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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