What should every investor know before they buy a property?

Before you purchase an investment property, you’ll probably seek expert advice from people like your mortgage broker for finance, possibly a buyer’s agent to find the property and a building inspector to check the property is sound.

But none of these experts view a property from the perspective of a potential tenant and that can make a world of difference when it comes to rental returns. That’s why consulting a trusted property manager can really help.

Why consult a property manager before you buy an investment property?

Your property manager is the best person to advise on the rent you can expect. They’ll also be the person who needs to find a great tenant. So getting them in before you sign the contract of sale is another level of protection when it comes to making a wise property investment.

Property managers view properties from the tenant’s perspective so they look for things that will make your rental property desirable. They’ll also consider what type of tenant will be attracted to your investment and the rent they are likely to pay.

For example, a shabby looking 3-bedroom home will attract younger people such as students, so you can expect to receive a lower rent and possibly a high turnover of tenants. Whereas, a well maintained 3-bedroom home will attract families who are likely to remain tenants for several years – providing you with a stable rental income.

Does the investment property comply with current Tenancy Laws?

When you buy a home to live in, you may decide to overlook some maintenance issues but it’s different for investment properties.

Under NSW residential tenancy laws, rental properties need to meet 7 minimum standards to be considered fit for habitation. In addition, there may be other repairs or upgrades required. An experienced property manager should be able to advise you on what’s important to do now and what needs to be planned for. Afterall, if an expensive kitchen or bathroom renovation can be delayed without jeopardising your rental income, then why spend that money now?

Suburb profiles are important

Have you ever noticed that suburbs tend to attract similar types of people? For example, suburbs with a good mix of public and private schools tend to attract families. While suburbs with lots of restaurants tend to attract couples and singles?

When it comes to buying an investment property, you’ll need a property that fits the suburb’s profile. Let’s face it, a studio apartment will be difficult to lease in an area that attracts families!

Unbiased advice you can count on

Your property manager is the one who will be taking care of your property in the long term,  so consulting with them before you buy an investment property makes sense.

If reliability, knowledge and experience are important to you, you can’t go past Brigitte Stills from Stills Properties. She’s been looking after landlords and their properties for over 30 years.

Remember, before you sign the contract of sale on an investment property, contact Brigitte for her expert and unbiased advice. Call 1300 091 638 or email propertymanager@stillsproperties.com.au


COVID-19 has changed property management. What you need to know.

When the economy starts to contract, we all look at ways to save money. For some property investors, reviewing the need for a managing agent might be on their list of cost savings. But COVID-19 has changed the rental market landscape.

These days, managing a property is more than collecting the rent and arranging for repairs. There are times when you will also need to manage some difficult conversations with your tenants. If you already have a property manager, you’ll find you are relying on them more than ever and if you don’t currently have one, you might want to reconsider your decision.

Tenant hardship

Tenants are losing their jobs or have been asked to take pay cuts. This means, they may not be able to pay their rent – even if they are receiving payments under the Government’s Coronavirus Stimulus Package.

There are 3 ways you can handle this situation:

1. Allow the tenant to break their lease and find a new tenant

With this option you will be facing the challenge of finding a new tenant who is prepared to pay the same rent. Currently, there are almost 7000 properties for lease in the Sydney metro area, so finding a great tenant who is prepared to pay the same amount of rent, could be a challenge.

2. Offer your tenants a rental abatement

A rental abatement provides tenants with a rent-free period on the understanding they will repay the lost rent at the end of the rent-free period. It’s important both the landlord and tenant understand the legal ramifications of a rental abatement. It may not be a good solution for either of you.

3. Reduce the weekly rent for a period of time

In this situation, the tenant continues to pay rent but at a reduced rate. The rent reduction usually has a fixed term (e.g. 3 months). At the end of the rental reduction period, the rent will return to previous levels. In this situation, the landlord permanently loses rental income for the period of the rent reduction. However, regular rental income is still being paid.

