Property investment remains one of the best ways to create wealth but success depends on much more than just property selection and location.
You see... property investment also involves people – namely landlords (that's you) and tenants.
Throughout the residential tenancy, you as the landlord have various responsibilities which must be upheld.
Across the country, there is state-specific legislation that protects landlord rights as well as the tenant's.
As this legislation is often amended, especially at times of tighter rental markets, it's imperative that landlords understand what their responsibilities are as investment property owners, as they are obligated to abide by state law.
This article will help all landlords better understand their tenant's responsibilities as well as their own landlord rights when it comes to collecting, holding and returning a bond, collecting rent, increasing rent, entering their property, maintenance, repairs and ending a tenancy.
Note: Of course, we'll also discuss how using a professional property manager can make your property investment journey simpler and more enjoyable, too!
How to receive rent from tenant
As a landlord, you have the right to choose the tenant you consider the most suitable for your property but under the Equal Opportunity Act you must not discriminate against any of the applicants based on their:
- Marital status
- Having children
- Mental illness
- or a whole host of other discriminatory reasons.
If you do, you could be liable to pay damages or fines.
Rental bonds are paid by tenants at the start of their tenancy and 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 and are responsible to ensure that it is lodged with the relevant state authority within the correct time period.
The amount of bond is usually about four weeks' worth of rent, however, it can vary depending on the type of dwelling.
At the end of the tenancy, damage to the property may be paid for out of the bond, but only if both parties agree.
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 to pay 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
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.
Utility and service charges
When it comes to utility and services charges, there are varying rules around this across the country so it's important to check your relevant state authority.
Generally speaking, however, during a tenancy, tenants are responsible for the following utility charges if the property has a separate meter (one which the supply to one property only):
- All charges for the supply or use of electricity, gas or oil (including supply charges and reconnection fees).
- All charges based on the amount of water consumed (but not service charges or reconnection fees).
- All sewerage disposal charges.
- All charges for the use of bottled gas (but not for the supply or hire of gas bottles).
- On the other hand, if a property is not metered separately, landlords are responsible for:
- Initial connection fees
- Usage charges for the utilities.
Responsibilities of the landlord to the tenant
During a residential tenancy, landlords have a number of responsibilities to their tenants, which are enshrined in the relevant legislation.
Again, many of these responsibilities can be managed by a professional property manager on a landlord's behalf.
Some of the responsibilities which a landlord has to a tenant include:
- Give the tenant a copy of the relevant State or Territory booklet outlining their rights. This needs to be done before the tenants move into the property or on the day that they do.
- The rental property must be vacant, clean and safe on the day that the tenant shifts in.
- The main living areas must be kept in good condition and all the appliances need to be maintained.
- The condition expected will be dependent on how old the property is and how much the rent is.
- You are obliged to take care of anything that may need repairing on the property and must respond to any requests in a timely manner.
- During a tenancy, the landlord is responsible for keeping the property in the same state that it was in when the tenant moved in. So this means maintenance and repairs need to be completed as they arise.
- Respect the rights of the tenant to quiet enjoyment of the property.
- Comply with all health and safety laws.
- Provide reasonable security with locks in good working order and supply keys for each lock.
- Pay all charges, levies, premiums, rates, and taxes for the property.
- Reimburse the tenant for money spent on emergency repairs (certain conditions apply).
- Not enter the premises to carry out a general inspection until after the end of the first three months of the tenancy (depending on the relevant legislation) and even at this time, follow the rules regarding proper notice periods.
When can a landlord visit their 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 six-month period, 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.
Landlord rights regarding Repairs & 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, 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.
Examples of urgent repairs include:
- Burst water service
- Blocked or broken lavatory system
- Serious roof leak
- Gas leak
- A dangerous electrical fault
- Flooding or serious flood damage
- Serious fire or storm damage
- Failure or breakdown of gas, electricity or water supply to premises
- Any other damage which results in the property being unsafe or not secure
If they are not dealt with, the tenant has the right to organise a qualified professional to complete repairs, up to the amount specified in the tenancy agreement. You will then have to reimburse the tenant for the cost incurred.
Non-urgent repairs need to be carried out within a specified amount of time, which may vary from state to state, but must usually be carried out within 14 days, yet 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 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.
