Defending bond and compensation claims

If the rental provider (landlord) believes they have suffered loss as a result of you breaching your rental agreement (lease) or Victoria’s rental laws, the Residential Tenancies Act 1997, they may apply to the Victorian Civil and Administrative Tribunal (VCAT) for your bond or for compensation.

The most common bond or compensation claims made by rental providers are for:

• Damage to the rental property or to fixtures or goods supplied with the property
• Cleaning

Claims for lease-breaking costs or lost rent if you leave without giving proper notice are also common. For information on defending against these claims see our page on Lease breaking.

If you agree the rental provider is entitled to some, or all, of your bond, or compensation, and you agree on the amount, make sure you get the agreement in writing.

The agreement should clearly state how much you have agreed to pay, how it will be paid, such as through a joint bond claim to the Residential Tenancies Bond Authority (RTBA), and confirmation that the rental provider will not make any further claim against you in the future.

You should also get a receipt for any payment you make to the rental provider.

You do not need to agree just because the rental provider is pressuring you. If you do not agree the rental provider will need to apply to VCAT, where they will need to prove why they should be given any part of your bond or compensation.

If the rental provider makes a bond or compensation application to VCAT it will be up to them to prove their claim. They need to prove that:

• They have suffered financial loss or property damage
• The loss or damage resulted from your breach of the rental agreement or the Residential Tenancies Act 1997
• The amount they are claiming is reasonable

They should also be able to provide proof that they spent the money they are claiming for, on the thing they are claiming.

For further information on rental provider’s claims and applications to VCAT see the section on this page headed ‘How a claim is made’.

If a rental provider makes a bond or compensation application to VCAT, there are defences you can raise that VCAT will take into consideration.

If the application is for compensation, VCAT will also need to take into consideration guidelines produced by Consumer Affairs Victoria (CAV) [section 211B]. These include guidelines on maintenance, cleanliness and damage and fair wear and tear.

Rental providers seeking compensation must apply to VCAT within 6 years of the fault or loss occurring (see section 5 of the Limitation of Actions Act 1958).

See our page Consumer Affairs Victoria guidelines. You can also view the full guidelines on Consumer Affairs Victoria’s website.

Note that all the sections in brackets on this page, such as [section 211B], refer to Victoria’s Residential Tenancies Act 1997. References in brackets to regulations and schedules, such as [regulation 90], are to the Residential Tenancies Regulations 2021. See the bottom of this page for links to all of these.

Fair wear and tear

If the rental provider claims there is property damage, VCAT must decide whether this is damage, or just fair wear and tear [section 61]. For example, if the carpet has become worn over time by people walking on it, this is fair wear and tear and not damage.

The best way to check the difference between the two is to think about normal use. If things wear out with normal use this is most likely fair wear and tear. If the rental provider wants to replace anything that has worn out through fair wear and tear, they have to pay for it themselves.

Fair wear and tear is also relevant for cleaning claims. For example, minor scuff marks on walls or floors, marks caused by foot traffic on carpets, or worn and faded curtains or blinds are all considered fair wear and tear under the Consumer Affairs Victoria guidelines.

For more examples of fair wear and tear compared to damage see our page Consumer Affairs Victoria guidelines. For the full guidelines see Consumer Affairs Victoria’s website.

Depreciation

The rental provider cannot claim the full cost of replacing something that was not new when it was damaged. VCAT must allow for ‘depreciation’, which means the older something gets, the less it is worth.

The Australian Taxation Office (ATO) produces an annual rental properties guide for rental property owners with information on depreciation over time, including a table of common household items and their depreciation life span. You can use this information to work out how long something is worth any money.

For example, carpets installed before 1 July 2019 have a life span of 10 years, meaning they decline in value by 10% every year. If a carpet is more than 10 years old, the value is zero.

You can get a copy of the ATO’s rental properties guide for the current year from its website.

For compensation claims for damage in addition to having to consider Consumer Affairs Victoria’s guidelines [section 211B], VCAT must also take into consideration depreciation and the ATO’s Rental properties guide [section 211A, regulation 90].

Cleaning

The law says you need to keep the property reasonably clean and, when you move out, leave it, as far as practicable, reasonably clean and in the same condition as when you moved in, taking into account fair wear and tear [section 63].