What we do

At Stills Properties, we believe in creating long-lasting relationships with both our tenants and landlords. In the current environment, these relationships are more important than ever so this is what we are doing:

1. Checking-in with tenants on a regular basis

Our priority is to make sure every tenant is doing ok. But our commitment to making regular contact gives us an opportunity to check each tenant’s employment situation and their ability to continue paying rent.

2. Investigating rental reduction offers, if appropriate

If a tenant comes to us to ask for a rental reduction or abatement because they have lost their job, we will request appropriate documentation to verify their job loss. Assuming everything checks out, we negotiate between the landlord and tenant to reduce the rent for a fixed period of time.

3. Providing landlords with options

We understand that a loss of rental income could mean financial hardship for our landlords, and let’s face it, landlords can lose their jobs too. There are various tax reductions and mortgage freeze options available and we’ll chat to you about your options.

4. Know the changing legislation

There is no uniform code on rental relief for each state so it’s easy to get confused.  As a result, some tenants might ask for leniency that’s only offered in another state. As your managing agent, it’s our job to know all the relevant information for investment properties in NSW. That means, our landlords don’t need to have difficult conversations with their tenants or even spend time looking for the relevant legislation.

While the coronavirus is new, managing properties isn’t!

With over 30 years in the Sydney property management business, we know what it’s like to manage properties in tough times. The cause may vary but our hard work and attention to detail never changes.

Residential property management is always about building strong, open and honest relationships with people. If you feel your current property manager isn’t looking after you or your property the way they should, contact Brigitte Stills on 1300 091 638 or email  propertymanager@stillsproperties.com.au


Six month moratorium on residential tenancy evictions during COVID-19

The NSW Government is introducing an interim 60-day stop on landlords seeking to evict tenants due to rental arrears as a result of COVID-19, together with longer six month restrictions on rental arrears evictions for those financially disadvantaged by COVID-19.

Read the media release
Read the new Regulation

New measures
Coronavirus (COVID-19) has already had a significant impact on the economy, meaning some tenants are having difficulty keeping up with rent payments. The NSW government is introducing measures to help landlords and tenants work together. The new measures include an interim 60 day stop on landlords issuing termination notices or applying for NSW Civil and Administrative Tribunal (the Tribunal) eviction orders due to rental arrears, where tenants are financially disadvantaged by COVID-19.

“This will allow time for Government financial support to reach those who need it and limit social movement in order to minimise public health risks during the COVID-19 pandemic.”

A landlord is required to negotiate a rent reduction with the tenant in good faith in the first instance, and can only seek to give a termination notice or apply for an eviction after the interim 60-day stop if it is fair and reasonable in the circumstances of the specific case.

Fair Trading will be able to assist landlords and tenants try to reach an agreement if needed.

Along with these restrictions on evictions for rental arrears, the Government will be extending the notice periods for certain other lease termination reasons to 90 days. At any time during the 60 day stop and the longer six month restrictions, landlords can still apply to the Tribunal at any time to take possession of a property if they are suffering undue hardship.

Eligibility
To meet the requirements for 60 day stop on evictions and the longer six month restrictions, a household needs to demonstrate they are impacted by COVID-19. A household is COVID-19 impacted if:

1. one or more rent-paying members of a household have lost employment or income (or had a reduction in employment or income) due to COVID-19 business closures or stand-downs, or

2. one or more rent-paying members of a household have had to stop working or reduce work hours due to illness with COVID-19 or due to COVID-19 carer responsibilities for household or family members, and

3. the above factors result in a household income (inclusive of any government assistance) that is reduced by 25% or more.

Important
All tenants who are not impacted by COVID-19 are expected to honour their existing tenancy agreements including paying all rent and charges in full.

Flowcharts
To understand how the ban on evictions due to COVID-19 may affect your tenancy, see the first flowchart. If you are a landlord and you want to understand how the new measures affect all types of residential tenancy terminations, use the second flowchart.
Flowchart: Can a tenancy be terminated during COVID-19
Flowchart for landlords – termination of tenancy options

Template letters


For tenants

We have created a template letter for tenants to help them when approaching landlords to request rent reduction. We have also created an example.
To help with your request, your letter should also include:

1. your original household income
2. your change in circumstances due to COVID-19 and how this has impacted on your household income
3. the rent payment you would be able to meet under your new household income
4. any income support you receive

Tenant template letter
Tenant example letter

For landlords when responding to a tenant
All landlords must be prepared to negotiate rent payments with tenants experiencing financial hardship due to the COVID-19.

