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Are Canberra landlords greedy?

By Property Manager - 23 November 2011 56

money business

Here’s what ACT residential lessors (landlords) understand very well:

Traditionally Canberra’s rental market sees considerable seasonal fluctuation. The transient nature of the population regularly sees high prices and strong competition for vacant properties in the Summer months, particularly around January when everyone is moving in and out of town.

Here’s what ACT residential lessors (landlords) rarely know:

Beyond the initial fixed term (usually 12 months) there is little you can do to control when the tenants vacate. You cannot force existing tenants to sign a lease renewal, and if they choose to remain on a periodic tenancy they can leave at any time by giving 3 weeks notice.

Scared that their tenants might move out when the market is slower, owners often surmise that they should get rid of those tenants to find someone willing to commit to a new 12 month term; and many are shocked when they are told that they have to give the tenants 26 weeks notice if they don’t have a valid reason (eg moving in or selling the property).

“Why?” or “That’s not fair” are the usual owner responses to this. Let me explain why…

The legislation is generally weighted to ensure that the tenants have some protection against owners who make decisions based on the business of owning an investment property, without due consideration for the human factor.

Ironically these are often the same people who believe that the banks are faceless corporations hell-bent on gouging every dollar from mortgagees, yet when they have to make decisions relating to their investment property they treat their tenants worse than the banks could ever get away with.

So this is a gentle reminder to Canberran lessors – your investment property is not just a business, it is someone’s home. If they treat it well, pay their rent and cause you no issues then they certainly deserve to be considered when you are making decisions that will affect their lives.

If you can’t afford to wear a short period of vacancy because the tenants move out during the quiet time of year, or if you can’t afford to lose a few dollars a week in rent to secure tenants outside of the summer-time-wallet-gouge, then you probably can’t afford to own an investment property.

And let’s not forget – any property marketed at the right price will be tenanted fairly promptly in Canberra, regardless of the season. If you’re sitting on a vacant property it’s probably because you are trying to screw tenants out of more money than the place is actually worth.

[Photo used by permission of Stuart Miles]

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56 Responses to
Are Canberra landlords greedy?
Property Manager 3:38 pm 23 Nov 11

Rental increases are not capped by value, only frequency. You can up the rent by any amount once every twelve months, but if your increase exceeds “CPI + 20%” and the tenant contests it you will have to justify yourself to the tribunal.

devils_advocate 3:24 pm 23 Nov 11

Holden Caulfield said :

Property Manager said :

Holden Caulfield said :

When can we expect to read “Are Canberra tenants selfish?” that presents an equally one-sided view of the rental market, this time in favour of landords?

I can do that too. I’m not as biased as this one post might have you believe, this is just part of the picture – I could’ve suggested as much in the OP, but I didn’t want to dilute the message to those lessors that need a good slap around the chops…

Fair enough.

I did learn something though. I was always under the impression that once off the initial rental contract that it was essentially a month to month contract and either party could terminate with a month’s notice.

That’s how it was always explained to me when I was a tenant 10 years ago, so perhaps things have changed in that time.

I had a very brief time as landlord through, using a real estate agent as property manager. That ended relatively abruptly after the tenant paid his bond/first period of rent, moved in and made no other financial contributions for the next 2-3 months. We had a standard no pets rule, but may have considered if asked. We weren’t asked and the only significant contribution made to our property by that tenant was allowing his dog to chew through the brand new blinds and piss all over the new lawn we had carefully laid.

After that we signed up with DHA and then they’re a bit like a bank, in that you sign a lengthy contract agreeing to each party’s terms only to, pretty much, have a cover all at the end that says they can do what they like. A bit facetious of me there, obviously, and they were very good for the 5 or so years we kept the property. Just a bit one-sided when they wanted to break the lease 10 months early.

DHA used to be a great deal when you could build the house yourself (bearing in mind their specifications) and then lease it to them, provided it met their requirements. I’ve had an 11 year relationship with them (recently renewed for further 9 years) and I can’t fault them at all.

