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Being a Landlord in Australia – Your Obligations

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    Being a landlord is more than just collecting rents and maintaining the property. It's about relationships, open communication and mutual trust. As a landlord, it's vital to understand your rights and responsibilities so that you don't fall foul of the legislation in your state.

    Renting out a property as a homeowner or investor can be a tricky legal process to navigate. Without knowing your Landlord's rights and responsibilities, you could get caught up in a nasty legal battle that could have been avoided. Below are the top landlord rights and obligations in Australia. So if you're looking to rent out your home or are considering purchasing an investment property, the process is a little easier.

    We talked about 26 myths about property investing in Melbourne.

    It's essential to understand the rules set out your obligations as a landlord.

    Your entry rights as a landlord

    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.

    As a landlord, you can only enter the premises under certain circumstances. This could be an emergency, or with the consent of your tenant. Of course, you can also enter for other purposes like conducting a routine inspection, providing you have notified the tenant in advance the correct way.

    For example, in Victoria, a landlord may enter the premises as long as the tenant agreed 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 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 months, 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.

    Repairs and maintenance

    As a landlord, you're generally responsible for organising and/or paying for repairs and maintenance.

    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, others will need to be attended to promptly.

    You must provide and maintain the premises in a reasonable state of repair during the tenancy. If, however, your tenant has caused damage at the premises, they're likely to be liable for those repairs. Keep in mind there are special provisions that apply for urgent or emergency maintenance.

    It's important to note that as a landlord, you are only obliged to undertake repairs, not updates. Non-urgent maintenance, therefore, do not include changes a tenant simply desires, such as requesting new carpet or fresh paint, unless the tenant negotiated this before moving in.

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    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." The recommendation is the sooner, the better. If non-urgent repairs are not attended to, your tenant may apply to the tribunal for 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.

    Also read about capital gains tax and how to avoid it.

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    Utilities and other bills

    This is an interesting one – when is the Landlord or tenant responsible for paying bills like water, electricity and gas? Generally speaking, tenants are only liable for services that are separately metered for their use, like water. The Landlord will pay for most other charges like land taxes and council rates.

    What alterations or additions can be made?

    If you're renting a property, you must get the Landlord's consent before you install fixtures or make alterations to the premises. Unless you and the Landlord agree otherwise, any installations or changes you make will be at your expense. A fixture is an item that becomes attached to or part of the premises – things like a window, door or a toilet, for example.

    Security and locks on the rental property

    Generally speaking, landlords are responsible for providing the rental property in a secure condition with locks on all windows and doors. The tenant should be given a copy of the keys at the beginning of the tenancy. In most cases, the locks can only be changed by the tenant or Landlord if the other party consents to this taking place.

    The Rent

    As the Landlord, you have the right to request rent on a weekly, fortnightly or monthly basis. With both the bond and rental payments received, you should provide detailed and signed receipts stating the date, amount received, property address, name of tenant and duration for which it has been paid.

    One of the keys is to ensure you have the best tenants in your properties who have the financial capability to pay the rent, as well as the desire to look after your property well.

    Successful tenant selection is a skill and is one where a professional property manager can help you.

    They'll also help you with all the necessary paperwork and following up if the tenant does not pay their rent on time.

    As a landlord, you have the right to expect that the rent for your property to be paid by the due date in the way that was agreed on the lease.

    While the legislation does vary across the country, if tenants have not paid their rent by the due date, they are considered to be in "arrears."

    If they are more than 14 days in arrears, then landlords have the right to issue the tenants with the relevant notices to vacate.

    Landlords need to keep in mind that if their tenants do not pay their rent, or are late paying their rent, that the mortgage still needs to be paid, which always remains the Landlord's responsibility and should be budgeted for accordingly.

    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.

    Again there is legislation about the timing of rental increases across the country. Still, generally speaking, if a tenant is on a periodic lease, the rent can be increased once every six months, after giving two months' notice to the tenant.

