Your rights and responsibilities as a landlord
You may be using property investment as a wealth creation vehicle, but as long as your property is tenanted, your assets aren’t just a money maker – they’re someone’s home. Here’s what you need to know about being a landlord.
Landlord responsibilities at the start of a tenancy
You’ve got your investment property and now you need someone to live in it. It’s time to find a tenant.
The first decision you will have to make after starting a tenancy is whether you will be using an agent to find a tenant and manage your property.
Using an agent has several advantages and disadvantages. Finding out what you’re prepared to invest in your property portfolio in terms of personal time and energy is the key to deciding between the two options.
If you don't live near the property, you are time poor, or struggle to understand tenant legislation well, then using an agent may be a better and more practical option that turns out to be more cost-effective in the long run.
Agents will conduct inspections on the property before, during, and after the tenancy. Agents take care of advertising a property, vetting tenants and organising legal paperwork such as the lease agreement. They will monitor rent payments and issue any notices against the tenant should they fail to comply with a section of the lease agreement. They will also represent the landlord at any tribunal hearings should relations with the tenant turn sour.
Managing the property yourself can save you the cost of the agent's fees and help build a more direct relationship with your tenant. It may be an option to consider if you live nearby, have a good knowledge of tenancy laws and have enough time to do all the work associated with maintaining a tenancy (such as inspecting the property, organising repairs or attending any tribunal hearings).
There is also a third option available through many real estate agencies. You can decide just to use an agent to go through all the applications, find a suitable tenant and do the necessary paperwork, and then you can take on the day-to-day management.
If you do go down the path of self-management, there are some key things to consider during the beginning of a tenancy. Even if you decide to opt for a real estate agency to manage your property, it is worth reading the below in order to make sure they are complying with their responsibilities.
Firstly, you will need to advertise your property. Depending on the location of your property, free internet forums or local newspaper advertisements may be sufficient. However, in busier markets you may need to pay for an online listing on a real estate website.
You will need to make sure you provide an adequate listing of the property that accurately depicts its features, and take clear photographs to include with the advertisement.
You will need to make the property available for inspection by prospective tenants before allowing them to apply for the property.
Make sure you have any prospective tenants fill out an application, detailing things like where their previous place of residence was, their current employment circumstances and personal/professional references.
Once you’ve received an application for your property, there are several key things you need to keep in mind when considering whether to approve it.
There are numerous anti-discrimination laws that exist in Australia and you will need to be sure you adhere to them in your search for a tenant.
With this is mind, it is still important to thoroughly screen any tenant entering your property to gain an understanding of their suitability as a tenant. Make sure they have a strong employment history and will be able to keep up with the rental payments on the property on their current income.
Be sure to check with previous real estate agencies or landlords (listed on the application) to gain an understanding of the applicant’s behaviour as a tenant.
Once you’ve approved an application, you will need to organise a residential tenancy agreement for the new tenant/s to sign. A standard application issued in each jurisdiction is usually easy to download from the internet.
Before a tenant moves in, you will need to conduct a thorough inspection of the property, noting any damage or features (such as appliances installed in the property) on a condition report (a standard template is available in each state/territory). When the tenant moves in, they will be required to fill out the same report, noting any additions or disagreements. This will serve as a legal basis for any future disputes/issues about the property’s condition, so be sure to make it accurate and keep it in a safe place. The tenant needs to be provided with a copy of the final report.
You will need to ensure your tenants sign a tenancy agreement and post a bond with the relevant bond authority in your state or territory. Make sure they fully understand the conditions of the agreement, including payment amounts, frequency, and the period of the lease.
You will need to provide your tenant with a payment option. Most jurisdictions mandate the provision of more than one option for payments.
Landlord responsibilities during the tenancy
During the tenancy you will need to conduct scheduled checks of your rental property. The frequency that this is permitted varies by jurisdiction, but you need to make sure you don’t risk raising the ire of your tenants.
You will need to make sure you have tradespeople on hand to respond to any maintenance-related enquiries your tenant may present you with. In each state there are certain timeframes within which emergency repairs need to take place, so you need to respond to any maintenance requests your tenant may file within a reasonable time period.
It is important any requests you make to your tenant during the period of the tenancy are put into writing and follow the prescribed style/time period in your state or territory.
During the tenancy you may wish to raise the weekly rent. If your tenant has signed a fixed-term rental agreement the rent agreed to at the time of signing the agreement is the only amount that can be charged during the period of the agreement.
If your tenant is signed to a periodic tenancy, then you may request they pay an increased amount of rent. Depending on the jurisdiction, the tenant may have the option to dispute the increase. The frequency of rental increases is typically regulated and cannot exceed a certain number of increases during a set timeframe.
You may wish to take out landlord insurance while your property is being treated as a rental property. This is a type of insurance designed to protect landlords from damage inflicted by a tenant, or even cover periods of lost rent due to vacancies. Details vary by policy so it’s important to check the fine print before deciding whether a policy is right for you.
Selling a property while it is occupied by a tenant requires a landlord to abide by certain guidelines, such as giving notice before any open for inspections. If a current tenancy agreement is in place, a landlord cannot evict a tenant on the basis of wanting to sell the property as vacant on possession.
If your tenant falls into arrears or contravenes a section of the lease agreement, you cannot simply evict them. Due process needs to be followed, and the tenant needs to be issued with notification that they are in breach of their tenancy agreement.
A tenant can dispute any notice given by referring the matter to the tenancy tribunal in their state or territory. Likewise, a landlord can seek the involvement of the tribunal if the tenant refuses to cooperate with a notification.
Ending a tenancy
A tenant may end a fixed-period tenancy with due notice in advance of the agreement’s completion date. If a tenant decides to end their lease earlier than this specified end date, they are typically liable for additional costs such as paying for the property to be re-advertised and advance payment of rent.
If a tenant is on a periodic agreement they still need to provide the landlord with advance notice of their intention to vacate the property.
If problems with a tenancy cannot be resolved by issuing a remedial notice, then a landlord may face the prospect of evicting their tenant. The precise process for this varies by jurisdiction, but a rough outline is given below.
First steps: how to give an eviction notice
Generally, once a legitimate reason for evicting a tenant has been identified, the process follows this order:
• Issue written notice to vacate, citing the relevant section of that state or territory’s tenancy act
• Adhere to the timeframes relevant to your jurisdiction
• Refer to body governing tenancies in your jurisdiction if tenant does not respond to requests to vacate.
For a full breakdown on the reasons that are needed to issue eviction orders, the process, and the legal discrepancies between each jurisdiction, click here to see our handy guide on how to evict your tenants.
