‘Self-managing his property cost him $10,000’

By

10/12/2012


As the principal of Alexa Real Estate in Adelaide, Xenia Ioannou has worked with plenty of self-managed landlords who have turned to her for help after landing in a sticky situation

In one instance, it was a client who already used her services that almost ended up with a whopping fine, thanks to the missteps of a self-managed landlord. 

It all began when a tenant in Adelaide complained to her landlord that her air-conditioning unit was broken. The landlord told his tenant that he couldn’t afford to repair or replace it, but offered her a $10 per week rental decrease to compensate for the lack of cooling. 

“When the landlord offered a rent reduction, she accepted – but the law states that you can’t do that. Legally, it has to be fixed and you cannot override legislation with a personal agreement. But, the landlord did not know this,” Ioannou explains. 

A few years later, the property was sold to one of Ioannou’s clients. He wanted her to take over management of the property upon settlement so, during the sale process, she called the local tenancy tribunal to enquire about the amount of bond that was lodged. 

“The person on the phone said, ‘Why does that address ring a bell?’ She asked me to hold and when she came back on the line, she said, ‘Oh, you are aware of what’s happening with this property, aren’t you?’” Ioannou says. 

“It turns out that the tenant wasn’t happy with the situation and had applied for a rent reduction of $30 per week for the two-and-a-half years that the air-conditioning wasn’t fixed – plus the costs of living in a motel room during the really hot months, as she couldn’t cope without cooling.” 

In total, the tenant was asking for around $10,000, which included an amount of $4,000 for the rent reduction alone together with the cost of the motel. 

“I asked what the chances of the tenant winning her case were, and the person at the tenancy tribunal said, off the record, that it was virtually 100%, as it’s illegal for the landlord to fail to repair something like this,” Ioannou says. 

To make matters worse, the responsibility for paying the tenant would fall on the current owner, regardless of the fact that it was the previous owner who had fallen foul of the law. 

“I rang up the new purchaser, our landlord, who had no idea about any of this, and I recommended that he instruct his conveyancer to hold back an amount of money to cover these costs,” Ioannou adds. 

“He did, and the money was paid back to tenant out of the self-managed landlord’s pocket. At the end of the day, even though the tenant accepted the $10 rent reduction, the tenancy tribunal disregarded that because according to the law, she shouldn’t have had to put up with that situation. It sends a very clear message to landlords to ensure that you do the right thing and follow the letter of the law.”

 

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Comments
  • Rick says on 11/12/2012 01:22:55 PM

    What a load of rubbish. I'd like to know which sections of the Residential Tenancies Act the real estate agent claims were breached. Last time I checked, an air-conditioner wasn't considered an essential service and does not require immediate (or, in fact, ANY) repair. Making an agreement to reduce the rent in lieu of fixing an item such as an air-conditioner is acceptable. It does not seek to "evade the Act". The "knowledgeable" real estate agent conveniently leaves out detail such as whether or not the agreement was in writing....and other detail such as (1) Why did the tenant accept the $10 per week reduction, (2) why and how did the tenant then apply for a $30 per week reduction, (3) why did the tenant stay in a motel, (4) was the landlord aware and did the landlord agree to pay for a motel.
    Lastly, on what possible grounds can one person (ie. the new property owner) be legally responsible to pay the tenant compensation that the tenant claims is owed by another person (ie. the property owner at the time of the tenancy subject to the compensation claim) ???
    ItThis "story" is SO typical of what gives real estate agents a bad name....sensationalism, scare-mongering, scant detail, incorrect facts. Good one Xenia, you're an agent that obviously knows her stuff....NOT !!

  • Rick says on 11/12/2012 01:41:36 PM

    Haha I agree with Rick. Why did they call the tenancy tribunal to check how much bond was lodged ? Bonds aren't even lodged with the tenancy tribunal. What the real estate agent is saying doesn't make sense. If this dispute went on for 2 and a half years, that seems ridiculous. The $4,000 in claimed rent reduction means she was claiming the same reduction during all the other months of the year, even when an air conditioner would not be used. This agent is either dumb, foolish or plainly making stuff up to scare people. Managing a property isn't hard but you do have to follow the rules.

  • Tuula says on 11/12/2012 02:54:57 PM

    People, don't be fooled by this fear-mongering. I have saved myself thousands by managing my own properties. I have chosen this route after being badly burned by real estate agents.

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