Investing in real estate has long been an Australian pastime and it can be a rewarding experience. However, it’s not something to take on lightly. Having found and purchased an investment property owners and landlords need to manage it. This is no easy task. So we’ve compiled a list of some of the most common owner and landlord FAQs to help.
Here are some owner and landlord FAQs and how our property managers answer them:
- Owner and landlord FAQ 1 – My tenant wants a periodic lease. Should I agree or ask them to go on a fixed term lease?
This is tricky. To fully answer this question it’s important to assess the current state of the rental market. If there are low vacancy rates and increasing rents then the market is hot and landlords could be more inclined to consider a periodic lease (also called a month to month lease). This is because a periodic lease can offer flexibility.
The tenant can move on easily, and the landlord has confidence in the market being hot enough that if this happens a new tenant could be found quickly. It also provides the landlord with the option of ending the lease faster if they are inclined to do so.
On the flip-side, if the market is cold (high and/or rising vacancy rates) landlords are more likely to be inclined to want a fixed term lease as it offers security.
The time of year can also impact this decision as some points in the year are generally quieter than others. For example, many people are away over Christmas and this can make it difficult to lease properties over this period.
If landlords have bought off the plan it is also wise to consider an unusual lease term. New developments are likely to be signing tenants up to similar rental agreements that start at the same time, potentially leading to some vacating simultaneously 6 to 12 months down the track. An unusual lease term can help landlords avoid having to compete for tenants in the future.
Something else to consider in the scenario of a periodic lease agreement is that the landlord is required to provide 2 months’ notice to the tenants to vacate whereas the tenant is only required to give 2 weeks’ notice to the landlord. One last thing to consider is that some landlord insurance policies will not cover loss of rent in the scenario of a periodic lease and as such, it is important to review your landlord insurance policy if you decide to agree to a periodic agreement.
- Owner and landlord FAQ 2 – What happens if my tenant breaks the lease?
It depends what sort of lease the tenant has signed. If they have signed a fixed term agreement then they are not required to give a minimum period notice. However, they may be obliged to pay compensation for costs incurred including the letting fee and advertising as well as compensation for loss of income by way of rent up until a new tenant is found. If the tenant has signed a month-by-month agreement then the notice period is 14 days in Queensland. If the tenants give the required minimum notice and then move out, the landlord will be left to cover the costs of finding a new tenant.
The Residential Tenancies Authority has a list of fast facts for ending a tenancy agreement which you can read here.
- Owner and landlord FAQ 3 – My tenants are late with their rent, what can I/we do?
First thing first is to find out why. Is this a new thing or has it become a regular occurrence? Sometimes it’s a simple case of they forgot. Other times it could be more complicated. We try to get as much information about tenants circumstances so that we can adapt our approach. These situations are generally resolved after a little investigation. Occasionally, this sort of situation may require a firmer hand and there are procedures that landlords and property managers can take. The Residential Tenancies Authority describes these on their website.
At Blocksidge our procedures are governed by the Property Occupations Act 2014. This Act protects the rights of the landlord to remove a tenant who is not paying rent whilst at the same time gives the tenant an opportunity to resolve the situation and remain in the property. Our property managers will work with tenants to avoid unnecessary actions however, we are not afraid to take necessary steps to terminate Tenancy Agreements if a tenant falls too far behind in their rent.
- Owner and landlord FAQ 4 – I’m selling my investment property but my tenants still have some time on their lease. What should I do? Should I wait until they vacate?
First and foremost it is advisable to treat tenants with respect. The investment property has been their home and it is nerve-wracking when your home suddenly becomes uncertain. Landlords should try to give tenants as much notice as possible so that they can decide what to do. If the tenants decide to move out the property may have to go to market unfurnished. However, there are services that can fix this (e.g. home styling services). Alternatively, the tenants may stay and the landlord will have to deal with the fact that the property will be shown in the condition that the tenants leave it. Sometimes this is a moot point as the tenant is clean and conscientious. Other times it can be a nightmare. Weighing up these considerations will help landlords decide whether or not to wait until the tenants vacate.
The Residential Tenancies Authority has a page dedicated to this topic with fast facts and information that can be very helpful. Click here to go to their page.
So that’s our list of owner and landlord FAQs and how our property managers answer them.
Maximising your investment property takes time and requires good due diligence, reporting and organisation. Property managers can assist by taking the bulk of this work and allowing landlords to only have to worry about the tough decisions.
Blocksidge & Ferguson Pty Ltd has been real estate managers in Brisbane for more than a century. We can assist you in managing your investment property and make the process seamless and convenient.