August 3rd. The temperature hit 2 degrees last night and there’s frost on the grass outside. Two weeks ago the heating went out, and the landlord’s phone has gone unanswered ever since. It’s like he’s guessed why we’re calling. It’s a good thing there are three families living in this three bedroom apartment. The extra body heat keeps the youngest kids from crying, although James is starting to ask questions, like why his home doesn’t look like his friends’ houses. Why are ten people huddled around an oil heater? And why are there wires hanging loose from the fluro lights in the bathroom?
It’s a story divorced from our view of life in Australia, but a recent study shows a rise in slum-like living conditions in Australia; a million Australians reside in poor living conditions, and more than 100,000 live in derelict housing. There are number of social issues at the root of these awful statistics, but one of those issues is unscrupulous landlords.
Last month domain.com published an article The answer to renters’ woes: A mandatory test for landlords that we here at Perspective found an interesting. Should potential landlords sit for a licence?
The test would cover:
- Their understanding of relevant legislation
- Their financial capacity to maintain an investment property to necessary standards
- Any previous failed business investments
- A criminal history check
While it’s a foreign concept to us, it’s common overseas. In Wales a landlord was fined £3000 for failing to renew his tenancy licence, and in Canada local councils are pushing to introduce licences.
The argument is that licences would protect tenants from living in substandard conditions, and ensure landlords adhere to the laws.
Peter Sheen, a tenant advocate at Child & Family Services in Ballarat spoke to the Sydney Morning Herald about some of his experiences working with landlords, noting that he saw a disproportionally high number of disgruntled tenants whose landlords were self-managing.
“Landlords may want to save money on agents’ fees or they may not be able to use an agent because of some problem with the property,” Sheen says. “Some just want to flaunt the Residential Tenancies Act and agents will not touch them.”
We decided to chat to Independent Property Management aficionado Sam Griffiths to get an expert view of the situation.
Sam, you’ve been at this for a few years, what are some of the most difficult landlord situations you’ve had to deal with?
By far the most difficult situations I have to deal with are broken heating units in winter. It may seem pretty minor, but not if it’s you that’s freezing your butt off. This happens time and time again each and every winter, and normally only happens because landlords have failed to listen to our professional advice and have the unit serviced prior to the cold season. Legislation states that heating is an urgent repair and must be fixed within 7 days—which frankly, can be a long seven days—and that’s all well and good assuming the owner has funds to fix the issue! When tenants are cold in winter and the owner won’t answer your call because they know why you are calling, it gets really hard.
Do you ever turn away or cut your contract with landlords because you don’t think they have the money to maintain a property, or they want you to act against regulation?
To be honest, it has never happened to me. BUT that’s not to say that it shouldn’t have happened at least once or twice during my time as a PM. There are plenty of unprofessional requests each day, some are quite amusing, but we simply explain what the legal guidelines are and that’s usually enough to nip such things in the bud.
How do you determine what makes a good landlord when you begin the relationship?
Communication! How open and willing to discuss their situation are they? There is no doubt about it. Sure, I get that everyone’s financial situation is different and some are better than others – but if they’re open to honest communication, things will go well. There are always cheaper fixes that can be done in the interim.
How do you feel about a landlord licence?
I think a landlord licence would be important for someone who self-manages their property, but if you’re going to engage a property manager, you don’t really need one. That’s what our role is for. We manage to provide a buffer, so regardless of the landlord’s level of understanding, it rarely impacts the tenant—the problem lies in self-managed properties where the landlord isn’t aware of all of their responsibilities.
Is the criminal check needed? Do people have to worry about dangerous/illegal landlords?
I think a criminal check is something that will be required for absolutely everything one day anyway! It certainly couldn’t hurt to have one done for each landlord to ensure the property hasn’t been involved in criminal activity in the past, but we’ve never had any dealings with a landlord that needed to be referred to the police, so to that extent I don’t think people need to worry.
What are the benefits to having a property manager rather than self-managing?
Gone are the days of a PM just arranging to unblock toilets. A good PM will add value far beyond basic maintenance. They can support you in implementing preventative maintenance programs as required, manage risk, liaise with accountants and quantity surveyors on your behalf, uphold and increase the value of your asset and in time, position you to be able to invest again. Having a PM creates peace of mind, knowing you have someone looking out for your best interests, who has a thorough understanding of the legislation and potential risks and who can give professional advice.
If I was a landlord, I couldn’t think of anything worse than following up on overdue rent, organising constant niggling repairs or having tenants call me in the middle of the night. If something happens during the tenancy, causing one of the parties to dispute, its peace of mind knowing you have someone who has thorough records and information and is knowledgeable and able to present this information at ACAT if need be.
What are the benefits to potential renters choosing a property managed by IPM?
When you rent with a property management company like us, you know that everything is going to be done by the book, and you’re unlikely to need to face the courts because you’ve been evicted illegally or emergency repairs haven’t been done. There is also the risk that the bond will not be lodged with the RTA when a tenant is dealing directly with the landlord rather than an agent.
We also get to know our tenants, and if an owner needs to move back in to their property at the end of your lease, we can work with you to get you in to new place, without the need to worry about references and stress about whether you’ll be approved.
What is your advice to anyone wanting to ensure they’re a good landlord?
My key pieces of advice would be –
- Make sure you can afford it – You don’t want to create unnecessary stress for yourself, so do your research on the costs involved such as general rates, land tax, strata fees as well as allowing a budget for maintenance and agency fees. If you’re unsure about what sort of expenses are likely, chat to us. We can advise you on these aspects. Keep records of all expenses as they are tax deductable.
- Get landlords’ insurance. You wouldn’t drive a Maserati uninsured so why would you even consider not ensuring an asset worth hundreds of thousands of dollars! If the pipes burst and your property floods, it’ll help get the problem fixed ASAP, so your tenants aren’t without their home for too long.
- Communicate! Look after your tenant by tending to maintenance and communicating with them (or your agent) promptly. A good tenant is worth their weight in gold and good, open communication makes the whole experience far more enjoyable for all parties
- Be prepared for general maintenance, particularly if you’re not buying a new property, you need to ensure you allow a budget to cover unexpected costs like a hot water system failing for example.
- You get what you pay for. When you’re shopping around for a Property Manager, cheaper isn’t necessarily better. Instead of focusing on the fee, focus on what value the Property Manager can add for you and the tenant. Do they have best practice reporting and systems in place to protect you and your asset? And most importantly, do you get along with the person? They need to work closely with you and your tenant, so it’s important that they like working with people
So there you have it, a landlord licence might be a good idea, particularly for self-managed properties. But in the meantime, a good property manager will protect both landlords and tenants, and provide any knowledge either party is missing.