Are Canberra landlords greedy?

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?
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Violet68 Violet68 10:45 pm 25 Nov 11

What a lovely thing to say about children.

Speaking of children. Fk the market and enforce appropriate living standards (safety, functionality and appearance) together with security of tenure. “children in homeless families are the largest group who seek support from the homeless service system”.

We don’t need more “affordable” housing. We need to stop people getting rich out of making housing “unaffordable”.

http://www.homelessnessaustralia.org.au/UserFiles/File/Fact%20sheets/Fact%20Sheets%202011-12/Homelessness%20&%20Child%202011-12.pdf

http://www.homelessnessaustralia.org.au/UserFiles/File/Fact%20sheets/Fact%20Sheets%202011-12/Homelessness%20&%20Families%202011-12.pdf

milkman milkman 9:50 pm 25 Nov 11

fragge said :

I personally hope the bubble bursts and those that have contributed to this mess are stuck with a bunch of debt that they and their children and their children’s children can never climb out of. At the moment, the opposite is true, but nothing lasts forever.

What a lovely thing to say about children.

drfelonious drfelonious 7:15 pm 25 Nov 11

When I did Economics, we certainly spent a lot of time on markets and supply and demand. There was also some discussion about things called ‘subsidies’, ‘tariffs’ and ‘government intervention’.

However in Australia over the last decade we have developed a rather unique species of people who say they are believers in “markets” and the right to get rich. These people are hypocrites, however, because what they are really advocating is Government Soviet style command of housing prices to keep pushing them higher. I think in years to come the last decade of government control of the market will be cited as an example of how to destroy an economy. We’ll have a free market when there is no:

First Home Vendor Grants
Negative Gearing
Capital Gains Tax Exemptions
Welfare rights for property millionaires
Artificial choking of land releases
Stamp duty as a percentage of property value (and reliance of stamp duty for govt revenue)

If you think about it, it is utterly ridiculous that 400 square metres of land with no infrastructure or amenities costs upwards of $300k in a small city like Canberra in the midst of boundless sheep paddocks in our very low population density country. There is nothing comparable to this obscenity anywhere in the world – it is clearly the result of deliberate government policy to keep prices as high as possible (and consequentially to transfer wealth from younger generations to older). It’s no secret – at the last election those clowns in the ALP were blatantly touting their high house price policy in their Canberra campaign ads.

For an example of how a real housing market behaves, look to Texas and Georgia.

Holden Caulfield Holden Caulfield 4:24 pm 25 Nov 11

fragge said :

Correct, however when people are also forced to pay such exorbitant prices in order to continue living in the same geographical area, there isn’t really a market so much as a monopoly. Its not like there are people listing their houses for under $300k to undercut the competition.. I personally hope the bubble bursts and those that have contributed to this mess are stuck with a bunch of debt that they and their children and their children’s children can never climb out of. At the moment, the opposite is true, but nothing lasts forever.

Close your eyes and I’ll kiss you,
Tomorrow I’ll miss you;
Remember I’ll always be true.
And then while I’m away,
I’ll write home ev’ry day,
And I’ll send all my loving to you.

fragge fragge 2:39 pm 25 Nov 11

OpenYourMind said :

Bluey said :

In answer to the question:

Yes.

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

There’s this thing called the market. People charge what the market is willing to pay. I suggest you could take a course called Introductory Economics 101.

Correct, however when people are also forced to pay such exorbitant prices in order to continue living in the same geographical area, there isn’t really a market so much as a monopoly. Its not like there are people listing their houses for under $300k to undercut the competition.. I personally hope the bubble bursts and those that have contributed to this mess are stuck with a bunch of debt that they and their children and their children’s children can never climb out of. At the moment, the opposite is true, but nothing lasts forever.

Bluey Bluey 2:40 pm 24 Nov 11

Appreciate the reply PM. I’ve passed that on to my Mum so she knows the score in future.

Property Manager Property Manager 12:01 pm 24 Nov 11

Bluey said :

OpenYourMind said :

Bluey said :

In answer to the question:

Yes.

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

Landlords charge what the market is willing to pay. I suggest taking the course ‘Introductory Economics 101’

I’d suggest you go and look whats out there. Real World 101.

A question for PM.

