High risk, low reward: Private landlords reminded of stiff penalities

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Investors considering privately managing their properties have been served a reminder of the cost that can come with not doing it properly by Western Australia’s Consumer Protection department.

Bozena Sakowski was recently handed a $7,200 fine and ordered to pay another $396 in court costs after she plead guilty to 24 breaches of Western Australia’s Residential Tenancies Act.

Sakowski received eight $500 fines for failing to lodge bond with the Bond Administrator and failure to provide a receipt for the bond and 16 $200 fines for ailure to use the correct form and information when entering into a written tenancy agreement and failure to provide a property condition report at the start and end of a tenancy.

According to Consumer Protection, Sakowski kept bond monies in her personal bank account or safe and created her own lease agreement, which included conditions that were not acceptable, such as no children being allowed to visit the property.

Standard lease agreements were made mandatory in Western Australia, while providing condition reports is also compulsory.

Bond money is required to be lodged within 14 days.

Mark Whiting, director of property managers Access Property, said the three areas where Sakowski was found to have breached regulations where the most common areas where private landlords find themselves in trouble and he believes it’s getting harder and harder for private landlords to keep up with current legislation.

“Here in Western Australia we had something like 110 changes to residential tenancy legislation happen at the start of July 2014. Because of the size of those changes there was a big campaign to make sure everybody was across those changes and I think a lot of private landlords took notice of that,” Whiting said.

“But the thing is there are a lot of smaller changes that happen from time to time and don’t get that publicity and unless you’re really across everything you’re going to miss those and that’s where I think a lot of private landlords get caught,” he said.

While he believes private landlords are running bigger and risks trying to manage properties and tenants on their own, Whiting said current rental conditions, particularly in Western Australia, have people believing they can’t budget for the services of a property manager.

“The number of private landlords seems to be stying pretty steady. With what’s happening in the rental market here people seem to be thinking that a property manager is something they can’t afford so they’ll do it themselves.

“The reality is that you’re probably costing yourself money if you do it yourself. A good property manager is going to probably have a better understanding of the market than you do and will be able to be much more efficient in renting the property out and getting you the best return.”

For those that do choose to go the self-managed route, Whiting urges them to make sure they understand the potential penalties they could face if they slip up.

“I really don’t think most private landlords have any idea of the size of the fines they can be hit with for not doing the right thing. Consumer Protection in the last year or so have gone from saying ‘you can be fined for this’ to ‘you will be fined for this.’”

“It’s all well and good to think you’re going to save money by doing things yourself or you can’t afford a property manager, but only one fine could easily cost you more than a manger would.”

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  • Graham says on 24/03/2016 02:36:25 PM

    The tenancy laws aren't that difficult actually. Good luck trying to find a competent property manager. It's way less stressful to manage our own properties. Takes less time as I don't have to manage the property manager. Tenants also appreciate that maintenance is done quickly.

  • Not a veggie says on 25/03/2016 01:11:08 PM

    What is the world coming into, believing that we are unable / incapable to manage and understand Their new laws. Landlords simply need to keep with the laws that are coming into place and manage their own portfolio. Had several property managers and none of them were up to it, it is just a job for them, the properties are not theirs. As Graham mentioned above tenants appreciate when the maintenance is done accurately and promptly, you will keep your tenants longer and have a better business relationship with them instead having the property manager playing the blaming game on each landlord / tenant.

  • smarty pants says on 07/11/2017 05:44:41 PM

    I completely agree with the above comments. I have been witness to property managers letting the property they manage deteriorate to the point of disrepair. Very often the property managers are not doing their job and deliberately misleading the owners as to the conditions the property really is. For instance one property manager would send the owner black and white photo of the garden to hide the fact that entire lawn was dead together with the rest of the garden. They would engage contractors for repairs on the property that charge twice that normally the cost would be. I know the case where the unsafe wall that was allowed to deteriorate to the point of disrepair fell and killed the tenant at the property, well manager was "not responsible". And being neighbours we approached the manager on one of her inspection visits to question her about the very visible deterioration of the property. Needles to say we were met with very hostile reception. Usually you have no access to your own property to verify it's condition. While when you do your own inspections you have direct contact with the tenant, built a better relationship with the tenant and can asses your property condition first hand. And most importantly don't have to pay very high fees for the questionable inspections.
    The person that brought to our attention the case of Ms Sakowski is serving interests of this questionable managers. No thank you I would rather have a safe environment for my tenants, money are not everything the relationship with your tenant is.

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