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

Except where otherwise noted, content on this site is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this licence, visit: https://creativecommons.org/licenses/by/4.0


Why are some property management fees lower than others?

Property management fees can vary significantly. This makes it hard to know if you are receiving value for money or paying too much. Let’s look behind the scenes at what really happens at the lower end of the management fee scale and compare this to what you should expect.

What do lower fees really mean?

Lower property management fees mean the traditional practice of visiting properties, and knowing them well, are sacrificed. Instead, property managers are desk-bound administrators. This may not seem like a problem at first. But you should be concerned for several reasons:

  1. If the property manager doesn’t know your property well, they’re unable to identify any negligence caused by the tenant. When the current tenant moves out, you could be left with a hefty repair and maintenance bill before you can next lease your rental property. A long vacancy combined with repair costs can cause a big dent in your budget.
  2. Lower management fees require the managing agent to look after more properties to cover costs and make a living. With volume comes the challenge of remembering the details of each property, each landlord and each tenant. It also means it’s difficult to promptly attend to any issues with the property or the tenant. That’s why Stills Properties is a boutique property management agency. It gives us time to provide highly personalised and individual service because we know you and your property very well. It also gives us time to build good relationships with tenants. This leads to harmonious tenancies.
  3. With lower management fees comes outsourced routine property inspections. These are usually performed by different inspectors each time. This can be a problem because it means the inspector won’t know your property or the condition it was in when the lease commenced. Therefore, he or she is unable to identify any negligence caused by your tenant.

Management fee savings could be an illusion

While lower management fees can appear to save you money, it’s a risky strategy in the longer term due to:

  • A lack of knowledge of your property and its condition at the time the lease commenced
  • No-one to coach your tenant on how to care for your investment property
  • Property managers too overwhelmed by the size of their portfolio to attend to issues promptly
  • Outsourced property management services so no-one is accountable for protecting your investment

Easy tenancies take time and effort

Easy, stress-free tenancies happen when the property manager takes the time to build rapport with the tenant and know your property.

Having rapport with the tenant means the tenant trusts the managing agent. Then, if the tenant has an issue or accidently causes damage, they’ll advise the property manager so the problem can be promptly resolved. Likewise, if the tenant isn’t maintaining the property appropriately, the managing agent can coach them on what’s expected.

Stills Properties are a boutique property management agency who works closely with both landlords and tenants. It’s a formula for success that’s proven to maximise returns for landlords and create harmonious relationships with tenants. If you’re looking for an experienced, knowledgeable and dedicated property manager, contact Brigitte at Stills Properties. For more information or to discuss your property management requirements, call Brigitte Stills on 1300 091 638 or email propertymanager@stillsproperties.com.au


Prepare now for new residential tenancy laws

The NSW Parliament recently passed a number of amendments to the Residential Tenancies Act 2010. With over 30% of the NSW population renting, these changes are designed to make it easier for tenants to make a rental property feel like home.

For landlords, it creates an opportunity to attract and retain high quality, long term tenants – providing greater income certainty on their investments.

The new laws also improve protections for victims of domestic violence.

The implementation date for the Residential Tenancies Amendment (Review) Bill 2018, is expected to begin in the first half of 2020 so it’s important all landlords start planning now.

The Reforms in summary

A. Minimum standards identified

At the beginning of any tenancy, all properties will need to meet 7 minimum standards to be deemed fit for habitation. These standards will also need to be maintained throughout the tenancy (by way of repairs). While not an exhaustive list, these standards are considered the minimum baseline.

The 7 minimum standards are:

  1. The property must be structurally sound
  2. Each room must have adequate natural or artificial lighting (the exceptions are storage rooms or garages)
  3. There must be adequate ventilation throughout the property
  4. It must have an electricity and/or gas supply with adequate electricity and gas outlets for lighting, heating and appliances
  5. The property must have bathroom facilities (including toilet and bathing facilities) which provide user privacy
  6. The property must be connected to water supply infrastructure for the supply of hot and cold water for drinking, washing and cleaning
  7. The plumbing and drainage must be satisfactory

B. New resolution powers & rectification orders

The property management industry is plagued by disputes over repairs and maintenance issues along with claims of property damage caused by tenants. The new legislation is designed to reduce these problems by providing NSW Fair Trading with greater powers – including the ability to issue rectification orders.

C. Rent increases limited for periodic leases

Rent increases for periodic leases (that is, where the tenancy has no specified time limit) will be restricted to once every 12 months under the new laws.

D. Protections for victims of domestic violence

Tenants who need to escape a violent partner will be able to terminate their tenancy immediately and without penalty. In addition:

  • The victim/s will not be held accountable for any property damage that occurred during a domestic violence incident
  • The same is true if they are a co-tenant who is not the perpetrator
  • If a tenant terminates a lease because they are a victim of domestic violence, the landlord or their agent are prohibited from adding their name to the tenancy database

E. Separate meters for granny flats etc.

With the rise of dual occupancies, granny flats and the like, the Residential Tenancy Amendments include a new definition for “separately metered premises”. The purpose of this amendment is to reduce the number of disputes between landlords and tenants over who pays for water, electricity and gas.

F. Other changes

The amendments are quite comprehensive and include a number of other changes including:

  • The introduction of penalties for landlords or agents if they fail to provide the tenant with a property condition report at the beginning of the tenancy
  • Mandatory set fees for breaking a fixed-term lease
  • Penalties for landlords who fail to repair smoke alarms
  • Clarification on taking photos and videos during inspections and publishing them to advertise the property for re-lease or sale
  • Stopping database operators charging tenants to access their own information

Take care of your tenants and they’ll take care of your property

Your investment property is a valuable asset so it’s only natural you want to ensure it’s providing a great return on investment, with tenants that will take care of it.

This new legislation is designed to help you do that by providing tighter guidelines on what’s acceptable from both a landlord’s and tenant’s point of view.

For an informed and conscientious property manager to look after your investment needs, call Brigitte Stills on 1300 091 638 or email propertymanager@stillsproperties.com.au She’s been looking after landlords and their properties for over 30 years.