    If the tenant is on a fixed-term tenancy, such as a 12-month lease, then the rent cannot be increased until the end of that tenancy.

    If tenants find the proposed rental increase unreasonable, they can challenge it and have a state government inspector assess its fairness.

    Landlords must consider whether a higher rent will be more beneficial than having tenants stay in their property for longer.

    Changing tenancies is time-consuming and has additional costs attached, such as loss of rent during the vacancy, reletting fees and marketing charges – the total of which could be more than the proposed extra rent would bring over six months or a year.

    With this in mind, landlords should consider whether an extra $5 or $10 per week will make a big enough difference to their bottom line.

    This is especially important during times when rental supply exceeds demand, so tenants have much more choice and may decide to move somewhere cheaper simply.

    It may be more prudent to wait another six or 12 months before increasing the rent in such a circumstance.

    Extended periods of vacancies are not what any landlord wants for their investment property, so always keep in mind that long-term tenants who pay their rent on time and look after your property well are the type of people that you want.

    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.

    What are your landlord rights when your tenant stops paying rent?

    It's one of the worst nightmares for landlords – a tenant who hasn't paid rent for weeks and won't vacate the property.

    Unfortunately, a good tenant can quickly turn into a bad tenant.

    This can happen due to personal troubles, health issues, drugs, they lose their job or get divorced.

    As a property investor, you not only stand to lose out on your rental income, which you're most likely relying on to help pay your mortgage, but you may not be able to access your property or find new tenants until your existing tenants leave.

    And the result is that you could be significantly out of pocket.

    So what are your rights as a landlord if this happens?

    Well, it all starts before you take on a tenant.

    Make sure your property manager checks their past rental history using national rental databases and make sure your potential tenant doesn't overextend themselves.

    I believe it's essential to have a good line of communication with your tenant by using a good property manager.

    Hopefully, they'll have done regular inspections of your property and answered any tenant requests promptly.

    This should make communication during challenging times a little easier.

    Tenancy legislation is a State-based law, so you must have a proficient property manager looking after your interests to stay within the laws when this type of unpleasant situation arises.

    apartment building

    Find out why your tenant is in arrears.

    Your property manager should know the day your tenant is in arrears by checking their trust bank account.

    Their first step should be to find out why your tenant isn't paying rent and to begin making polite enquiries and assist in minimising your loss.

    The reason you haven't received the rent could be something quite simple and easily fixed, such as:

    • simple forgetfulness
    • temporary cash flow problems
    • a misunderstanding between joint tenants

    Or it could be something more complicated and long-term, such as:

    • your tenant has lost their job
    • your tenants are a couple and have split up
    • your tenant is suffering from challenging personal issues (such as bereavement or work-related stress).

    What your property manager should do next

    If a tenant does not pay their rent by the due date, they are considered to be 'in arrears.'

    In Victoria, if tenants become 14 days or more in arrears, they can be issued with an official notice to vacate.

    The number of days in rental arrears before these notices can be sent varies around Australia, so it is essential to be familiar with your local tenancy laws.

    But a landlord or property manager cannot evict a tenant; the proper procedures must be followed.

    Firstly, the notice must be correctly worded and correctly delivered, including being delivered by registered post.

    Then the matter must be brought before the relevant tenancy authority such as VCAT or the NSW Civil and Administrative Tribunal.

    The tribunal may then issue a warrant of possession to evict the tenant.

    Try and nip things in the bud by monitoring arrears daily, because if a tenant falls behind in their rent, the sooner you know about it, the sooner you can attempt to resolve the issue and mitigate any financial loss.

    We call and email the tenants and then send a breach notice outlining that they have failed to pay their rent on time after they've been in arrears for three days.

    Going to the tribunal is the last resort.

    Often the matter can be resolved by giving the tenant the option to make part rental payments or more frequent payments such as weekly to get them through what is hopefully just a bad patch.

    If the tenant must be evicted, you will most likely be able to retain part or all of the bond to make up for your loss.

