While in the past, many tenants thought the landlords had unreasonable rights, now the pendulum has certainly swung in favour of the tenants and a lot of landlords feel their rights have been reduced while their responsibilities have been increased. As a landlord it is important for you to understand your “rights and responsibilities” so that you don’t get on the wrong side of the legislation.
While your property manager will (in many cases) advise you and act on your behalf, as a property 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 disgruntled 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 becomes all 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 landlord 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 months rent but this may be increased for some expensive properties or if the rental property was previously the landlord’s own home. Even if your rent increases during the tenancy, unfortunately you cannot 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 premises is not in the same condition as it was at the beginning of the tenancy.
Whilst costs of rectifying what is commonly called “fair wear and tear” cannot be claimed, as a landlord 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 that the tenant should have paid
• Loss of the landlord’s goods
• Unpaid rent
If there is a disagreement about the division of the Bond, or the landlord wants to claim compensation over and above the bond, the landlord must apply to the Tribunal within 10 business days of the tenant vacating the premises. This is where having a comprehensive Condition Report at the beginning of the tenancy, together with photographic evidence, is an 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 at the end of the tenancy.
Rent can be paid weekly, fortnightly or monthly however, if rent is paid weekly, the landlord cannot 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.
Your property: As a landlord you must:
• give the tenant a copy of the booklet relevant to their State outlining their rights on 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 during the term of the tenancy
• if you need to replace any water appliance, fitting or fixture, ensure they meet 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 (in the case of some units), 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 enjoyment in the premises
• not enter the premises to carry out a general inspection until after the end of the first 3 months of the tenancy and even at this time, follow the 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’ the ‘Residential Tenancies Act 1997′ or any other Act.
• To 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 6 month period, but not within the first 3 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.
Repairs: 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 than will need to be attended to promptly. You will need to respond to urgent repairs without delay. If nothing is done, your tenant has the right to arrange for these repairs to be done up to the value of $1000 – 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, but obviously I would recommend you do it sooner. If not non-urgent repairs are not attended to, your tenant may apply to the Tribunal for an inspection and subsequent report. After 60 days, the tenant can apply to the Tribunal for a repair order. Even though they may feel like it, legislation prevents tenants from withholding rent while waiting for repairs to be done.
When can I increase the rent? Tenants always think their rent is too high but most landlords are wanting to take advantage of the tight vacancy market to maximise their investment returns. The problem is you just cannot increase the rent whenever you want to. For example, if you have a standard lease, you cannot increase your rent until the end of the fixed term unless your agreement states otherwise. In any case, you cannot 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 using the correct form.
How do I end the tenancy? There are set ways of ending all tenancy agreements and these 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 tenants rights to remain in the property are protected, if you want to end the tenancy, you should check:
• The reasons allowed for giving a notice in your State to end a tenancy agreement
• 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 tenancy agreement
As a landlord you have the right to choose the tenant you consider the most suitable for your property but the Equal Opportunity Act makes it unlawful to discriminate against or harass people. What this means to you is that you cannot 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. This is only a short summary of your rights and responsibilities of a landlord and that is why, to maximise your investment returns and to minimise your headaches, all landlords should have a good, sound understanding of their rights and responsibilities.