Right in the middle

A property manager with the right skills can keep owners and renters happy even in troubled times

QWhat should landlords expect from good property managers?

A great property manager will possess four key characteristics. With state-based training now a requirement for property management licensing, a great manager will have a baseline understanding of the minimum standards of quality and accountability to be upheld; good communication skills; organisational skills to handle with ease the coordination of multiple conflicting priorities and projects; and attention to detail.

In addition, landlords should expect a good property manager to properly and thoroughly screen tenant applicants from the outset, adhere to the letter of the law in terms of processes, procedures, paperwork and timing stipulated in the relevant tenancy legislation, in order to protect the landlord’s interests when inevitable tenancy issues arise, ensure all communications are backed up in writing – the adage “If it isn’t written down it didn’t happen” applies here – and identify and communicate likely and potential tenancy issues in advance and have contingencies and management plans in place to cover them when they occur. BUSHY MARTIN

And what should tenants expect from good property managers?

Good managers should be responsive to any issues a tenant is raising. Owners don’t want to lose value in their property; it’s in the landlord’s best interests to maintain the property. Not all do, but many do.

The better the relationship between agent, tenant and owner the better all round. Tenants can help manage appointments with repairers, pest control and other services, and if you’re trying to sell the property, they help with appointments.

One of the downsides in property management today is very little contact with tenants and agents – they’re often doing things on apps and online. Sometimes repairs and maintenance can fall through – not seen or not seen as important enough. Recently, I had my own issue. The agent had organised a pest inspection and when the pest people contacted me directly I was unsure whether it was bogus or not. PENNY CARR

QHow soon should a manager start checking the tenant’s future plans when a lease is close to ending?

Ninety days out from the lease expiry, they should write to the tenant about the upcoming lease extension (this gives them ample time to think about the year ahead). At 60 days they should touch base with the tenant (if they have not already responded) and find out their plans.

At 50 days, the tenant should receive the lease extension or a “notice to vacate” if they have not responded. Waiting for a tenant to respond and/or not issuing a notice to vacate within 45 days of the lease expiry date may result in a periodic lease agreement by default as the tenant had not received the required notice to end the lease. Inaction is not an option.

Frankly, a good agent will have identified the longer term plans of a tenant at the application stage and throughout the tenancy.

Recent changes to the tenancy legislation in Victoria mean that once a tenant is in a property for more than 12 months, it is now very difficult to get them to leave, so this may impact on how lease terms are managed.

BUSHY MARTIN

QDuring crises like Covid, are managers obliged to pass on a landlord’s willingness to reduce rents if tenants are experiencing hardship?

For residential leases, under the Residential Tenancies Act 1997 (Vic), tenants can end the lease early where they are experiencing financial hardship.

For retail and commercial leases, we find that property managers are more willing to pass along details of tenants’ hardship to landlords where the parties have a good working relationship and where the tenant contributes in a positive way to the tenancy mix (particularly relevant for shopping centres). During the pandemic, tenants are protected by the relevant state or territory’s legislation and the enforcement of the relevant laws is supported by state-based bodies such as the Victorian Small Business Commission.

NICOLA CARNEVALE

QIf the tenants stop paying rent, at what point should managers alert landlords?

For residential leases, if the tenant is in arrears in respect of at least 14 days’ rent and the landlords wish to issue a notice to vacate, they must give the tenant a notice in writing and at least 14 days’ notice to vacate. It’s important that the manager acts quickly in informing the landlord so that they can determine how to proceed, whether it be by issuing a notice or approaching the tenant to understand the circumstances of the non-payment or part payment. In Victoria, residential landlords can also apply to VCAT for compensation for unpaid rent.

For retail and commercial leases, landlords can re-enter (unless their lease says otherwise) the day after a tenant has missed a rent payment without notice. Therefore, managers should notify landlords as soon as possible after the non-payment to allow the landlord and manager to consider how to proceed with the breach of the lease.

NICOLE CARNEVALE

QAs a tenant, what can you do if you feel the agent isn’t passing on issues to the landlord, such as non-working stove hotplates, electrical plugs, blind cords?

