Locked Down… but not out!

19/8/2021

At the time of writing this we are 6 weeks into our 2021 Greater Sydney lockdown.

So future readers, will we be out of lockdown at the end of August? PLEASE let it be.

As Real Estate Agents in this current lockdown we really have to be grateful for the most part that we can continue working, albeit a lot differently but we can still work and carry out necessary tasks. Considering how many others are faring we must be grateful for that.

It sounds odd to write this but dare I say that, luckily enough, we know what the deal is by this stage. We also know how lockdowns work, their impacts and we know what help is available and to whom.

For Sydney what’s difficult this time around is that it feels like a backward step, having seen the economy here and the general mood improves over the first half of 2021.

In my world, the Property Management one that is, we had experienced a great year so far in terms of reduced vacancy rates, rents starting to stabilising and starting to increase as well. After 2020 I felt that we’d found our feet for sure and I think the sentiment is simply that we’ve all had enough of life with COVID-19 around us.

There is certainly less panic and shock that there was last year so thankfully, we still have tenants looking for properties, and those properties getting snapped up. People are still looking for new surroundings, more workspace to separate work & downtime, and trying new suburbs. As we’re now pretty well versed with our “new normal” we are definitely well placed to be able to give our clients, current & new, some certainty surrounding their investment properties especially when their property is coming onto the Rental Market during the current lockdown. While there may be some added concern because of some restrictions, we can thankfully follow the daily updates of the Real Estate Institute of NSW & Fair Trading to know what we can & can do as things evolve.

So, what’s happening at The Management Agency;

  • Plenty of one-on-one Inspections to show Prospective tenants properties, By Appointment & vacant properties only
  • Routine Inspections are delayed until restrictions ease, unless absolutely necessary, realistically we might need a couple of months to catch up on these
  • Urgent Repairs & Maintenance
  • Maintenance where tenants are agreeable to access & under a strict set of circumstances
  • Working through any requests for assistance via the assistance packages available to tenants & landlords
  • A steady stream of new clients coming on board with The Management Agency through July & at currently at capacity into September

As for our rental market, we’re yet to see any real impacts on rents or vacancy rates but of course, we’re monitoring and making any adjustments that are needed. Vacancy rates & rents are currently holding steady from what’s been a consistent year in lettings.

Aside from that, we are essentially working as per normal. Just like most other Sydney siders, we are trying to minimise our movements as well, with only the essential appointments taking place.

We’re here though, working from home as we always have. We just now have to be out of PJ’s and ready to go should someone want to see a property so that keeps us on our toes!

The new sign-off; “Stay Safe!”

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/

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/

Finding a New Home

25/03/2021

Painful is the only way I can summarise moving house & I move a lot. Looking back, I have an average of moving every 3 years and for many different reasons, Buying & Selling, moving for size & more space and so on.

My 2021 move though has given me the complete perspective of a tenant though & in the area that I work in which I have not experienced before. So, for a few reasons, I found myself looking for a rental property to make a base for The Management Agency for a year or so while I plan my next property move.

Obviously, I hear firsthand from tenants that I meet about what they go through but going through this process has really given me a new insight & newfound respect for tenants that are actively looking in the rental market. Boy has the rental market woken up in 2021, supply levels are way down on 2020 and there are many prospective tenants still looking to make a move and some really need to move. So needless to say there were ques and a lot of interest in the Surry Hills & Redfern area as we’ve been seeing across our own viewings.

I won’t name & shame, now or ever, thankfully the managing agents for the property I secured are amazing but just Picture this;

I went to a property in Surry Hills which was two levels, lined up, masked up and QR coded in. The agent was only allowing one group at a time. Mind you there was a line through the building & they had set a total of 10 minutes for the Open House.

As the property was still occupied, we were only allowed to inspect 1 of the 2 levels. So, none of the prospective tenants could see the bedrooms or bathroom. Who is going to rent a property that they’ve barely seen? NO ONE, and yes, I did storm out of that property as my Saturday morning was wasting away, the first Saturday I’d had off in ages as all of my properties had been leased.

Needless to say, it was ½ an hour after the “open house” had begun, so much for the 10-minute window.