To help you, we have created a template you can use when responding to rent reduction requests. We have also created an example.
Your response letter should also include:

1. your financial situation – be open and honest about your financial situation, including whether you rely on the rental income to cover mortgage repayments or other expenses.

2. your conversations with your lender – outline the result of conversations you’ve had with your lender about waiving or reducing your own mortgage repayments.

3. the rent payment that you would be able to accept

4. clarify whether the rent payment loss (arrears) will be waived or repaid

Landlord template letter to tenant
Landlord example letter to tenant

For landlords when talking to their financial institution
Landlords are encouraged to approach their financial institutions to seek a mortgage freeze or reduced repayments as part of the negotiation discussions with their tenant/s. We have created a template you can use when approaching your lender. We have also created an example.

Your letter should include:

1. your financial situation be open and honest about your financial status if you rely on the income from your rental property to help pay for the mortgage, and are negotiating with your tenant about rent payment, this should be outlined and evidenced in your request.

2. the mortgage waiver or reduced payment you are seeking until you or your tenant resumes normal employment arrangements.

3. clarify whether your rental payment losses (arrears) will be waived or repaid under a repayment plan with your tenant once the COVID-19 emergency is over

Template letter from landlord to financial institution
Example letter from landlord to financial institution

Frequently asked questions

Can a tenant and landlord still end a tenancy if they agree?
Yes. A tenant and landlord can agree to end a tenancy and decide when and how this is to happen.

What proof does a tenant need to show they are impacted by COVID-19?
The tenant can provide simple documents to show that they are impacted by COVID-19, for example:
proof of job termination/stand-down, or loss of work hours
proof of Government income support
proof of prior income.

What do the changes mean for tenants who are impacted by COVID-19?
The new rules put an immediate 60 day stop on termination notices and Tribunal applications for terminations based on rental arrears where a tenant is unable to meet their rental obligations due to being impacted by COVID-19.

This will allow time for tenants to receive Government income support and for landlords to negotiate a reduction or waiver of mortgage repayments with their lender.

It will also allow time for tenants and landlords to negotiate possible reductions in rent if needed. A dispute resolution process is available through NSW Fair Trading if no agreement can be reached or where the landlord or tenant would prefer to use this option.

Does the tenant need to pay back the rental arrears or will the amount be waived?
The amount of rent arrears accrued by a tenant who has negotiated reduced rent will not automatically be waived. Whether rental arrears will be waived is subject to negotiation between the tenant and the landlord (with assistance from Fair Trading’s dispute resolution process as required).

Are sub-tenants covered by the stop on evictions?
The stop on evictions applies to sub-tenants who are unable to meet their rental obligations and who are covered by the Residential Tenancies Act 2010. These are tenants where the property is subject to a written residential tenancy agreement and:

are a sub-tenant under a written residential tenancy agreement with the tenant named in the main tenancy agreement, or

a tenant under the main written tenancy agreement has transferred the tenancy to them.

Can I still end my tenancy using the required notice periods and not negotiate with my landlord?
Yes. Tenants who do not wish to stay in their premises can terminate using the existing notice period required for their specific agreement.
Tenants seeking to end a fixed term agreement early may be required to pay break fees under their agreement. Details about ending a fixed term agreement early are outlined on the Fair Trading website.

Why are we not protected from eviction for six months as was announced following the National Cabinet meeting recently?
The package announced is designed to support tenancies to continue wherever possible. The new laws will provide a six month moratorium on landlords giving termination notices, or making applications for forced evictions, due to rental arrears for tenants who are impacted by COVID-19, provided both parties seek to find a mutually workable solution.