    And any additional loss should be covered by your Landlord's insurance.

    How do you end the tenancy?

    There are several set ways to end a tenancy agreement, and these methods vary slightly from state to state. Even if a contract has a fixed end date, you will need to give the 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 to give the notice to terminate the rental.

    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.

    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.

    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.

    Why you should collect a rental bond

    Tenants pay rental bonds at the start of their tenancy. They are a goodwill payment held in trust by the specific state government rental authority, which is used as financial protection for the Landlord in case the tenant breaches the terms of the tenancy agreement.

    This protects you if the tenant does not pay all the rent owed, damages your property or fails to keep it in a satisfactory condition, as you will then be eligible to claim some or the entire bond once the tenancy is over.

    At the start of a new lease, you are expected to provide a bond lodgement form to be filled out by both parties. You are responsible for ensuring that it is lodged with the relevant state authority within the correct period.

    The amount of bond is usually about four weeks' worth of rent. However, it can vary depending on the type of dwelling.

    You should take a bond from your tenants as a security deposit. There are good reasons for this: If your tenant fails to keep the premises clean, damages your property or does not pay the rent, you can claim some or all of their bond at the end of the tenancy. This bond must be forwarded to your state residential tenancies bond authority. The authority will hold the bond on behalf of you and the tenant during the tenancy.

    In most instances, the bond is equivalent to one month's rent. But if you have an expensive property, or if the rental property was previously your home, the bond can be more than that. Once the tenancy has ended, you can claim on the bond if the property is not in the same condition as it was at the beginning of the tenancy. However, you need to be aware of what is commonly called 'fair wear and tear. ' These issues cannot be claimed.

    However, landlords cannot charge tenants for any fair wear and tear of property that may have occurred during the tenancy.

    Examples of fair and wear include faded curtains or a worn kitchen bench-top.

    Conversely, missing curtains or burns or cuts to the bench-top would likely be considered damage, so the tenant would be responsible for paying for these to be repaired.

    At the end of a tenancy, if your property is left in good condition and is clean, then both the Landlord and the tenant can agree to have the bond repaid to the tenant in full.

    If there is any damage, then the process becomes a little more complicated as both parties have to agree that damage has occurred during the tenancy as well as the costs of the repairs.

    For example, the Landlord may make a claim on the bond for:

    • Rent not being paid
    • Damage caused by the tenant or their visitors
    • Cleaning expenses
    • Abandonment of the premises by the tenant
    • Landlord being forced to pay tenant's bills
    • Loss of Landlord's goods
    • What you can claim on
    • Damage caused by your tenant or your tenant's visitors.
    • Cleaning expenses.
    • Your tenant is abandoning the premises.
    • Your tenant is leaving you to pay bills which they should have paid.
    • Loss of your goods.
    • Unpaid rent.

    What if there is a disagreement about the bond?

    If there is a disagreement about the bond, or if you want to claim compensation over and above the bond, you must apply to your state tribunal. In NSW, the arbiter is the NSW Civil and Administrative Tribunal (NCAT). In Victoria, you would need to apply to the Victorian Civil and Administrative Tribunal (VCAT). All states and territories have respective bodies.

    Now you know your fundamental landlord rights and responsibilities as a landlord, the idea of owning an investment property is probably a lot less stressful! If you do end up in a legal battle with your tenants, there are plenty of options that can be taken to resolve the issue, including mediation.

    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 ten business days of the tenant vacating.

    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.

    Australian property law differs for both tenants and landlords in every state, so it's essential to check with your local tenancy authority.

    How do you end the tenancy?

    There are several set ways to end a tenancy agreement, and these methods vary slightly from state to state. Even if a contract 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

    There are several set ways to end a tenancy agreement, and these methods vary slightly from state to state. Even if a contract 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.

    Discrimination

    As a landlord, you have the right to choose the tenant you consider the most suitable for your property. Still, 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.

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