What would I have done differently? For a start, I would not have shown the property or advertised it until after the tenant had moved. It was obvious that they weren’t comfortable with people going into the property due to COVID-19 which is not the issue, but if you’re going to put a property on the market, with one external building photo mind you, do it properly and allow people to see the whole property.

That’s just one example & I’m not saying I’ve never been late for a legitimate reason or shown a property that’s not 100% ready or it might’ve been mid-renovation or whatever but still… for the most part all I experienced was a lot of waiting around past appointment times & no real interest or care from Leasing agents. Little requests for feedback or general courtesy, it’s no wonder we’re viewed so poorly!

Landlords, prospective tenants face huge barriers to being able to rent your properties, so if you doubt your property is being offered effectively then get involved.

Tenants, I feel for you. Saturday’s viewings are like being a contestant on The Amazing Race, less the Amazing part. I don’t know what to tell you, I can see that tenants can be turned off properties simply because of the barriers they face, the unanswered questions, competition & in some cases, the unfortunate attitude of agents that they face.

Thankfully though as I mentioned, locked in a cute Terrace (Pet Friendly) with an efficient agency and the boxes are getting unpacked. Who wants to hear how the rest of the move worked out? Comment 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/

 

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/

Renting with Pets

21/10/2020

I’ve previously written here about Animals in Rental Properties, but through the course of 2020, we’ve seen several highly covered Tribunal and court cases battling for pet owners to have the right to keep pets in apartments.

Recently we’ve seen COVID-19 effectively increase the number of tenants seeking approval to keep pets in rental properties and whilst there are fewer obstacles getting pets approved in some properties, the issues surrounding approval becomes complicated where the property is part of a Strata Plan, a community of apartments or townhouses.

In some high-profile cases in Sydney, we see appeal after appeal where ultimately, it’s up to the building’s individual Strata Committee to approve or decline applications for pets.

In New South Wales, the default is no longer to ban pets, but instead allow pets after you obtain written approval from the Strata Committee, which can’t be unreasonably refused. This was a New South Wales legislative change which forms part of the Strata Schemes Management Regulations 2016.

However, this doesn’t consider a strata property’s individual by-laws. Even though legislation provides for the occupier of a strata apartment to have a pet, that doesn’t mean you have the strata committee’s approval. Strata Committees get to choose which by-laws it wants to incorporate into their strata scheme. Saying this, the recent unanimous ruling by three sitting judges from the NSW Court of Appeal, on a four-and-a-half-year battle between Jo Cooper (pet owner) and the Horizon building in Darlinghurst, now means that no blanket ban on pets will be permitted in any building anywhere in the state of NSW. You can read the article here, written by Sue Williams, Domain Reporter.

Prior to bringing a pet into a strata property, you’ll need to send a written request to the Strata Committee seeking permission. This applies even if your building is pet-friendly, and some strata managing agents may have a dedicated application form for this process.

Every Strata Committee will require different information but some of the information requested could be;

  • A description of your pet i.e. the pets breed, size and age
  • Details of your pet’s disposition, such as temperament and its activity needs
  • Proof of registration, microchipping, de-sexing, and all necessary vaccinations
  • References from former landlords, agent, or neighbours that mention your pet’s behaviour, particularly if you have previously kept a pet in a strata managed complex
  • Records of any formal pet training

In the application process, I feel that what’s considered strongly 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 the number of pets
  • If the pet will suitably fit in with the Strata Plan
  • Your personal routine i.e. if you work from home or take your pet to work

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 all day, every day.

If you reside in a rental property, you need to be aware that the landlord of the property is allowed to exercise their discretion on whether or not a pet is permitted by tenants in their apartment. In order to seek approval from the Strata Committee, the tenant’s pet application should be first submitted to the landlord (or Property Manager if managed by an Agency) for approval and then once approved by the landlord or agent, they will submit the pet application to the Strata Committee for you, so essentially this two-step process has to happen before a pet can be kept at the property.

“It is important to note that under the Hearing and Assistance Dogs Act 2009, any person who relies on a guide, hearing or assistance dog (and who has the right to be on a lot included in a community titles scheme, or on the common property) has the right to be accompanied their service dog, regardless of a strata committee’s by-laws on pets.” PICA Group.

So, it is worth looking into further.

For Tenants – find out what the owner’s position is on pets first, find out if there are other pets in the complex and therefore the by-laws are more likely to allow pets.

