Top Tips for Starting a Tenancy

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You’ve found an investment property and it ticks the boxes for location and price. You’ve done the figures and they all add up, you’ve put the offer in and it’s been accepted. The finance has been approved, and you’re now the proud owner of an investment property and on the way to realising your financial goals.

What next? Well, you need to find a tenant and rent out the property.

There are some legalities and paperwork involved. Whether you’re a first time investor, or you have an investment portfolio, it’s always good to revisit some ‘tenancy’ basics to make sure you get the best from your investment.

Deciding to use an agent

There are many factors to consider when deciding on whether to use an agent or self-manage. You need to consider your time, what paperwork needs doing, legalities and whether you want the stress of a call to mend a burst water pipe when you’re about to go on holiday.

Our advice is to speak to several property management agencies and don’t base your decision on price alone. Look at what services you are getting and ask questions. As well as asking about what is and isn’t included in the price, ask how long they have been in the business, how they find and screen prospective tenants, what steps they take if the tenant is late with payments and how they handle repairs.

Discrimination in the rental market

Everybody should be given a ‘Fair Go’ when renting or trying to rent a property. The view that ‘it’s my property so I can choose who I like’ only goes so far. You have the right to choose the most suitable tenant provided no unfair discrimination occurs. Know what’s in the anti-discrimination law, and what is considered as direct and indirect discrimination.

Completing a tenancy agreement

A residential tenancy agreement (also called a lease) is an agreement between you and the tenant to live in your premises in return for payment of an agreed rent. The agreement is a legal contract which sets out the terms and conditions of the arrangement. You need to complete and sign a written tenancy agreement at the start of each tenancy. Before the tenant signs the agreement they must be given a copy of the New tenant checklist.

There are two types of tenancy agreements, a Fixed term agreement (such as for 6 or 12 months), and a Periodic (continuing) agreement which is for an indefinite time.

Filling out a condition report

At the start of every tenancy you need to fill out a condition report. This records the general condition of the property, on a room by room basis, including fittings and fixtures. Fill it out with as much detail and accuracy as possible. The report will be a key piece of evidence at the end of the tenancy if there is a dispute about replacing missing items, paying for cleaning or damages.

Taking a bond

A rental bond is money paid by the tenant as a form of security in case they breach the tenancy agreement. A bond should not be treated as a substitute for careful selection of prospective tenants. All bonds must be lodged with Fair Trading and you can make a claim against the bond for certain reasons after the tenancy ends.

As of 30 January 2017, property agents and self-managing landlords must be registered with Rental Bonds Online (RBO), Fair Trading’s easy and secure service to manage bonds online. Agents and landlords must also offer the service to new tenants as the first option for lodgement of their bond.

Safety and security

There are legislative requirements which require properties to have smoke alarms of a certain standard installed in the correct location. These also need to be inspected regularly to ensure they comply with current legislation.

If the property you’re letting has a swimming pool and/or spa, ensure you have a valid certificate of compliance and this must be given to the tenant.

You should also check the legalities on locks on windows and balconies, and the security of the property; landlords must provide and maintain locks or security devices to ensure that the premises are reasonably secure.

Of course, using a reputable property manager can help with many of these points, ensuring you’re acting within the law, managing the paperwork and taking out much of the stress and hassle.

If you want to know more about being a landlord, the NSW Office of Fair Trading website is www.fairtrading.nsw.gov.au.
You can download the fact sheets on all of the above under the Being a Landlord, starting a tenancy section.

With over 40 years of business in the area, we know the legalities and what paperwork you need to run a good investment property. We are one of Newcastle’s longest established real estate offices and our talented team would love to share its knowledge with you.

Give us a call on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au  or pop into our Cardiff office for a chat.

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