I’ve always believed that if you’re kind to tenants, they’ll be kind to your investment. It’s a naive thought but one I still try to go by, basically so I can sleep at night and not have to worry about what is or isn’t happening inside my retirement nest egg. Even so, the rules around rents, bonds and evictions can create all sorts of headaches for landlords, depending on the state you live in, as they’re often stacked in favour of the tenant.
BY LAUREN CROSS
I consider investing to be a fun and rewarding process, as well as a long-term plan, so I’m not too fussed about a dollar here or there. Over the past two years, I’ve given my tenants on the Gold Coast anything they asked for. They could change colours, drill holes, put shelves in, etc. I fixed and repaired anything they wanted without question. I even recently put air conditioning in the unit for free and didn’t ask for any sort of increase in rent, simply because I figured this would make them happier there and also add some value to the unit (the sun can be a real killer with my west-facing apartment in summer.)
I knew they loved living there, so I was shocked when they suddenly gave my property manager notice to leave (apparently they wanted more space after having a baby). After more or less bending over backwards for what I thought were dream tenants, I was even more shocked to find out they only gave two weeks’ notice. By the time I actually found out they were leaving and a new ad went up on the internet, I had just 10 days to find someone. Ten days!
Given the current vacancy rate on the Gold Coast (where lots of two-bedroom apartments on the water are now available) I was feeling a little stressed out about my tenants’ sudden departure. I asked my property manager if 14 days’ notice was actually allowed and yes, by law, tenants need to give just 14 days’ notice in Queensland if they choose to leave a property.
On the other hand, if a landlord decides to put new tenants in or end a lease, they need to give a massive two months’ written notice! Is it just me, or does this seem unfair? It appears that in many cases, rules regarding rent, bonds and evictions actually favour the tenant, even though the landlord is the one paying for rates, repairs and property managers.
Unfortunately it gets worse. Luckily for me, my tenants always paid the rent on time and treated the place like a mini palace. But if tenants ever default in Queensland, you practically have to roll out the red carpet for them, just to get back what’s owed to you. The tenants have to be sent a breach notice after seven days, then given a notice to rectify the breach after another seven days. Any other breach, such as not maintaining a garden, requires another 14 days’ notice. So an entire month has gone by before you can even get a new tenant in! Talk about a headache!
Tenants must also be given plenty of notice in some states for rental increases.
In New South Wales and Victoria, it’s 60 days. Victorian landlords can’t charge more than one month’s rent either for a bond, if the price of their rental property is $350 per week or less.
Personally I feel that all these rules and regulations make it very tough on landlords and it would be nice to have the tables turned. After all, it’s your investment! I can accept that law is law and if a tenant wants to leave after 14 days, they have that choice. But surely a bit of common courtesy wouldn’t go astray – and tenants should treat their landlord the very same way they expect to be treated by their landlord. In fact, we’re always hearing about how tough tenants have it. How their landlord is mean, how their landlord is increasing the rent, how their landlord won’t give them brand new everything! But there are plenty of landlords like me who do everything they can to make tenants happy. In fact, landlords are sometimes so desperate for a good tenant, they’ll even keep their rental rate lower than what it should be in many cases, just so they can keep a good, long-term tenant.
As with any problem there’s always a solution. Despite my 14-day drama, the good news for me is that I actually received an application within a few days (again, I was shocked!) so I’m still sleeping well at night. But some landlords are no doubt stressing every day about the fact that they want to evict a tenant but can’t.
What has your experience been? Have you ever had to wait weeks and weeks to evict a tenant, or not been given your rent for months? For more information on rent, bond and evictions, check out page 32 of this month’s API edition, where we examine what the rules are for landlords in each state.
Lauren Cross is a journalist/subeditor of Australian Property Investor magazine, www.apimagazine.com.au
sounds like you did not have a lease in place,
when a lease expires and a new one is not created, then your scenario will result
Comment by rob — September 22, 2011 @ 1:07 pm
Great to see an article detailing some of the issues Landlords face and to hear someone support good owners. There are a lot of them (& agents) out there, but we only seem to hear the bad stories. As an Agent, we are constantly fighting a losing battle in regards to tenants/landlords rights etc. The time periods need to change to a flat one month’s notice. This would even up the balance. On another note, you mentioned defaulting tenants and taking up to 1 month to kick them out. In Brisbane area we seeing this stretch to nearly three months as a result of a poor court system and lack of education / training in such. That’s a lot of money to be out of pocket for a struggling investor. Keep up the good work.
Comment by julie — September 22, 2011 @ 2:38 pm
I once lost 2 1/2 months rent because I believed the property manager when they said I could easily raise the rent from $280 pw to $320pw at the end of a lease. The existing tenants weren’t prepared to pay the huge increase and gave notice to leave. It was the end of November and all over Christmas there were lots of lookers but no takers. Finally half-way through January I told the PM to reduce the asking rent to $295. There was a positive enquiry within a couple of weeks but the new tenant couldn’t move in for another two weeks after that!! I learnt three lessons from that very expensive episode –
1. Never accept a lease that is due just before Christmas, chances of people wanting to move at that time are almost non-existent, try and get it to finish in Feb or Sept for eg.
2. Don’t just leave it all up to the PM to set the price, if you haven’t got new tenants signed up by the end of two weeks, drop your price to meet the market – 80% of something is better than 100% of nothing.
3. If you already have great tenants, think twice before whacking up the rent just because you think you can. A smaller increase followed by another small increase 6 months later would probably have kept them onside and saved me a lot of grief not to mention the added cost of advertising and letting fees. Greed caused me to lose almost $3000.
Comment by Deborah — September 22, 2011 @ 11:02 pm
We had a property manager who was so bad at managing that not only did the tenants get further and further behind in their rent (which I only found out when money started being late into our account each month), but we found out the manager had not even got a bond off them in the first place! We had thought after we kicked them out that at least we would have that to fall back on, but no. We tried to get the money out of the property manager since it was his fault, but it was all ‘there’s no legal obligation to take a bond off the tenant’, so we got nothing. Needless to say, now we ask for a copy of the bond lodgement receipt each time we get a new tenant (and got a new property manager).
Comment by Kim — September 25, 2011 @ 11:04 am