agents have been quite difficult to deal with, non-responsive, and that’s been going on for many months now”.

She said residential renters should not need a lawyer to resolve disputes with their landlords.

“But people are emotional, they are stressed out, and they find they cannot communicate with their agents, who are not responding, they are being quite negative.”

Meanwhile, many small businesses have been forced to shut down by state government restrictions and do not have any revenue coming in, she said.

Some landlords were willing to cut rents, but in other cases “the real estate agent will sometimes respond, sometimes not, but they will constantly say they don’t have negotiations from the landlord”.

“Negotiations will drag on for months, we’ll have to take it to the SBC [Small Business Commission],” she said.

She said real estate agents should realise there were other industries far harder hit by the crisis.

“A house will still be standing at the end of the lockdown and an investment can be recouped in the long run, but there are businesses that are failing and we have clients that entering into liquidation because they don’t have a choice,” she said.

“Perhaps show just a little bit more empathy about the fact that they are not the only ones being negatively affected by this.”