Uncertainty over changes to the Residential Tenancies Act is contributing to the south-west's rental crisis, according to Roma Britnell.
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The Member for South West Coast said more landlords were choosing to rent their homes as Airbnbs because of the changes.
She raised the issue in parliament on Wednesday afternoon.
"Several people are coming into my office each week talking about being unable to find rental properties," Ms Britnell said.
"People with good jobs, references.
"Supply is short and landlords are actually avoiding the rental market because of the changes the government has made and is making to the residential tenancy laws.
"There's quite a lot of confusion and there's quite a lot of anxiety."
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Mr Britnell said a number of landlords were conerned about the change allowing residents to have pets, unless refusal order is obtained from VCAT.
She questioned what the process for this would include and whether a tenant was allowed to have a pet in a property while the refusal order was sought.
Ms Britnell said she was also concerned this may be a lengthy process.
In addition to that, Ms Britnell said there was no definition of pet.
"I can tell you a story about a property we had on one of the farms and it was rented to some people who decided to rare calves in the front lawn."
Ms Britnell said she had spent quite a lot of money establishing the lawn and garden beds, only for the calves to destory them.
"The lawn was completely destroyed," she said.
"I also had another situation where we had two showers in the property and the second shower was used as the kitty litter tray for the cats."
This resulted in the plumbing system for the house being damaged substantially, she said.
"This is what people are concerned about - these horror stories," Ms Britnell said.
"Owners are losing faith in the system with the new rule changes proposed."
Ms Britnell said more and more property owners in Warrnambool were choosing to list their property as an Airbnb.
In addition to that she said the region had a critical shortage of social housing.
"The government is ignoring the crisis and this has been developing in the south-west over the past five years," she said.
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