My mother recently had to vacate as her owners are moving back in. Fair enough. Whilst looking around for a new place she found some truly horrendous places with mould in the carpets and walls, sagging ceilings, leaking showers, burnt out stovetops etc. Apparently these are all OK to rent as the agent isnt part of some industry self regulating group? Is this legal to rent place obviously unsafe for habitation, (mould and saggy ceilings) and is there a body these properties and/or ‘agents’ can be reported to?

There’s a simple requirement in the Standard Residential Tenancy Terms (part of the tenancy act) that requires a landlord to provide a property in a state that is fit for habitation. This possibly leads to some conjecture about what suffices, but the descriptions you’ve given sound like clear breaches.

The issue here is (and I’d be happy if any other professionals could add to or correct this assessment), while I think the tribunal would probably like to hear the matter and would like to take action against the owner, there are two clear obstructions to justice:

* Until a tenant takes possession of the property the owners have not breached anything.
* Even if the tribunal could find a way to do something about it before a tenant was signed, not a lot of people have the spare time to take the issue to the tribunal, particularly when there is a chance it won’t achieve anything.

Other than the tribunal there really isn’t anyone to police this stuff. The Greens plans for minimum standards will probably address this, but forcing lessors to spend money on achieving a certain standard will (IMHO) increase the cost of rent for all lower-end properties – not what renters need.

Unfortunately the agents liability in this is largely diminished as they only act on behalf of the owner and therefore have no control over the state of the property.I do think that the agent should probably have their heads read for managing a shitbox, and they could face a slap on the wrist for it, but that’s their business decision. I would be distancing myself from that client as much as possible because headaches are sure to follow.

Bluey Bluey 10:21 am 24 Nov 11

OpenYourMind said :

Bluey said :

In answer to the question:

Yes.

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

Landlords charge what the market is willing to pay. I suggest taking the course ‘Introductory Economics 101’

I’d suggest you go and look whats out there. Real World 101.

A question for PM.

My mother recently had to vacate as her owners are moving back in. Fair enough. Whilst looking around for a new place she found some truly horrendous places with mould in the carpets and walls, sagging ceilings, leaking showers, burnt out stovetops etc. Apparently these are all OK to rent as the agent isnt part of some industry self regulating group? Is this legal to rent place obviously unsafe for habitation, (mould and saggy ceilings) and is there a body these properties and/or ‘agents’ can be reported to?

caf caf 10:02 am 24 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.

It’s not that simple, though. Even if you’re guaranteed a win at the tribunal, if you intend to keep renting in the ACT then it might not be worth going – several real estate agents ask if you have ever been to the tribunal on their property applications. It’s not hard to imagine that if you say “yes”, your application will find its way to the bottom of the pile, regardless of whether you won or not.

Property Manager Property Manager 9:28 am 24 Nov 11

matt31221 said :

I think not only land lords but real estate agents. They are oxygen thieving middle men who are greedy scum that don’t keep their word and have pushed house prices up. You could put more trust in the word of a junkie/thief than a real estate agent.

About ten years ago house prices were affordable in Canberra. It was in the average citizens reach to buy a house here. 85,000 for a 3 bedroom house in Isabella Plains in 2001 – fair price. Now 350,000 for the same house! Surely the value hasn’t gone up that much – (The value of the aussie dollar hasn’t) it is still the same house. 750,000 for a 4 bedroom house in Uriara, tell them they are dreaming. All ’cause of real estate agents.

Wow. I cannot find words to accurately describe how dumb your comments are. Please refer to OpenYourMind’s post RE economics 101 at #20 or #21.

Property Manager Property Manager 9:21 am 24 Nov 11

thehutch said :

Property Manager said :

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.

I’m glad you clarified this PM, as some people on here have the false impression that rents cannot be increased above CPI… which is wrong.

On a side note, I always enjoy reading PM’s little write-ups. They entertain me – not only as they are informative, but as they are a testament to PM’s continued development in the property sector.

Plus whenever you write something, I have the fun of trying to guess what was the catalyst for the write up… I guess that a lessor has given you a call recently wanting to remove tenants that choose to stay on periodic tenancy rather than sign a new 12mth lease?

Keep it up PM… sadly real estate is filled with ‘greedy, fake and souless baaaaad people’, don’t become one.

As always Hutch, spot on. The owner isn’t necessarily ‘greedy’ but misinformed and fixated on avoiding tenants vacating mid-year. Much re-education is needed of owners AND tenants.

Yes whingers, property managers too.

