Guide to Renting. The main piece of legislation that covers tenants, landlords and agents is the Residential Tenancies Act 1997 (the Act).
Tips for landlords
Choosing an Investment Property
Keep the following in mind when selecting the location of your investment property
Does demand, for whatever reason, exceed or apparently exceed supply?
Is the area’s increase in price significantly greater than the region as a whole?
Does the area have low prices, which are expected to rise in the near future?
Are neighbouring areas experiencing good capital growth?
Are there positive developments happening in the area (e.g. a new railway or arterial road to the city that will impact positively on capital gains?)
Choosing a property manager
When selecting a property manager, ensure that they are knowledgeable about the law and your rights and obligations as a landlord as these can vary from state to state and are updated regularly. Most importantly however, a trained, professional property manager looks after your investment to maximise return, ensure consistent tenancy and communicates regularly.
Obligation to tenants
There is often competition to attract quality tenants. Tenants require, and have the right to, reasonable standards of housing and living conditions.
Relationships between tenants, landlords and agents should be built on respect. Tenants deserve to be greeted with respect at all times.
Routine inspections
Routine inspections should be regularly carried out on rented properties to ensure that the tenant is caring for the property and also to ensure that the property is well maintained and safe for the tenant to live in. Your property manager can carry this out on your behalf.
Maintenance, repairs and responsibilities
A lack of maintenance on a rental property not only hinders capital growth of the investment, but also could lead to an injury claim if the property is not safe. There are legal obligations pertaining to maintenance and emergency repairs which you property manager can advise you on.
Protecting your investment
Consider landlord protection insurance when leasing your property. This insurance is separate and in addition to insuring the building itself. It provides protection against unexpected situations for loss of rental income or property damage. Landlord insurance is a tax deduction.
When choosing a landlord insurance policy, it is important to carefully read the terms and conditions.
Tips for Tenants
Research and preparation
It goes without saying that you will want to know about the area you are looking to live in. Does it have good access to public transport? Are there schools nearby? Is there a shopping or café strip? Your local agent should be able to help familiarise you with a new location.
Prepare your paperwork
Some areas can be competitive for tenants so it pays to be one step ahead and have all your paperwork ready for a tenancy application. This would normally include 100 points of identification, past references and proof of income. Add good presentation and a friendly smile and you are already in front!
Rent and Bond
When moving into a property, you may be required to pay rent in advance and a security deposit of between 4 to 6 weeks’ rent, known as a rental bond. Most real estate agents will request the payment of this money in cleared funds prior to taking possession of the property. This is then held in trust until you move out.
Once you take possession, all monthly rental fees must be paid on time – it is the tenant’s responsibility and a condition of the tenancy agreement.
Tenancy Agreement
It is important to understand that when signing a tenancy agreement you are entering into a legally binding agreement. Take the time to carefully read and understand all conditions of the tenancy agreement before you sign. If you do not understand any of the conditions don’t be afraid to ask questions.
Condition Reports
The condition report is an important document. This report notes the general condition of the premises, including fittings and fixtures. The landlord or agent must give two copies of the signed condition report to the tenant before the tenant occupies the premises. A $500 fine can be imposed if this is not done.
The tenant must fill out and return the condition report to the landlord or agent within three business days of moving in. It is important that you take the time to accurately complete this report to minimise disputes at the end of the tenancy. To further reduce disputes at the end of the tenancy you may wish to take photos of the property.
Repairs
You have the right to live in a safe, secure and liveable property. Tenants also have a responsibility to look after the property in accordance with you tenancy agreement. The Tenancy Act outlines clear steps for both the tenant and the landlord in the event of an urgent and non-urgent repair. Your property manager should be your first point of contact for any maintenance issues regardless of fault.
For more information about property rental, please see the Consumer Affairs website or read the Real Estate Institute of Victoria’s Guide for Tenants and Landlords.