Leases; To Renew or Not to Renew?

21/7/2021

Back in March 2020, I wrote about our New Leases in NSW following some changes to the Residential Tenancies Act & Regulations. Great timing huh, dealing with a pandemic and its impacts and making sweeping changes to how landlords and tenants view a Lease Agreement.

So it’s been a while now that these changes have been in but I still get calls and questions arising out of the blog I wrote about the changes. Titled To Renew or not to renew that blog can be read here.

As a quick summary though it goes through the Pros & Cons of this new legislation, and the potential impacts it might have (and has had) on owners and tenants, and the certainty that Fixed Term lease agreements once gave them that is now lacking. But I’ll summarise what the changes have done even further than that;

For Owners:

  • Resigning / Renewing a Lease to a New Fixed-term has little to no importance now because of how easy a lease can be broken
  • Owners see Periodic / Expired Agreements as more of an advantage as at least they are given 3 weeks’ notice of a tenant vacating. They also have not had to pay for a renewal to be signed.

 

For Tenants: 

  • Easy to Break a Lease but when they’d like some certainty of a Fixed Term Lease, they lose out with fewer owners offering them because of the reasons above.

 

So for Landlords, the options are;

    1. Not renew a Lease and have continuing agreement where tenants provide you with 3 weeks’ notice to vacate at any point

Or

2. Renew a Lease where tenants can break the agreement by paying a set break fee as outlined in my blog

So…

What has happened since these changes have come into place is tenants simply upping and leaving when they’ve found another property after a landlord has gone through the effort of finding them and the compliance measures that need to be fulfilled just before they get keys. The main concern for landlords is that you go through all of this and can now end up with a vacant property at any time. Realistically, the Break Fee isn’t covering the costs of reletting, vacancy in between tenancies, and so on.

Sadly now some owners only offer 6-month leases and no renewals, so whilst it was being heavily advocated that there be this leniency to Break Lease clauses when these reviews were being considered, who are the real losers here?  Long-term tenants seeking some certainty, or Landlords thinking that maybe investing in Property looks less attractive.

Speaking to the Real Estate Institute of NSW though, they’re sure that these terms are set to remain in place so like most things, pandemic included, we have to learn to live with them.

Am I being too dramatic about it all, too negative? Let me know in the comments below.

Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one service for his Property Investor clients.

For more information visit; https://themanagementagency.com.au/about/

 

 

NSW Renting with Pets – The Strata Update

19/5/21

I’ve previously written here about Animals in Rental Properties but throughout 2020 we’ve seen some changes when it comes to several highly covered Tribunal and court cases battling for Pet Owners to have the rights to keep pets in Apartments. We’ve also seen COVID-19 effectively increase the number of tenants seeking approval to keep Pets in Rental Properties.

In some high-profile cases in Sydney, we see appeal after appeal where ultimately, it’s up to the buildings individual Strata Committee to approve or decline applications for Pets. In Strata Plans it’s generally up to the owners to decide what By-Law they adopt for their specific building.

If a building adopts a Strictly NO PET By-Law then it essentially doesn’t have any Pet Policy in place, a No Pet By-Law is not a valid one.

In New South Wales, the default is no longer to ban pets (as it was prior to a 2015 law change), but instead allow pets after you obtain written approval from the strata committee, which can’t be unreasonably refused.

However, this doesn’t consider a strata property’s individual by-laws. Even when legislation provides for the occupier of a strata apartment to have a dog, cat, or even bunny, that doesn’t mean you have the strata committee’s approval. As with all by-laws, each strata committee gets to choose which by-laws it wants to incorporate into thier strata scheme.

Even if your building is pet-friendly, prior to bringing a pet into your strata property you’ll need to send a written request to the committee seeking permission.

The application could require information such as:

  • A description of your pet, including his or her size, age, appearance and breed
  • Details of your pet’s disposition, for example, is your pet docile or friendly
  • Records of formal obedience or other behavioural training
  • Records to demonstrate that you are a responsible pet owner by having proof of registration, microchipping, de-sexing and all necessary vaccinations
  • Records of keeping your pet previously either in a strata plan or other residence, including references from your former landlords or neighbours that specifically mention the behaviour of your pet

In the application process considerations made will be;

  • The By-Laws for the particular building
  • The type, size and number of Pets
  • The size of the property vs the size and number of Pets
  • If the Pet will suitably fit in with the Strata Plan

Whilst applications can’t be unreasonably denied, I think it’s fair to say that a large active dog won’t be approved for a small apartment unless for instance, its owner takes the dog to work with them.

