If you have owned an investment property for a while, you may have built a good, solid relationship with your property manager. But have you noticed you are receiving more automatically generated emails lately?
From an agency perspective, property management is changing. Increasingly, property managers are relying on automation to communicate with landlords to reduce overheads and increase agency profits.
But what about the landlord?
Or the tenant for that matter? What happened to:
Conversations with your property manager?
The ability to ask questions?
Personal service?
In the chase for larger margins, the human side of property management is being lost and at Stills Properties, we think that’s wrong and really sad.
Click to respond
We were recently speaking with a landlord who had enjoyed a great relationship with their property manager for many years, but then she left and the “robots” took over.
Now, the landlord receives automatically generated emails asking for instructions. One of them simply said:
Repair required. Please click the link below.
Repair to curtain rod required
Do you wish to have this repair carried out?
Require a quote?
Require more information?
Not proceed with the repair?
Or this one:
Your tenancy agreement is coming to an end.
Do you wish to renew your tenants agreement?
Do you require more information?
No, you do not wish to renew?
The landlord wanted to know why they had to tick a box to ask for an opportunity to speak with their property manager. We agree!
Managing properties is a “people” industry and your investment property is a significant investment. That’s why we believe you should be able to call or email us if you have a question, concern or are looking for advice.
It’s the same with tenants. They need to know there is someone they can speak to if they have a problem, concern or question.
Automated emails put agency profits first but at Stills Properties, we put people first.
Do you feel like a number or a valued client?
Technology has its place. There’s no disputing that. But it should never replace personalised, customer service. That’s why your investment property will be personally managed by our founder, Brigitte Stills.
So if you would like to be treated like a valued client, contact Brigitte from Stills Properties on 1300 091 638 or email propertymanager@stillsproperties.com.au
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.
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
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
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
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.
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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
Commercial properties are an attractive investment option for private investors. While commercial properties typically yield high rental returns with long tenancies, there are several things landlords must know to ensure they make the most out of their investment.
1.Commercial lease differences
If you own a residential investment property you may be surprised to know there are some key differences between commercial and residential leases. Commercial leases:
tend to be more involved and complex than residential leases
are longer than residential tenancies; usually three to five years with one or two option terms of three to five years each depending on the space of the building
have a minimum and maximum lease term which can be negotiated by both parties
are harder to break than residential agreements
include annual rent reviews and increases
have the tenant pay for all outgoings, including rates, taxes, levies, water and utilities
have the tenant pay for all outgoings, including rates, taxes, levies, water and utilities
are negotiated between landlord and tenant to equally benefit both parties.
2. Lease Agreement
The lease agreement is a legal document clearly outlining the rights and responsibilities of the landlord and tenant. Everything should be spelled out in the terms of the lease agreement to avoid confusion during the tenancy and ensure maximum protection for both parties.
The lease agreement should include:
rent amount and how it is
calculated
rent increases and when they will
occur; increases are typically determined by a fixed price (expressed as a
percentage), market review or Consumer Price Index (CPI)
outgoings (rates, taxes, levies,
water and utilities)
lease start date and duration
option rights for extension or renewal
cost and responsibility repairs, maintenance
and costs
sign-on incentives
fit-out responsibilities,
approvals and expenses
allowable improvements
option to assign a lease (tenant
transfers the lease to a new tenant)
make good provisions at end of
lease (return property to its original state)
breaking the lease (ending an
agreement early) and associated fees
security bond, either bank
guarantee or personal guarantee
payment of landlord fees
Each state and territory have specific legislation on commercial and retail leases. You should seek advice from a commercial lawyer before drafting your commercial lease agreement.
3. Landlord responsibilities
As a commercial landlord, it’s essential you
understand your main responsibilities before negotiating the terms of the lease
agreement.
In most commercial leases
the tenant is responsible for the interior of the rented premises,
which includes the fit-out and repairs and maintenance of walls, floors,
fixtures and inclusions throughout the lease term.