For Owners – it may be worth looking into getting a tenant approved to keep a pet, as I’ve written before most pet owners are responsible ones and can become long term tenants. For the most part, in my experience, renting to tenants with pets is a trouble-free experience.


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/

Repairs, Maintenance & Fair Wear & Tear

16 September 2020

Taking care & looking after a rental property is a shared responsibility between tenants, landlords, and the Property Manager if managed by a Real Estate Agency.

The landlord is responsible for ensuring that the property is fit to live in and that repairs and maintenance are completed so that the property is in a reasonable state of repair. The tenant is responsible for keeping the property reasonably clean and undamaged and leave it in the same condition it was in when they moved in (fair wear and tear excepted). If the property is managed through a Real Estate Agency, then the Property Manager will act on behalf of the Landlord and will ensure that the property is fit to live in and is the go-to person, for the tenant to report any repairs or maintenance issues that arise during the tenancy.

What happens when maintenance and repairs are needed?

A tenant should contact their Property Manager or Landlord (if not managed by an Agency) as soon as possible and report the maintenance and/or repairs that are needed.

The Property Manager will need to identify how the maintenance and/or repair came to light. Was it due to damage caused by the tenant or just wear and tear?

If it was damaged caused by the tenant, then the tenant will be responsible for the reasonable cost of repairing, restoration and/or replacement to rectify the damage, however, if it is wear and tear, then the landlord will bear the costs.

What is ‘fair wear & tear’?

Fair wear and tear, is a term for damage that either naturally or inevitably occurs as a result of normal use and/or ageing. Another way to look at it is, fair wear and tear is damage that occurs even when an item is used competently and with care and proper maintenance. This covers property fixtures and items that deteriorate over time due to daily use and/or ageing.

Some of these are:

  • Worn kitchen benchtops
  • Worn handles or hinges
  • Scuffed flooring on the carpet on high traffic foot areas

On the other hand, it is not, wear and tear when the damage to the property is due to an accident, negligence, or even malicious.

Some of these are:

  • Burns on kitchen benchtops
  • Holes in the walls
  • Stains or burn marks on the carpet

As an example, carpet has an expected lifespan of 10 years, and therefore wear and tear consistent with its lifespan is expected, so daily walking on the carpet will result in wear and tear.

However, excessive staining, like from a spilled glass of red wine would not be considered ‘fair wear and tear’.

Somethings aren’t always as clear cut, so your Property Manager will need to apply some common sense and ask the right questions in order to make an informed decision on whether or not the damage is ‘fair wear and tear’.

Saying that fair wear and tear is not always something that requires repair, but simply needs to be taken into account based on the age and economical life of a fixture or fitting. Fair wear and tear always has to be a consideration, for example, at a final inspection at the end of a tenancy.

‘Fair wear and tear’ forms part of a Lease Agreement

The NSW, Residential Tenancy Agreement (Lease Agreement) and the NSW, Tenant Information Statement both reference the term ‘fair wear and tear’. Fair wear and tear is the responsibility of the landlord, and tenants are not responsible for paying for ‘fair wear and tear’, however, tenants need to be aware that it is there obligation to leave the residential premises as nearly as possible in the same condition, fair wear and tear excepted, as at the commencement of the tenancy.

There is though, excessive wear and tear, which takes into account, how long tenants have resided in the property or how long it’s been since things like repainting or flooring have taken place.

Excessive wear and tear, is wear from use that isn’t normal and that can come from a lack of overall care taken or just too many people residing in a property, above what has been agreed, as noted on your Lease Agreement.

Tenants need to be mindful that the cost of repairs, or the restoration of, the premises or goods leased with the premises if it is a result of damage caused by the tenant, other than ‘fair wear and tear’, may be deducted from the bond.

Landlords, what you need is a Property Manager that knows the difference and can step in accordingly, and tenants, you need a Property Manager that’s willing to take the time to Inspect the property and explain what’s what.


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/

Landlords, Tenants, Property Managers & COVID-19

What else could my Blog be about right now.

I was going to post about depreciation & had a few other topics I wanted to put out but as you all know; life is on pause right about now.

These weeks have been tough.