By the way… landlords are not responsible for damage caused by tenants – such as a door ripped off its hinges – with the repair paid for by the tenant, by agreement, or deducted from their rental bond.
Professional property managers have well-developed systems for tenants to report any urgent repairs or damage, which can then be remedied by whichever party is responsible by agreement.
When can I increase the rent?
Tenants always think their rent is too high and of course, landlords want to take to maximise their investment returns.
The problem is you just cannot increase the rent whenever you want to.
Again there is legislation about the timing of rental increases across the country, but 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.
It's important that landlords 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 simply move somewhere cheaper.
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 really the type of people that you want.
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.
This can happen due to personal troubles, health issues, drugs, they lose their job or get divorced.
But the problem is, 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 end 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.
At Metropole Property Management we don’t like the rental to exceed 30% of the tenants’ combined income, otherwise, they’re more likely to find themselves in mortgage stress.
I believe it’s important 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 it’s critical that you have a proficient property manager looking after your interests to stay within the laws when this type of unpleasant situation arises.
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).
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 important 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.
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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.
However, at Metropole Property Management we 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 3 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 I end the tenancy?
Every landlord will eventually face a situation in which they need to evict a tenant.
If you want your tenant to move on earlier than planned, however, there are certain rules you must follow before showing them the door and these vary slightly from State to State.
Even if an agreement has a fixed end date, you will need to give the 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 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
If this isn't done, they run the risk of causing an unnecessary delay in getting back possession of their property or having to start the process all over again.
Here’s what you need to know...
During 2020 all states amended their legislation due to Covid19 to protect tenants during this challenging period.
Many of these measures will end in March 2021 but you can read more about them in the following articles:
- Victorias freeze on evictions and rental hikes extended
- It’s time to put a stop to rorting the rent relief measures
- Here’s how the rental markets around Australia have been affected by COVID-19
The following information was written in March 2018 and all legislation referred to was relevant at the time of writing, but may change over time, but it's likely this is what will be reverte to as we move into Covid normal.
New South Wales
A landlord is typically required to serve a signed written termination notice 14 days before the date of eviction.
This notice must indicate the property’s address, the eviction date and the reason for termination.
This reason must be valid.
If, for instance, a landlord claims non-payment and the tenant can provide proof that they have complied with the tenancy agreement and paid their rent, the tenant will not be required to vacate the property.
However, if the grounds for eviction are proven to be correct but the tenant does not leave by the specified date, the landlord has the right to obtain a warrant of possession, which will authorise officers to remove the tenant by force.
As is the case in NSW, Victorian landlords must provide a signed written notice, which can either be sent by post or delivered by hand.
If the tenant does not lave, the landlord has 30 days to request an order of possession from the tribunal.
This order includes instructions to vacate the home, the date of evacuation, and a warning regarding forcible eviction should the tenant fail to comply.
If there is no compliance, a landlord can then obtain a warrant of possession to allow the authorities to remove the tenant.
In the Sunshine State, the appropriate form must be used to create the notice, which must be presented within a reasonable period of time.
The reason for termination must be indicated, along with the evacuation date.
If the tenant does not comply, the landlord must apply to the tribunal for a termination order and a warrant of possession within two weeks of the date of handover.
Upon approval, the tribunal will then send a notice regarding a hearing, as well as a copy of the landlord’s application, to the tenant.
Once the warrant of possession is issued, it must be carried out within three days of the termination date.
The authorities have 14 days to enter the property and enforce the warrant unless the tribunal indicates otherwise.
In the west, landlords must issue a formal notice to the tenant regarding a breach of the tenancy agreement.
The tenant then has 14 days to correct the breach. If they do not comply, this is when the termination notice should be served.
The tenant is given seven days after receiving the notice to leave the property.
If the tenant does not vacate within this time period, then the landlord should apply for an order of possession from the Magistrates’ Court within 30 days.
The subsequent course of action is to request a property seizure and delivery order.
A court-appointed bailiff will then be sent to evict the tenant on the landlord’s behalf.
In the event that a tenant has breached the rental agreement, the landlord’s are required to serve written notice demanding a remedy; otherwise, the tenant must vacate the home.
