Being a landlord involves more than just collecting rents and maintaining the property. Pamela Yardney, director with Metropole Properties, outlines what every landlord needs to know about their rights and responsibilities.
While in the past it’s true that many tenants thought landlords had unreasonable rights, now the pendulum has swung in favour of the tenants and many landlords feel their rights have diminished and their responsibilities have increased.
As a landlord it is important for you to understand your rights and responsibilities so that you don’t fall foul of the legislation in your state. If you do, you may end up facing a hefty fine from the courts.
While your property manager will advise you and act on your behalf, as an investor, it’s a good idea to understand the rules setting out your obligations as a landlord.
Unfortunately many landlords managing their own rental properties are not familiar with the regulations and become disillusioned with owning an investment property because “the tenant is being difficult”. Rest assured tenants know their rights; the problem is many landlords don’t and the rental process can become too hard.
All landlords should take a bond from their tenants as a security deposit. If tenants fail to keep the premises clean, damage the property or don’t pay rent, the landlord or their agent can claim some or all of their bond at the end of the tenancy.
What some landlords don’t understand is that this bond must be forwarded to their state’s residential tenancies bond authority who will hold the bond on behalf of the tenant and landlord during the tenancy.
In most cases, the bond is equivalent to one month’s rent but it can be more than that for some expensive properties or if the rental property was previously the landlord’s own home. However, even if you increase the rent on the property during the tenancy, unfortunately you can’t increase the amount of the bond accordingly.
At the end of the tenancy, we occasionally find that the landlord believes he can claim on the bond because the property is not in the same condition as it was at the beginning of the tenancy. Remember that the costs of rectifying what is commonly called “fair wear and tear” can’t be claimed. As a landlord, however, you can make a claim on the bond for:
- Damage caused by the tenant or the tenant’s visitors.
- Cleaning expenses.
- The tenant abandoning the premises.
- The tenant leaving the landlord to pay bills the tenant should have paid.
- Loss of the landlord’s goods.
- Unpaid rent.
In Victoria, if there is a disagreement about the bond, or the landlord wants to claim compensation over and above the bond, they must apply to the Victorian Civil & Administrative Tribunal within 10 business days of the tenant vacating. In NSW the arbiter is the Consumer, Trader and Tenancy Tribunal. Other states and territories also have equivalent bodies.
This is where filling out a comprehensive condition report at the beginning of the tenancy, and having photographic evidence, is extremely important. It can be used as evidence helping the landlord or their agent claim all or part of the bond for cleaning, damage or replacing missing items.
Rent can be paid weekly, fortnightly or monthly, however if rent is paid weekly, the landlord can’t ask for more than 14 days rent at the beginning of a tenancy.
Utility and service charges
The landlord must pay all installation and initial connection costs for electricity, gas and oil supply.
As a landlord you must:
- Give the tenant a copy of the booklet relevant to your state outlining their rights as or before they move into your property.
- Make sure the premises are vacant and reasonably clean on the day the tenant is due to move in.
- Keep the premises and common areas in good repair.
- When replacing any water appliance, fitting or fixture, ensure it meets Standards Australia ‘A’ rating.
- Pay all installation and initial connection costs for electricity, gas and oil supply. If there isn’t a separate meter to the premises, the landlord must pay all other charges.
- Reimburse the tenant if the tenant has paid the costs of any utilities for which the landlord is liable. If bottled gas is provided, the landlord pays for the supply or hire of bottles.
- Make sure all external doors have locks and windows can be secured.
- Give the tenant a key as soon as possible after changing any lock.
- Let the tenant have peace and quiet and enjoyment of the premises.
- Not enter the premises to carry out a general inspection until after the end of the first three months of the tenancy and after this time, follow rules regarding proper notice periods.
When can you visit your property?
While you may feel like checking on how your tenant is looking after your property, you can’t just pop in whenever you feel like it. Local legislation will stipulate how frequently you can do this and how to go about it.
For example, in Victoria, a landlord may enter the premises as long as the tenant agrees to the time and was consulted within the last seven days.
Occasionally you may need to enter your property on short notice. In Victoria, a landlord has the right to enter within 24 hours after having given written notice to the tenant in order to:
- Carry out duties under the Residential Tenancy Agreement or Residential Tenancies Act 1997 or any other Act.
- Value the property.
- Show prospective buyers or lenders through the premises.
- Show prospective tenants through the premises.
- Verify a reasonable belief that the tenant has not met their duties as a tenant.
- Make one general inspection in any six-month period, but not within the first three months of the tenancy.
Under these circumstances, the landlord is allowed to enter the premises if the tenant is not home, providing the requirements regarding written notices have been met. The landlord does not have the right to enter in an unreasonable way or stay any longer than necessary unless it is with the tenant’s permission.
Occasionally you will be contacted by your tenant or property manager advising that you are going to have to repair an item in your rental property. While some of these may not be urgent, there are others that will need to be attended to promptly.
You will need to respond to requests for urgent repairs without delay. If you don’t do anything, your tenant has the right to arrange for these repairs to be completed up to the value of $1,000 – at your expense.
If you are unsure of what is classified as an “urgent repair”, consult your property manager or your local consumer affairs office.
Non-urgent repairs must be carried out within 14 days in Victoria. In NSW, the stipulation is “within a reasonable time”. Obviously my recommendation is the sooner the better. If non-urgent repairs are not attended to, your tenant may apply to the tribunal for an inspection and subsequent report. After 60 days (in Victoria), the tenant can apply to the tribunal for a repair order.
Even though tenants may feel like it, legislation usually prevents them from withholding rent while waiting for repairs to be done.
When can you increase the rent?
Tenants always think their rent is too high but most landlords want to take advantage of the tight vacancy market to maximise their investment returns. The problem is you can’t just increase the rent whenever you want to.
For example, if you have a standard lease, you can’t increase your rent until the end of the fixed term unless your agreement states otherwise.
In any case, you can’t increase the rent more than once every six months and you, or your agent, must give the tenant at least 60 days notice of any proposed rent increase.
How do you end the tenancy?
There are a number of set ways to end a tenancy agreement and these methods vary slightly from state to state. Even if an agreement has a fixed end date, you will need to give notice to end the tenancy.
Because the tenant’s rights to remain in the property are protected by law, if you want to end the tenancy, you should check:
- The reasons allowed in your state for giving notice to end a tenancy.
- Whether the notice needs to be given on an official notice or form.
- How much notice you need to give before the end of the agreement.
As a landlord you have the right to choose the tenant you consider the most suitable for your property but equal opportunity legislation in each state makes it unlawful to discriminate against or harass people. What this means to you is that you can’t select your tenant based on their age, race, religion, sex or a whole host of other discriminatory reasons. If you do, you could be liable to pay damages or fines.
To maximise your investment returns and to minimise your headaches, you should consider enlisting a professional property manager to look after your real estate assets. That way, all contact with the tenant should be through them, shielding you from the day-to-day hassles of finding tenants, completing agreements, organising maintenance, and if necessary, sorting out problems at the tribunal.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now