Property Managers everywhere are struggling to get through the mass of information and ideas on how to manage this crisis.

I realise, first and foremost that this is a Health Crisis and I’m yet to come across anyone that doesn’t agree with the Stage 3 lockdowns and overall need to #stayhome.

But what about the tenants that are staying at home but are worried that they can’t pay for their home. Yes, they’re struggling and I hear their stress and sympathise with them. Let’s also not forget that landlords have also lost work and like everyone, the bills keep coming in.

We need to find some happy mediums, even if these aren’t necessarily happy outcomes, but outcomes that everyone can live with.

So, I’m giving some tips to all on how we can ALL get through this. It may be obvious and it may be common sense but here goes;

Tenants

  • Look into what assistance is available; there are ample links and fact sheets available. Get them from trusted sources i.e. Government websites
  • Rest easy, there is a moratorium on evictions but, it’s been made clear, that doesn’t mean rent won’t accrue a debt if you don’t pay and also don’t approach your Property Manager or Landlord. If you can’t pay the full rent, pay what you can to keep any balances of rent owing low. Reach out for help!
  • Property Managers are trying to help where we can to negotiate good outcomes, we’re still waiting on further advice and information from the Government though. It is coming!
  • Speak to your Landlord or Property Manager, let us know your situation so that we can get back to you as soon as we know more

Landlords

  • If you don’t have landlord’s insurance by now, it may be too late with most providers having already cut off new policies
  • Speak to your agent and let them know your financial position, so that we have the complete picture
  • Our recommendations, as Property Managers, are just that. You will have the final say in any negotiations but you need to be open to them and compromise where possible
  • If your Property is for Lease or Vacant, it is time to align to the current rental market ASAP. Tenants are still out there looking. People are downsizing, economising and looking for the perfect Isolation pad.

 

And finally, to my fellow Property Managers. We’re having a tough time, seriously. Long hours, countless calls / emails and counselling sessions.

All the while we are taking a slight battering by the media and I’ve also been hearing of many pay cuts, cuts to working hours and layoffs in our industry.

 

Property Managers

  • Listen & be compassionate to all
  • Follow trusted sources and keep up to date & informed. Things are changing rapidly, almost hourly
  • Don’t be hasty and make rushed decisions; National Cabinet updates are coming
  • Follow your regular procedures until we know more
  • If you haven’t heard, don’t give anyone Financial Advice
  • Take serious precautions when you do have to go to properties, i.e. Physical distancing, masks, sanitizer & gloves
  • Adjust, adapt & Innovate as the way we do Property Management will be changed forever
  • Now is the time to go out of your way to help our landlords, tenants and tradespeople – Go the extra mile. How we perform during difficult times can cement and build long term relationships

Shoutout

A Huge Thank you needs to go out to the REINSW, REIA, Tom Panos, Jemmeson Fischer, Leanne Pilkington and the team at Novak Properties for the regular informative updates and webinars you are running constantly. You’ll all be remembered for your efforts during this time.

I greatly appreciate you all taking the time to generously share knowledge, your insights and practical advice simply to just help others and ensure we are all doing the right thing.

Keep your head up everyone, we’ll get through this.

Antonio

NSW Rental Reforms & Renewing Leases

5/3/2020

As a Property Manager, we spend a lot of time negotiating Lease Renewals as tenants’ leases come up to expire. My opinion is that it is ideal for both owners and tenants to have the security of having a lease in place.

With the recent NSW changes to Residential Tenancy Laws, I’m already seeing landlords reconsidering this and opting to have their tenants remaining on continuing agreements.

This is largely because of the changes relating to the costs incurred by tenants when they need to Break their Lease.

These changes are likely to see increased instances of vacancy periods and therefore loss of rent where the current lease arrangements provided landlords with much more security. For a landlord, being told that their property is vacant with little “compensation” being the Break fee, leaves them open to unpredictable and unforeseen vacancy periods.

“The question now, is it worth renewing a Lease, when they’re so easy for a tenant to break?”

Whilst a fixed-term lease provides tenants and landlords a period of security, with new legislation coming in on 23/3/2020, it’ll be easier for these leases to be broken by tenants so we might see more and more tenants leaving before the Lease expires simply because it’s more affordable to do so.