As I understand the current system, they only build houses themselves, then sell them to investors with the leases attached, at exorbitant prices (with less than 5 pc yeild, in some cases). No amount of lease/rental security is worth paying such an inflated asset price up front.

Holden Caulfield 2:49 pm 23 Nov 11

Property Manager said :

Holden Caulfield said :

When can we expect to read “Are Canberra tenants selfish?” that presents an equally one-sided view of the rental market, this time in favour of landords?

I can do that too. I’m not as biased as this one post might have you believe, this is just part of the picture – I could’ve suggested as much in the OP, but I didn’t want to dilute the message to those lessors that need a good slap around the chops…

Fair enough.

I did learn something though. I was always under the impression that once off the initial rental contract that it was essentially a month to month contract and either party could terminate with a month’s notice.

That’s how it was always explained to me when I was a tenant 10 years ago, so perhaps things have changed in that time.

I had a very brief time as landlord through, using a real estate agent as property manager. That ended relatively abruptly after the tenant paid his bond/first period of rent, moved in and made no other financial contributions for the next 2-3 months. We had a standard no pets rule, but may have considered if asked. We weren’t asked and the only significant contribution made to our property by that tenant was allowing his dog to chew through the brand new blinds and piss all over the new lawn we had carefully laid.

After that we signed up with DHA and then they’re a bit like a bank, in that you sign a lengthy contract agreeing to each party’s terms only to, pretty much, have a cover all at the end that says they can do what they like. A bit facetious of me there, obviously, and they were very good for the 5 or so years we kept the property. Just a bit one-sided when they wanted to break the lease 10 months early.

Property Manager 2:38 pm 23 Nov 11

GBT said :

Property Manager said :

rescuedg said :

hear hear, I just tried to make that very point to my landlord. We have had 2 rent increases in 18 months at about 3% each on a property that was already pretty darn expensive for what it is. Will not be renewing the lease in January and will wait out the 26 weeks while we find somewhere else to live.

Two increases within 18 months? In the ACT?
Not only is the lessor greedy, but stupid too. They’ve breached the tenancy legislation and you could quite easily get the tribunal to order that the owner owes you money.

NSW is a different story though.

I thought landlords were able to increase the rent once every 12 months? In that case, there would be no problem with an 18 month period that contained two rent increases.

I suppose it depends if it was an 18 month period after the initial 12 month lease. I took it to mean that the entire lease was 18 months, but you’re point is right, it is possible that the increases were valid.

Property Manager 2:36 pm 23 Nov 11

Holden Caulfield said :

When can we expect to read “Are Canberra tenants selfish?” that presents an equally one-sided view of the rental market, this time in favour of landords?

I can do that too. I’m not as biased as this one post might have you believe, this is just part of the picture – I could’ve suggested as much in the OP, but I didn’t want to dilute the message to those lessors that need a good slap around the chops. Which is not all of them, but like most things, a few rotten apples are stinking up the place.

I’ll start working on the next installment soon, and may even use your title.

devils_advocate 2:35 pm 23 Nov 11

Some of the things in the act are a bit stupid really because they end up distorting people’s incentives.

For example, rental increases are capped, but of course it doesn’t regulate what you charge on a new lease. So if you have a tenant in place and the market increases more than CPI or the maximum amount or whatever, the only way the landlord can meet the market is getting that tenant out and having a fresh agreement with a new tenant. In my view this is worse than the incumbent tenant at least having the option to pay the higher price.

And this 26 weeks notice thing is stupid and one-sided. I mean who can really forecast 26 weeks in advance what is going to happen? Anyone wanting any kind of certainty at all would need to start negoiting next year’s lease halfway through the current lease, otherwise issue a notice to the tenant so that they can’t leave you in the lurch in July on 3 weeks notice.

And in order to get around the 26 week notice period you either have to bring yourself into one of the fairly ridiculous hardship exemptions OR you have to issue notices in respect of trivial breaches by the tenant that you wouldn’t otherwise have worried about at all, just so you’re not stuck with having to give 26 months notice.