The new laws allow landlords, after the 60-day stop, to seek to terminate a COVID-19 impacted tenancies for rental arrears but this can only occur if they have tried to negotiate a rent reduction with the tenant in good faith and seeking a termination is fair and reasonable in the circumstances of the specific case.

What if the landlord refuses to negotiate and we can’t reach an agreement?
The landlord and tenant should both attempt in good faith to negotiate a reduction in rent.

NSW Fair Trading provides a dispute resolution process that landlords and tenants can use if they can’t reach an agreement themselves. Fair Trading will request evidence from the tenant about their previous income and current income from all sources, including any Government income support. Information will also be sought about any application the tenant has made for income support.

Tenants need to have an idea of how much rent they can pay when considering negotiations. Fair Trading will then contact the landlord to seek a mutual agreement on a temporary arrangement for the payment of rent.

Is income calculated before or after tax?
When determining whether a tenant meets the COVID-19 impact test, the income received is the money coming into the tenant’s bank account after tax.

How does the test apply to group houses where not all rent paying
tenants have been affected by COVID-19?
The COVID-19 impact test applies to the total household income, inclusive of any government assistance, such as the new job keeper payments.

Will my landlord insurance cover my rental losses?
Landlords should check their insurance policy to see whether they are covered for rental default. Different policies will have different limits and requirements. Many insurers are adopting new procedures to deal with the impacts of COVID-19, and may require evidence that the landlord has attempted to negotiate with the tenant.

I am a landlord, but I can’t afford to provide a reduction in rent
Landlords should seek to negotiate with their lender to try to obtain an agreement to waive or reduce mortgage repayments. Many lenders are offering to reduce or waive payments at this time.

If this is possible, landlords should have a greater capacity to agree to a reduced rent or charges for a period of time. The immediate 60-day stop on evictions will also allow time for the tenants to access Government income support and may allow tenants to resume paying existing rent.

Can tenants be encouraged to look at accessing their super to pay rental arrears?
Agents and landlords must not encourage tenants to access their super early to cover any rental arrears. This could constitute unlicensed financial advice and may not be in the best interests of the tenant. Financial advice must only be provided by qualified and licensed financial advisers or counsellors, not by agents or landlords.

What happens once the interim 60 day stop ends?
Once the intermin 60 day stop has ended, a tenant(s) who is still unable to meet their rental obligations due to COVID-19 can only have their tenancy terminated on the basis of rental arrears if the landlord has attempted to negotiate reduced rent in good faith but the tenant has failed to do so.

I am a tenant in social housing – does the stop on evictions apply to me? I am a tenant in social housing – does the stop on evictions apply to me?
Social housing providers have their own processes for dealing with rental arrears and are not covered by the new provisions.

Example scenarios

Reduced income together with income support resulting in less than 25% loss of income

A tenant pays $300 per week in rent under their tenancy agreement

The tenant earned $800 per week but lost their income as a sole trader due to the impacts of COVID-19 business closures on their business, following public health orders

The tenant now receives income support of around $1,500 per fortnight, or $750 per week, paid through their employer*

The tenant’s lost income per week is $50 per week, which is less than 25% of the tenant’s original income.

The stop on termination notices and applications for eviction orders due to rental arrears does not apply to this tenant.

Increase in income due to government support payments

A tenant pays $300 per week in rent under their tenancy agreement

The tenant earned $650 per week but lost their job due to business closures following public health orders

The tenant now receives income support of around $1,400 per fortnight, or $700 per week, paid through their employer

The tenant’s income has now increased as a result of the Commonwealth payment: instead of $1,300 per fortnight, they now earn $1,400 per fortnight*

The stop on termination notices and applications for eviction due to rental arrears does not apply to this tenant, because there has been no reduction in their total income.

Tenant and co-tenant in a family household. The tenant loses income and gets income support

A family pays $750 per week in rent in total and the adults are co-tenants under their tenancy agreement

Tenant A earns $1,000 per week, while their partner tenant B earns $500 per week

Tenant A loses their job due to business closures, but is receiving a government payment of around $1,100 per fortnight or $550 per week*

There is no impact on tenants B’s income

The lost household income is equal to $450, which is equal to 30% of the original household income

The stop on termination notices and applications for eviction orders due to rental arrears applies to this household.