 

Close to a Lease expiring your options are to either;

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

Or

  • Renew a Lease where tenants can break the agreement by paying a set break fee as outlined below

New mandatory set break fees for fixed-term agreements

Mandatory set fees when a tenant breaks a fixed-term agreement early will apply to all new fixed-term agreements that are 3 years or less. This applies to agreements that are entered into from 23 March 2020 onwards.

The break fees are:

  • 4 weeks rent if less than 25% of the lease had expired
  • 3 weeks rent if 25% or more but less than 50% of the lease had expired
  • 2 weeks rent if 50% or more but less than 75% of the lease had expired
  • 1 week’s rent if 75% or more of the lease had expired.

Using the example of a 12-month tenancy agreement, a tenant would only be required to provide two weeks’ rent to their landlord (that is, an amount equal to two week’s rent) to end their agreement early, if seven months (or 58%) of the agreement had expired.


I’ll be speaking to my clients on a case by case basis as Leases come up for renewal throughout 2020 but already, I am hearing “What’s the point of a Lease”.

The consensus is that at least getting 3 weeks’ notice on a continuing agreement gives you more lead time to advertise and show the property to secure new tenants, it’s all about minimising vacancy here.

As a Property Manager, it’s my job to maximise my landlords investments, and where leases are renewed at a cost to landlords it might not be the best investment to all clients when you consider a lease can be broken in the last 3 months and all the owner will receive is 1 weeks rent as the set break fee.

While there are many other changes to legislation coming in, which I’ve covered in my posts, I feel this change will have the greatest impact on both landlords and tenants.

Landlords face uncertainty in terms of the higher probability of lost income and Tenants face not having the offer or opportunity to renew their lease and get some long-term security in their homes.

My opinion is that there are no real winners here, unfortunately.

While it may sound advantageous to tenants being able to more affordably break their lease and move, long term investors may simply be turned off investing and may simply not offer the tenants that want to secure longer leases, the option.

As an investor, will I be renewing my tenant’s leases? Probably not, unless I’ve got tenants that really demand it and where I feel they’ll give me the courtesy of some notice of their vacating rather than none.

“What’s crucial here, is keeping good working relationships with tenants. Relationships where tenants will communicate any changes in circumstances to their Property Manager. So that we will get the heads up and some notice, even though the tenant doesn’t technically have to provide it.”

As Property Managers, it’ll be in our, and our client’s best interests that we keep our eyes and ears open and are attentive to our tenant’s movements and their circumstances.

Antonio @ The Management Agency

Changes to Residential Tenancy Laws – Read here for Updates

25/03/2020

Amidst the current Corona Virus climate, we’re adapting to the changes to the Residential Tenancies Act.

Whilst some of the new regulations surrounding Agents licensing won’t be enforced for a grace period of 6 Months, most agencies have already implemented new procedures surrounding their tenancies being compliant.

What are we hearing so far:

  • Owners not particularly liking tenants having their contact details, privacy concerns and the reasons why they have enlisted a Property Manager
  • Less emphasis on wanting fixed term leases, a lose lose for all maybe

The positive:

  • Tenants can sign electronic leases without needing a witness, a streamlined process for all

We’ll all adapt and innovate, as we must in these times.

Stay safe, Antonio


The latest release of up to date information issued by the Office of Fair Trading can be found here.

More information to follow here below as it comes to hand.

Antonio @ The Management Agency


9/3/2020

Further information is coming to light with regards to the changes coming into place on 23/3/2020 with many Property Managers hopeful we’ll have the complete outlook within the coming weeks, especially when it comes to the time frames in which all of the changes need to be in place, where some of these are immediate and others won’t be.

Here are some points I’ve been reading about;

  • New Leases from 23/3/2020 will need to list one of the Landlords points of contacts, whether it be an email address or phone number, this is set to be a requirement and a non-negotiable.
  • All Landlords will need to read and sign a “Landlord Information Statement” this will ensure that all landlords are aware of all of their responsibilities when a Lease is entered into, we are yet to get our hands on a copy of the prescribed form.
  • Similar to Smoke Alarms, properties will need to be tested and certified for Water Efficiency at the beginning of tenancies where Water Usage is being charged and recouped from tenants.

More to come as we approach the commencement date of these reforms,

Antonio @ The Management Agency

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