It sounds cynical but these measures are put in place to try and protect tenants but it just makes the problems worse and backs landlords into a corner.

00davist 2:31 pm 23 Nov 11

Holden Caulfield said :

When can we expect to read “Are Canberra tenants selfish?” that presents an equally one-sided view of the rental market, this time in favour of landords?

It’s a good point, as a tennant, i have experienced good and bad landlords, however, being handy with a toolkit, I have often helped my parents fix up their rental between tennants, they have been generally lucky, but the last lot broke almost everything (including light sockets) smoked in the house so much you can see were pictures hung, and distroyed the gardens with 3 secret goats!

Both landlords and tennants can be good and bad, and to my experience, neither party more so than the other.

GBT 2:28 pm 23 Nov 11

Property Manager said :

rescuedg said :

hear hear, I just tried to make that very point to my landlord. We have had 2 rent increases in 18 months at about 3% each on a property that was already pretty darn expensive for what it is. Will not be renewing the lease in January and will wait out the 26 weeks while we find somewhere else to live.

Two increases within 18 months? In the ACT?
Not only is the lessor greedy, but stupid too. They’ve breached the tenancy legislation and you could quite easily get the tribunal to order that the owner owes you money.

NSW is a different story though.

I thought landlords were able to increase the rent once every 12 months? In that case, there would be no problem with an 18 month period that contained two rent increases.

00davist 2:28 pm 23 Nov 11

colourful sydney racing identity said :

I think the real question is ‘are property managers leeches?’

Some yes and some no, the place i am in the process of leaving has in recent months become a nightmare, with some pretty severe lease breaches by the landlords, however, the property manager has been nothing less than amazing throght this, and has helped us immensly.

However, when I was renting in canberra, I never had a property manager that good, some were fine, sure, but no one stands out as particuarly helpfull.

I have heard repeatedly that one particular property manager is very good, and my fincee who rented once through him hightly reccomends him, but i personally dont have any experience with him.

We are moving back to the ACT now (well, we have, just need to finish getting our stuff along with us) but it’s a private rental, in this case, having seen whats out there at the moment, i would say I’m getting a fairly good deal.

Holden Caulfield 2:23 pm 23 Nov 11

When can we expect to read “Are Canberra tenants selfish?” that presents an equally one-sided view of the rental market, this time in favour of landords?

colourful sydney rac 2:20 pm 23 Nov 11

I think the real question is ‘are property managers leeches?’

Bluey 2:15 pm 23 Nov 11

In answer to the question:

Yes.

So many absolute s**tbox houses going for astronomical prices its obscene.

Property Manager 1:28 pm 23 Nov 11

rescuedg said :

hear hear, I just tried to make that very point to my landlord. We have had 2 rent increases in 18 months at about 3% each on a property that was already pretty darn expensive for what it is. Will not be renewing the lease in January and will wait out the 26 weeks while we find somewhere else to live.

Two increases within 18 months? In the ACT?
Not only is the lessor greedy, but stupid too. They’ve breached the tenancy legislation and you could quite easily get the tribunal to order that the owner owes you money.

NSW is a different story though.

SSrb 1:22 pm 23 Nov 11

I was concerned by the relative disorganisation (lack of standard forms relating to breaches, inspections etc) in the ACT rental market after moving down from QLD last year. Reading this particular bit of information on the Tenants Union websites a couple weeks ago made me realise it’s not all bad down here, and breathe a bit easier as I head towards the end of my overpriced lease and start looking at my other options.

They still have the right to put the rent up once you go periodic though, but only in line with CPI.

Still, it would be nice if they had a somewhat adequately staffed government rental monitoring and advisory service like the RTA though.

rescuedg 1:17 pm 23 Nov 11

hear hear, I just tried to make that very point to my landlord. We have had 2 rent increases in 18 months at about 3% each on a property that was already pretty darn expensive for what it is. Will not be renewing the lease in January and will wait out the 26 weeks while we find somewhere else to live.

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