This does not necessarily mean that you need to get the property professionally cleaned or steam clean carpets, even if the rental provider tries to insist on this or says you need to do this if it is in your rental agreement (lease).

Rental agreements entered into from 29 March 2021 may include a term about professional cleaning, or cleaning to a professional standard [section 27C, regulation 12]. However, such a term only applies if:

• The property was professionally cleaned or cleaned to a professional standard immediately before you moved in, and the rental provider told you this had been done, or
• Professional cleaning, or cleaning to a professional standard, is needed to restore the property to the same condition it was in before the start of your tenancy, taking into account fair wear and tear [section 27C, regulation 12]

For any other professional cleaning terms in your rental agreement, such as a term that says you need to have the carpets steam cleaned, you can argue that they are not valid. This is especially the case if the cleaning terms are not in the standard form for residential rental agreements and if the rental provider is asking you to do more than the law requires, which is to leave the property reasonably clean. For more information on what can be included in a rental agreement, see our page Rental agreements (leases).

As a general rule, a good guide is to leave the property as you found it, apart from fair wear and tear.

So that you have evidence of the condition of the property when you move in, and again when you move out, take photos at both times. Also look at the entry condition report from when you moved in and the exit condition report from when you moved out. By law the rental provider has to make sure the property is reasonably clean on the day you move in. Any claim the rental provider makes to VCAT needs to take into consideration the cleanliness of the property at that time. You cannot be asked to leave the property cleaner than you when you moved in.

If you agree that the rental provider is entitled to part, or all, of your bond, or entitled to compensation, but believe the amount they are claiming is unreasonable, you will need to provide evidence of this. For example, you could contact cleaning companies to see how their rates compare to the rental provider’s claim.

For more information see our pages:

• Bonds, for tips on protecting your bond
• Moving out, for information on the condition you should leave a property in when you move out
• Consumer Affairs Victoria Guidelines, for information on cleaning and maintenance guidelines that VCAT needs to consider when a compensation claim is made [section 211B]

See also Consumer Affairs Victoria’s website for the full guidelines.

Damage

The law says you, and your visitors, must not intentionally or negligently damage the property or any common areas [section 61].

The rental provider can only claim costs for damage where it was caused by you breaching your rental agreement or the law. If the damage is due to fair wear and tear through normal use, this is not your responsibility. It is the rental provider’s responsibility to pay for repairs.

It is also not your responsibility to pay for damage caused before you moved in or after you moved out. If the rental provider is making a claim for your bond, or compensation, for damage you did not cause, you should provide evidence of the state of the property at both the start and end of your tenancy, such as copies of the entry and exit condition reports, photographs and witness statements.

Amount claimed for damage 

If you agree that the rental provider is entitled to part, or all, of your bond, or compensation, but believe the amount they are claiming is unreasonable, you will need to provide evidence of this.

For example, if the claim is for the cost of repairs or replacement of property or fixtures, you should get quotes from shops or tradespeople to show that the rental provider is trying to claim too much.

Also check the age of the item to make sure depreciation is included, so you can work out its true current value. The rental provider cannot claim the full cost of replacing something that was not new when it was damaged.

The rental provider’s claim also needs to be in proportion to the damage caused. For example, they cannot claim for the cost of repainting the entire house if paintwork is damaged in just one room.

Example: claim for damage

The rental provider makes a claim for the full replacement cost of brand new, high quality, carpets throughout the entire house because there is a small stain on the carpet in one of the rooms, caused while the renters were living there. They try to justify the claim by saying if they have to replace the carpet in the one room where the stain is, then the new carpet in that room will not match the carpet in the rest of the house, so the entire house needs to be re-carpeted.

At the time the renters moved in:

• The carpets were the original carpets from the time the property was built, 20 years ago
• The carpets did not appear to be of a very high quality as they showed signs of wear in high-traffic areas and were worn through in some places
• There were several small pre-existing stains on the carpets throughout the house
• The entry condition report notes the stains and marks due to wear that were there before the renters moved in
• Photos taken by the renters and the agent also show the stains and marks were there before the renters moved in

At the time of the rental provider’s application:

• The original carpet is still in the property – nothing has been replaced
• The renters have moved out and the property has been relet at the same price

Prepare the case

To prepare their case, the renters need to answer these questions:

• Has the rental provider suffered property damage? Or is the state of the carpets due to fair wear and tear?
• Has the rental provider suffered financial loss?
• If they did suffer financial loss, is it because the renters breached their rental agreement or the law?
• Is the amount the rental provider is claiming reasonable?
• Has depreciation of the carpet’s value been included to get the true current value?