As the landlord, the exterior condition and structural
integrity of the property is your responsibility, including repairs and
maintenance of all structural aspects of the building. You must make sure the property
is fit-for-purpose, meaning it suits the nature of the tenant’s intended
business operations. And, you must ensure the tenant’s operations won’t impact
the local area.
Additionally, your property must have adequate building insurance, comply with building codes and meet health and safety standards. Rates and body corporate fees must be current when the lease is signed and gas and electrical safety certified.
4. Ideal tenants
Like residential property investments, securing the
right commercial tenant is key to maximising your rental return. Responsible
and profitable tenants that pay on time and are a good, long-term fit for your premises
are also key to your success as a commercial landlord. But finding potential
tenants and appealing to their specific business needs can be challenging.
Local, experienced and well-networked commercial agents are best placed to introduce ideal tenants, identify any red flags, negotiate the terms of the agreement and help you fill your commercial space – allowing you to get on with building your property investment portfolio.
Need more information?
Stills Properties has been managing investment properties for Sydney landlords for over 30 years, contact us to discuss your investment property management needs.
Winter is here and high time to assess your investment property
for any potential or existing issues before they worsen. Conducting a basic
winter maintenance check will not only protect your tenant, it’ll also
safeguard your property and finances.
Here are some rental property maintenance precautions that
landlords and tenants alike should consider as we move into the colder winter
months.
Test smoke
detectors
House fires are more common in winter. Some of the causes of
these fires are faulty electric blankets, heaters and appliances. While tenants
must check the condition of their heating and electrical appliances before use,
a smoke alarm is necessary (and required by law) to ensure the safety of the
occupants in case of a fire.
Tenants are responsible for replacing the batteries and testing
the device, but they must not interfere with or remove smoke alarms, without a
reasonable excuse. We suggest landlords schedule annual smoke alarm maintenance
checks to ensure they are operating effectively and notify the tenants. Fire and rescue NSW recommend
you:
Test your property’s smoke alarm batteries monthly
Remove dust from the smoke alarm every six months
Replace the batteries once a year
Remove and fit a new smoke alarm unit every 10 years.
Service air-conditioning
If you have one or more installed in your investment property, you
should make a point to clean or replace filters at the beginning of each
season. Filters may need more upkeep if tenants have pets, such as dogs or
cats, allow dust and dirt build up, or are big air-con users.
Treat mould
The most common cause of indoor house mould is moisture. Warm,
damp rooms such as the bathroom and laundry are particularly prone to mould,
especially in winter. During the colder months, tenants may open windows less
frequently, especially after taking a shower or using the clothes dryer.
Windows and walls become wet with condensation. Conversely, leaving windows and
doors open in the early mornings and evenings brings the cool, moist air
inside.
The best way to tackle mould is to ensure there’s adequate
ventilation available. Make sure windows and doors can be opened easily – preferably
during the warmer, sunnier parts of the day – and consider installing an
exhaust fan. Let tenants know what to look for and how they can also prevent
mould.
Clean gutters
It tends to rain more in winter. One of the most common winter
household maintenance issues is blocked gutters and downpipes. These issues can
cause all sorts of damage to your property, including leaking, rotting, rising
damp, water damage, mould and in severe cases, affect the property’s foundations.
If untreated, a minor issue can quickly escalate.
But it’s easy to prevent by making sure your gutters are free
from leaves, twigs and other debris, especially before winter. If you don’t
trust yourself on a ladder, you may prefer to hire a handyman to do the job.
Prevent slipping
Moss, mildew and algae can build up in damp, shady areas,
particularly in winter. This can make driveways, paths and outdoor patios
slippery and dangerous. While tenants are responsible for maintaining these
areas, you should make sure they know what to do before winter and check
they’re doing this at each inspection.
While there are many off-the-shelf products available to prevent
moss and algae build up the issue can be easily managed by:
keeping the areas clean and free from leaves and debris and anything
that causes the accumulation of moisture and
occasionally brushing and sweeping the surface.
Ongoing, proactive maintenance of your investment property, particularly during the winter months will protect your asset in the long-term.
Need more information?
Stills Properties has been managing investment properties for Sydney landlords for over 30 years, contact us to discuss your investment property management needs.