Tenant is sole breadwinner, tenant loses income and gets income support

A tenant pays $600 per week in rent under their tenancy agreement and is the sole breadwinner for the family

The tenant loses their job due to the business closures following the public health order announcements. The tenant’s income was previously $1,000 per week

The tenant receives income support payments from the government of around $1,500 per fortnight, which equals $750 per week*

The loss in household income is equal to $250 per week which is 25% of the original household income

The stop on termination notices and applications for eviction orders due to rental arrears applies to this household.

Share household where all tenants are on the main lease

Two friends share a house and are named on the lease.

The rent is $1000 per week

Tenant A earns $1200 per week and tenant B earns $800 per week, making a combined household income of $2000 per week

Tenant A loses their job and now receives $1115 per fortnight which is around $557 per week.

The combined income of the household is now $1357 per week

The loss in income is $643 per week, which is 32% of the original household income.

The stop on termination notices and applications for eviction orders due to rental arrears applies to this household

Share household with head tenant and sub-tenant on a written lease with head tenant

Two friends share a house and the rent payable on the main lease is $1000 per week

Tenant A is the head tenant and has a written sub-tenancy agreement with Tenant B

Tenant A earns $1200 per week and tenant B earns $800 per week, making a combined household income of $2000 per week

Tenant A loses their job and now receives $1115 per fortnight which is around $557 per week.

The combined income of the household is now $1357 per week

The loss in income is $643 per week, which is 32% of the original household income

The stop on eviction orders being issued due to rental arrears applies to Tenant A’s agreement with the landlord

As Tenant B’s income has not changed, the stop on notices for termination and eviction does not apply to Tenant B’s sub tenancy agreement with tenant A.

I need more support and information
Trained dispute resolution officers in Fair Trading are available to help landlords, managing agents and tenants to negotiate temporary changes in rental arrangements, if agreement cannot be reached between parties.

When you seek assistance with negotiations, we may need to obtain some initial information before it can schedule a time to discuss the matter with both parties.

How to seek help
If you have attempted to negotiate a rental plan without success you can apply for assistance by completing the Tenancy Complaint Form.

Apply for assistance
Tenants will be asked to provide evidence that they are experiencing financial hardship, such as:

proof of temporary or permanent job loss (eg, employer separation letter, evidence of reduced shifts)

proof that your business has suffered due to COVID-19 (eg, type of business – noting that some are now the subject of a government ban and cannot operate)

proof of previous employment income and current income (eg, bank statement, payslip)

proof of Government income support payments or applications made (eg, statement or advice/acknowledgement from Centrelink)

Tenants will need to assess the amount of rent that they are able to pay and the type of rental arrangement requested, for example:

Reduce my rent by $100 a week for a period of six weeks, or

Reduce my rent by $200 a week until employment resumes

Copies of your evidence can be uploaded from your mobile device and attached to the complaint form.

How long is the process?
We will be treating negotiation requests as a matter of priority and will respond as quickly as possible.

The timing for each negotiation process will be largely influenced by the demand for the service as well as whether parties can provide the requested information in a timely manner.


https://www.fairtrading.nsw.gov.au/resource-library/publications/coronavirus-covid19/property/moratorium

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Has your managing agent told you about the new reforms for landlords?

From 23 March, new residential tenancy reforms were implemented and if you own an investment property, these changes will immediately affect you. So ask yourself, has your current managing agent advise you of these changes?

Here’s what you need to know:

1. There’s a new Condition Report that reflects all the new tenancy reforms – including the minimum standards rental properties must achieve and the new smoke alarm regulations.

To learn more about the minimum standards for rental properties, read our previous blog warning landlords of these changes.

The new Condition Report also requires:

  • All taps and toilets must be checked at the beginning of each tenancy and any leaks fixed.
  • All toilets in rental properties must be dual flush with a minimum 3-star WELS rating.
  • Tenants to be given either 2 hard copies of the completed Condition Report or 1 electronic copy within 7 days of taking possession of the property.