Property damage

The small stain, caused while the renters were living there, could be considered property damage if it is not wear and tear from normal use. However, it might be wear and tear if it is not a stain, but instead a mark visible due to the carpet wearing through from normal use.

Financial loss

Even if there is property damage, the renters can argue the rental provider has not suffered any financial loss because of the stain because:

• They have not spent any money changing the carpets
• They have been able to relet the property for the same price
• The carpets have no financial value due to their age as they have fully depreciated according to the ATO’s Rental properties depreciation guide

Is the amount reasonable?

The renters can also argue that the rental provider’s claim is not reasonable because:

• The claim is not in proportion to the damage caused and it is unreasonable to ask for the carpets to be replaced throughout the entire property because of a small stain in one room
• There are methods other than replacing the carpet that could be taken to deal with the stain, such as cleaning or repairing the existing carpet, which cost less
• The replacement quality of the carpet the rental provider is claiming for is not reasonable compared to the lower-quality carpet that was there before
• The carpets were old, stained and worn before they moved in, and should be replaced as part of the rental provider’s duty to maintain the property in good repair, regardless of any stain caused while they were living there

Collect evidence for VCAT

The renters should collect evidence to support their defence, such as the entry and exit condition reports, entry and exit photos, and quotes for cleaning or repairing the carpet. They can even include quotes for new carpets of a similar quality to the existing carpets to show that what the rental provider is asking for is excessive and not reasonable.

It will be up to VCAT to decide if any of the bond or compensation should be paid to the rental provider. Even if VCAT decides that the renters have some liability for property damage, a well-prepared defence can help reduce the amount the rental provider is claiming down to an amount that is reasonable.

Bond claims

The only claim the rental provider can make to the Residential Tenancies Bond Authority (RTBA) without your involvement is one that says all of the bond is to be paid to you. For the types of bond claims that can be made directly to the RTBA, see our page Bonds.

If the rental provider wants any of your bond, and you do not agree with them, they will need to apply to VCAT, and can only do this after you have moved out.

They have 14 days from the time you move out to make a bond application to VCAT [section 419A].

Compensation claims

If the rental provider wants to claim compensation from you, they can do this at any time during your rental agreement, though in most instances they will wait until after you have moved out.

If you disagree with their claim, the rental provider can make a compensation application to VCAT.

Claims while you are living at the property

If you are still living in the property and the rental provider wants to claim compensation from you for loss suffered as a result of you breaching a duty under the Residential Tenancies Act 1997, they must give you a Breach of Duty Notice [section 208]. They need to do this before they can apply to VCAT [section 209].

See our page Renter breaches.

Claims after you have moved out

If you have moved out of the property the rental provider does not have to give you a Breach of Duty Notice. They can apply directly to VCAT [section 210].

If the rental provider makes an application to VCAT for your bond, or for compensation, VCAT will schedule a hearing. If you do not agree with the rental provider’s claim you must attend the VCAT hearing so you can give your side of the story and defend yourself against the claim.

Claim limits

For bond applications, the most the rental provider can claim is the amount of your bond.

If the amount that the rental provider wants to claim from you is more than your bond, the rental provider can make a claim against your bond and a compensation claim at the same time.

For compensation applications, VCAT can hear compensation claims for amounts up to $40,000 under the Residential Tenancies Act 1997 [section 447]. For larger claims the rental provider will need your consent or will need to go to the Magistrates’ Court or a higher court [section 447].

If the rental provider makes a large claim or makes a claim under the Australian Consumer Law and Fair Trading Act 2012 (Vic), for advice contact us, your local Tenancy Assistance and Advocacy Program (TAAP) service for people in private rentals, Tenancy Plus provider for renters in public and community housing, community legal centre or Victoria Legal Aid.