It’s always a little tricky; there are formal processes. Tenants can call agents informally and ask for things and inform them about things that have gone wrong, but if things don’t get fixed they need to make sure it’s in writing. Even if you are managing it informally you need to follow up phone calls or visits in writing to show you’ve raised the issue, when you’ve raised it and what needs to be done.

In Queensland there is a “notice to remedy breach”, which includes a range of issues including repairs. Seven days is given to take reasonable steps to fix a general issue, after which it ends up in the tribunal, and tenants don’t want to do that because they worry about what to do when their fixed term ends.

PENNY CARR

QWhat is a reasonable timeframe to expect a landlord to fix problems at your rental property?

The answer to this one is set out in the legislation for repairs and maintenance. If it’s a general repair, not an emergency, it’s seven days. Although sometimes there might be a delay, for example, after a flood. If it’s urgent, like the hot water, stove or sewerage, it comes down to reasonable time, and how long it would take to see it and get in contact with a tradesperson – it would be quicker than seven days.

Often there are people named on a tenancy agreement for contacting an agent or plumber if it’s an emergency repair.

If a tenant can’t get a response from the agent, they should be cautious about paying upfront.

In Queensland, if the problem falls into the category of an emergency you may be able to spend up to a couple of weeks’ rent to fix the problem and claim it back. It can be difficult, however, and the tenant has to have the money upfront. Some repair claims could go straight to tribunal for health and safety repair.

PENNY CARR

QWhat are the risks of managing your own investment property?

It’s always better to have someone manage your investment so that there is a “middle man” between yourself and the tenant. You don’t want to be taking calls from the tenant about repairs or delays in rent.

Yes, you will need to pay the agent a fee to manage this on your behalf, but you may be able to recover this cost through outgoings anyway, and it will help you sleep better at night! It also means that you don’t need to be across the relevant tenancy laws, as the agent and your lawyer can handle most situations. Of course, you would be consulted, but the day-today management of the tenant would be left to the agent.

DEAN CLAUGHTON

QIn tough times, how deep should a landlord cut rents to secure a tenant?

All good tenants have at least two characteristics: consistent and confident rent payment; and care and upkeep of the property.

Both of these are valuable. Cutting rent to secure a tenant that cares for the property will save costs in the long run. The method to approach the depth and length of time of the rent reduction has been shown to us by the Covid-19 issues.

Engage with the tenant and obtain evidence from them of their predicament. This could be in the form of a bank statement, a letter of termination or a BAS statement. These show a transparent willingness to work with the tenant.

DEAN CLAUGHTON

QShould you allow tenants to rent month-to-month after the end of a lease; or should you try to lock them in for a set period and perhaps offer an incentive for this?

Property investors are generally better served with fixed-term lease agreements. Periodic agreements (often referred to as month-to-month or no end date) often allow the tenant to leave within a short timeframe and it increases the potential of rent loss due to vacancy.

We are fans of fixed-lease terms. It doesn’t mean it has to be a year – the first lease term is generally a year – but if the tenant is unsure then give them another month or two, as long as you are aware of the seasonal demand cycles of the rental market in that area.

A month-by-month periodic is really only advantageous to the tenant, except in the instance where the landlord may potentially want to terminate the lease because they have something on the horizon (for example, selling the property, significant renovations or moving back into the property).

Tenants will generally want flexibility on lease terms when they need to reduce the rent they are paying or their future may have some uncertainty around their employment, relationship issues, ill health and/or a change in what they need in a home. So if a landlord were able to offer a stable rent for an extended period, that may sway them to continue for a fixed period. BUSHY MARTIN

QWhat are the most common reasons tenants get evicted?

In large part, non-payment of rent is the most common reason for eviction. Another common breach by tenants is the unlawful subletting of the premises (or part). Under the lease, tenants are required to seek the landlord’s consent to sublet to another person or party. However, tenants will often sublet to another party if they themselves are moving onto a different property (for example). For landlords, they do not have a contractual relationship with that person so have limited rights to recover from that new tenant. For existing tenants, it is in their interest to sublet or assign the lease to the new tenant so that they are no longer liable under the lease and are released from performing any of the obligations under the lease.

Landlords can also immediately terminate the lease if the tenant or a guest maliciously damages the premises or any common areas.

NICOLA CARNEVALE