The notice should detail the breach, the suggested remedy and the notice period.
The landlord should be careful to specify “all other occupants” aside from the tenant, and there should be two copies of this document – one to be kept for the landlord’s records.
The tenant then has seven days to comply with the request; eight days if the offence in question involves rent arrears.
If this is disregarded, then the landlord may proceed to fill in an application form for eviction, which also covers a request for vacant possession.
It must be accompanied by supporting documents, such as a copy of the lease agreement, rent records, and written notices if any.
These requirements must then be submitted to the tribunal, the only part that can affect eviction via a tribunal order.
On the Apple Isle, landlords must provide a notice to vacate either 14 or 28 days prior to the stated eviction date.
This notice indicates the date on which the document was issued to the tenant, the names of both parties, the address, the reasons for the evacuation notice, and the effective date of the notice period.
If the tenant fails to vacate the property, the landlord can apply for an order of possession from the Magistrates’ Court.
A copy of the application must be presented to the tenant on the same day.
The court will then send a representative to enforce vacant possession of the property on the set date.
Australian Capital Territory
When faced with a problematic tenant, a landlord is required to first serve a notice to remedy.
If the tenant does not act on it within seven days, then the landlord can move forward with a written notice to vacate.
If, however, the tenant has previously been issued two remedy notices, then a notice to vacate can be presented immediately.
There should be an adequate period of notice, and the document should indicate the legal grounds for termination as well as the premise behind these grounds.
If the tenant does not budge, then the landlord can apply for a termination and possession order from the tribunal.
Subsequently, the landlord can request a warrant for eviction.
Upon providing two days’ notice regarding the eviction, the authorities can then remove the tenant within a set period unless there are exceptional circumstances.
In the Top-end, a landlord must first seek out a rental officer to apply for an order for the tenant to leave.
An order for eviction can be made concurrently, or at another time.
The rental officer then issues the order to the tenant, and an affidavit of service is generated.
If the tenant does not vacate, the landlord must file an order for a writ of possession with the Supreme Court within six months.
This order should be supported by the affidavit of service for the eviction order and another confirming that the eviction order was disregarded.
The writ should then be issued to the sheriff, who would be granted the authority to remove the tenant and recover the property on behalf of the landlord.
In all cases, both parties will need to be prepared for the cost of asking the authorities to hear a case.
Resources by State
Being a landlord brings with it a raft of rights and responsibilities, which you must understand to be the best property investor that you can be.
As we've mentioned in this article, each state has its own specific legislation regarding this so it's imperative that you become conversant with the relevant laws or better yet use a professional property manager to navigate them for you!
- For landlords who have properties in Victoria, consider using this resource from Consumer Affairs Victoria.
- For landlords who have properties in New South Wales, consider using this resource from Fair Trading NSW.
- For landlords who have properties in Queensland, consider using this resource from Residential Tenancies Authority.
This is only a short summary of landlord rights and responsibilities and that is why to maximise your investment returns and to minimise your headaches, you should have a professional property manager manage your assets.
That way, all contact with the tenant should be through them shielding you from the day to day hassles finding tenants, completing agreements, organising maintenance, and if necessary, sorting out problems at the Tribunal.
Note: Metropole Property Management – the smart choice!
At Metropole, we help you build your wealth by offering you the best property management services available because we are a different breed of licensed estate agents.
We don’t sell real estate.
We lease and manage residential properties throughout Melbourne and Sydney and Brisbane and concentrate all our resources on ensuring that your specific management needs are fulfilled.
This means we will look after your property the way we look after our own, using our professional skills and the latest technology to find quality tenants, minimise vacancies and handle marketing, repairs, maintenance, accounting, and legal compliance efficiently and cost-effectively.
With so many different pieces of legislation regulating the landlord rights and responsibilities, it makes sense to have a professional on your side who can help your property investment journey be as successful and stress-free as possible.
You deserve a property manager who cares as much about your property as you do.
If you want to find out a little more about how Metropole can help you maximise the returns on your investment property, please click here, leave us your details and we will be in touch.
Editors Note: This article was previously published on Property Update and has been republished for the benefit of our many new subscribers