Give a forwarding address

As applications to VCAT may be made after you have moved out, make sure you give the rental provider or agent a forwarding address. If they don’t have one, they, and VCAT, might deliver notices and documents to the rental property where you used to live. You may not find out about the rental provider’s application until after the hearing. Ensure that you get your mail by having it redirected by Australia Post from your old address to your new address when you move.

If a VCAT hearing goes ahead without your knowledge, and orders are made, you can apply to VCAT to reopen the order. You need to make the application within 14 days of finding out about the order.

If the application was for your bond, and this has already been paid to the rental provider, you can ask VCAT to make an order that the rental provider repay you the amount they have received from your bond.

Get a copy of the application

If the rental provider applies to VCAT they must give you a copy of their application. The application should include the amount of your bond, or the amount of compensation, they are claiming and why they are claiming it. The rental provider must also give you any evidence they are relying on to support their application.

If you do not receive their evidence with the application, you should ask them to send this to you before the hearing. Tell them you will ask for the hearing to be adjourned (delayed) if you have not received the evidence or if you have not been given time enough time to review it before the hearing.

Put your request in writing so you can present this at the hearing to support a request for adjournment.

VCAT’s hearing notice

If the rental provider applies to VCAT, it will send you a ‘notice of hearing’ telling you where and when to go for the hearing.

If you cannot attend

If you do not turn up, the rental provider could get what they ask for. VCAT can make an order even if you do not go to the hearing.

If you cannot go to the hearing, you might be able to change the hearing date – or attend by phone or video conference. See VCAT’s website for information on changing a hearing date and on attending by phone or video.

Your evidence

At the VCAT hearing you will get an opportunity to tell your side of the story and to present your own evidence. Get together early any evidence that will help you defend against the rental provider’s claim.

This might include evidence about the condition of the property at both the start and end of the tenancy such as:

• The entry and exit condition reports
• Photos of the property at the time you moved in, and if you have moved out, at the time you moved out
• Receipts for any cleaning you may have done, or arranged to be done
• Your own quotes for cleaning, repairing or replacing items, if you want to show that the amount the rental provider is asking for is unreasonable
• Any witness statements that support your defences

For more information on using evidence see the ‘prepare evidence’ page on VCAT’s website.

Make copies

Make 3 copies of all the evidence you want to use at the hearing – one for you, one for the rental provider and one for VCAT. Make sure everything can be read clearly.

Take your evidence to the hearing

Any evidence you want to show VCAT at the hearing will also need to be shown to the rental provider or agent.

If the hearing has been scheduled to take place online contact VCAT before the hearing to discuss how you can provide your evidence at the hearing. Contact VCAT by email at renting@vcat.vic.gov.au or by phone on 1300 01 8228

Prepare for the hearing

At the VCAT hearing you will be given an opportunity to tell your side of the story.

If you do not agree that you are responsible for the rental provider’s loss, or think the rental provider’s claim is not reasonable, you will get a chance to state your reasons and provide any evidence to support your reasons.

To prepare for the hearing, make a few brief notes outlining what you want to say and get all your evidence together. Being organised is the key to presenting a good case.

Make sure you take to the hearing a copy of the rental provider’s application, their evidence, your own evidence and your notes.

For more information on getting ready, see our VCAT page.

VCAT orders (decisions)

VCAT will usually make a decision, called an order, on the day of the hearing. This will be made verbally at the hearing then put in writing and given to everyone in the application. Usually, the orders are made in writing on the same day as the hearing.

If VCAT makes an order and you do not understand the order, ask the VCAT Member, who is the person who hears and decides the case, to explain it to you slowly.

For bond applications, VCAT will make an order about how the bond is to be released by the RTBA.

For compensation applications, if VCAT makes an order that you have to pay compensation to the rental provider, you will need to consider how you will pay the claim. After the hearing, you can try to negotiate a payment plan with the rental provider – make sure you get any agreement in writing – or speak to a financial counsellor. See our page Financial hardship for information on free financial counselling.

Our video, ‘Going to VCAT’ has step-by-step guidance on how to prepare for and go through the VCAT process.

Bonds
Consumer Affairs Victoria Guidelines
Renter breaches
Financial hardship
Moving out
Video guide: Going to VCAT