2. The 23 March also saw the introduction of new smoke alarm obligations for all landlords. There are several changes you need to be aware of but importantly, landlords are required to ensure the smoke alarms in rented properties are in good working order. Penalties apply to any landlord who fails to comply with this requirement.

3. Tenants must now receive additional information about a property BEFORE signing a lease. This information includes:

  • If the property was used to manufacture a prohibited drug or cultivate a prohibited plant within the last 2 years.
  • If the landlord intends to sell the property or if a mortgagee (e.g. a bank) is taking legal action to reposes the property.
  • If the property is part of a strata scheme (e.g. an apartment or townhouse), tenants must receive a copy of the Strata By-laws. They must also be advised if any rectification works or major repairs to common property have been scheduled during the fixed term of the lease.

4. There is a new Standard Leasing Agreement which must be used from 23 March. The new Agreement reflects the changes to the rights and obligations between landlords and tenants and is designed to provide total transparency.

What has your property manager told you about the new tenancy reforms?

The changes to the NSW Residential Tenancy Reforms are extensive and in this article, we are only able to tell you about a few. As a Landlord, you need to know how these changes will affect your investment property and what you need to do to comply.

That’s why it’s important you know and understand your new obligations.

At Stills Properties, we provide our landlords with personalised information about how the new reforms will affect each of their investment properties. In fact, we believe it’s so important for you to understand your new obligations, we want you to ask yourself, has your current managing agent explained the changes to you?

If you think you deserve better service and more information from your property manager talk to us. Stills Properties have been looking after Sydney landlords for over 30 years. Call Brigitte on 1300 091 638 or email  propertymanager@stillsproperties.com.au


What happens if you want to sell an investment property?

What do you do if you want to sell your investment property – especially if you have a tenant living there? Here are our 4 key tips to help you and the tenant through a potentially rocky period.

Tip 1:  Plan it carefully

Selling any property should never be a spontaneous decision. It’s particularly true when you have a tenant. Remember, it’s their home. They are entitled to privacy. They also have the right to feel safe and secure.

We believe open communication and understanding are critical when you first advise a tenant that the property is being sold. That’s one of the reasons we have strong, positive relationships with all our tenants.

Tip 2:  Choose your sales agent carefully

If you want your tenant to keep your property looking good for every open, the selling agent must treat them well and follow legislative requirements. Otherwise, as the landlord, you could find yourself in trouble.

When one of our landlords decides to sell their investment property, we remain very involved in the process. We’ll often recommend they use sales agents we know will collaborate with us, and who will look after the best interests of both our landlord and the tenants.

Tip 3:  Stay or Go – The tenant has rights

Once a tenant has been advised of an upcoming sale, they can choose to cancel their lease as long as they follow their legal requirements. This means you’ll be losing rental income much sooner than you expected.

We recommend you try to ease the pain and inconvenience of opens by offering your tenant a generous rent reduction during the sales period. It means you may have a reduced rental income but at least you still have incoming rent to help offset your mortgage. Rental reductions also reward your tenants for keeping your property in good condition throughout the sales process.

Tip 4: Follow the tenancy legislation

There are all sorts of regulations regarding a tenant’s rights when selling the property. These include:

  • Providing correct notice prior to opens
  • Restrictions on promotional photography
  • Allowing tenants to terminate the lease if they wish
  • Remaining at the property during each open

As your property manager, we’ll ensure the selling agent respects and abides by the tenancy legislation as well as protecting the rights of your tenant.

A successful sale begins with tenant selection

Selling your investment property might seem improbable at the moment, but priorities change. That’s why we offer comprehensive property management services that take into consideration all aspects of leasing – from finding a great tenant to navigating the challenges when you decide to sell. After all, we’ve been managing Sydney properties for over 30 years.

For help to find great tenants for your investment property or for further information on the services we offer, call Brigitte Stills on 1300 091 638 or email propertymanager@stillsproperties.com.au