If you are in a rental property, under the current legislation the owner of the property is allowed to exercise their discretion on whether or not a pet is permitted by tenants in their individual apartment or unit. When seeking committee approval, a tenant’s application to have a pet should be submitted to them by the owner of the lot, not the tenant themselves after the owner of the lot has approved the keeping of a pet in the property, so essentially this two-step process has to happen before the tenancy can be sure to go ahead.

So, is it worth looking into further, Yes and I highly recommend reading through the following Q&A link and the recent Webinar at the links at the end of this Blog?

For Tenants – find out what the owner’s position is on pets first, if a Property Description doesn’t stipulate just ask the agent if they are open to Pets. When you’re at the property look out for other pets in the complex and therefore the By-Laws are likely to allow Pets.

Obviously, if the property is a house or not in a Strata Plan then your only obstacle is the landlord. What I don’t suggest is getting a Pet first and trying to get approval after the fact!

 

For Owners – it may be worth looking into getting a tenant approved with a Pet, as I’ve written before most Pet Owners are responsible ones and can become long term tenants. For the most part, renting to tenants with Pets is a trouble-free experience! If you’re unsure of your Buildings stance on Pets, read through a copy of your By-Laws.

 

For heaps more info on Pets in Strata the following links are a must from the team at Lookup Strata:

A very informative Q&A on PETS in NSW Strata can be found here;

https://www.lookupstrata.com.au/nsw-pet-rules-for-strata/

A Webinar discussing everything Pets in NSW can be found here; https://www.lookupstrata.com.au/nsw-strata-webinars/

As a Property Manager I feel, and know for myself, how beneficial pets can be to everyone’s life so it’s important to me for The Management Agency to encourage Pets in Rental Properties. Of course, this applies where we feel the property is suitable for a specific Pet & of course the Landlord approves.

In the end, there are factors that determine outcomes that are out of our control and I personally wouldn’t condone approving a Pet in a property where I feel it wouldn’t be good for a Pet’s wellbeing. In any case, applications are always considered and handled on a case-by-case basis and I think that’s fair on everyone.

Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one service for his Property Investor clients.

For more information visit; https://themanagementagency.com.au/about/

Need To Know – Legislation Update

24/02/2021

I recently took over the management of a property and the lease was invalid for multiple reasons. For a start- the name listed for the landlord on the lease said “Contact Agent” and it only got worse from there. Landlords & Tenants need a lease that is valid, to begin with (obviously) and gives everyone some certainty surrounding their agreement.

2020 was a lot to take in, so to digest some of the legislation changes & recent updates so here I’ll briefly summarise what you all need-to-know!

NCAT Jurisdiction and why Leases were updated in Sept 2020

NCAT, short for NSW Civil & Administrative Tribunal, is the go-to Tribunal for disputes in Tenancy situations. NCAT can make enforceable orders on parties to resolve issues ranging from arrears to possession to damage claims.A little-known fact is that in some cases NCAT may refer the matter to Local or District courts if the landlord is not a resident of NSW. There’s quite a bit of reading on that matter here.Leases were just updated in Sept 2020 where landlords have to disclose their state or country of residence if it is not NSW. This may help NCAT filter through and decide on what matters they can and can’t hear even though they may have to be the first port of call.

The lease Agreement must have this specific info

Leases must now have tenants’ email addresses listed in order for tenants to give consent to receiving any notices or correspondence via email. Leases must also list 1 form of contact for a landlord, either a phone number or email address.

ID Requirements for Landlords

Before leasing or taking on the management of a Property, Property Managers must fulfil an ID Check for landlords to confirm their identity and their ownership of the Property. This has been in place where enlisting an agent to sell a property for some time but is new to Property Management

Information Statements for Landlords & Tenants

There is a new Information Statement each for Landlords and Tenants. Tenants have to be provided a copy on or before signing their lease. For Landlords, they’re required to read and acknowledge having read the statement before a lease is signed, an important step.

Material Fact Disclosure

Material Fact has been around for some time now but the facts that need to be disclosed do get reworked and reworded. For instance, Landlords and therefore agents, need to disclose to tenants if they are aware of any major rectification or works scheduled in a Strata Complex that would impact tenants during their lease. Essentially, a material fact is about sharing the information that you know whilst also protecting landlords if you’re not in the know.

Extension of the Moratorium on Evictions- extended & in place to 26 March 2021

Aside from a stop on COVID-19 Impacted tenant terminations, the moratorium also keeps in place extended notice periods to 90 Days’ notice for other forms of Terminations notices, such as for the End of Fixed Term & Breaches of Agreement.

The Management Agency wishes you all the best for 2021, I know it’s flying by already and we’re working away in what is already turning out to be a busy rental market with a lot of leasing activity already well underway which is already an improvement on 2020.

Thank you for your support, following, and reading!

Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one and end to end service for his Property Investor clients. For more information visit; https://themanagementagency.com.au/about/