Classified Classified 9:18 am 24 Nov 11

I’ve been a landlord for many years now, and there will always be both tenants and landlords who just don’t get it. Renting a property is a simple arrangement. The landlord rents the property, and maintains it, the tenant pays the rent and looks after the place. It really doesn’t need to be more complex.

Of course, you’ll always get both landlords and tenants who want more, and this is typically where things get rocky. My policy has always been to get people in a market rent, give them a small increase every year or two, and fix things when they break. Other than that, leave them alone. By and large my tenents seem to like this arrangement, and typically stay for long periods. On the odd occasion I’ve had a dodgy tenant, I simply tell the property manager to remove them. I don’t care if it takes a while – I have insurance to cover any shortfall or damage they do.

Property Manager Property Manager 9:10 am 24 Nov 11

Grail said :

Nicely put, PropertyManager.

Here’s a question for you and the greater RiotACT community: my property manager has recommended raising the rent on my Holt apartment from $380/week to $400/week. To me that seems a rather large rental increase (that extra $1040pa has to come from somewhere).

Should I try to contact the tenant myself to ask about his/her satisfaction with the property and the current property manager? Is $400/week pushing the limits of sensibility for a 2 bedroom apartment in Holt?

If we’re talking about the apartments at Parkview then there are two currently listed on allhomes, at $390 and $400. I generally suggest to my lessors a price that will keep in touch with the market price, while being low enough to keep the tenants in place – if the price is increased to the point where the tenant can do better for the money, they might leave. That will cost the lessor much more in letting costs and advertising.

Is $400 too much? Probably not, but of course, as Spinact said at #26, the price may also be based on the quality of the tenant – those that cost you a lot by reporting every insignificant maintenance matter probably need to pay more than the tenant who knows how to manage minor things themselves.

NoAddedMSG NoAddedMSG 10:51 pm 23 Nov 11

EvanJames said :

00davist said :

and distroyed the gardens with 3 secret goats!

I do fervently hope that, when you enter those tenants on that new register of horrible tenants, you put in the “reason” bit: Secret Goats.

Secret Goats: best thing I have read today.

spinact spinact 10:16 pm 23 Nov 11

Grail said :

Nicely put, PropertyManager.

Here’s a question for you and the greater RiotACT community: my property manager has recommended raising the rent on my Holt apartment from $380/week to $400/week. To me that seems a rather large rental increase (that extra $1040pa has to come from somewhere).

Should I try to contact the tenant myself to ask about his/her satisfaction with the property and the current property manager? Is $400/week pushing the limits of sensibility for a 2 bedroom apartment in Holt?

I would ask your property manager whether they’re good tenants or not. If they’re good tenants and you don’t need the extra money to cover your expenses then tell your property manager to leave the rent as is.

Grail Grail 8:11 pm 23 Nov 11

Nicely put, PropertyManager.

Here’s a question for you and the greater RiotACT community: my property manager has recommended raising the rent on my Holt apartment from $380/week to $400/week. To me that seems a rather large rental increase (that extra $1040pa has to come from somewhere).

Should I try to contact the tenant myself to ask about his/her satisfaction with the property and the current property manager? Is $400/week pushing the limits of sensibility for a 2 bedroom apartment in Holt?

thehutch thehutch 6:36 pm 23 Nov 11

Property Manager said :

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.

I’m glad you clarified this PM, as some people on here have the false impression that rents cannot be increased above CPI… which is wrong.

On a side note, I always enjoy reading PM’s little write-ups. They entertain me – not only as they are informative, but as they are a testament to PM’s continued development in the property sector.

Plus whenever you write something, I have the fun of trying to guess what was the catalyst for the write up… I guess that a lessor has given you a call recently wanting to remove tenants that choose to stay on periodic tenancy rather than sign a new 12mth lease?

Keep it up PM… sadly real estate is filled with ‘greedy, fake and souless baaaaad people’, don’t become one.

poetix poetix 6:20 pm 23 Nov 11

00davist said :

and distroyed the gardens with 3 secret goats!

Three goats? Sounds like trolling to me. Was there a bridge involved?

00davist 00davist 5:29 pm 23 Nov 11

EvanJames said :

00davist said :

and distroyed the gardens with 3 secret goats!

I do fervently hope that, when you enter those tenants on that new register of horrible tenants, you put in the “reason” bit: Secret Goats.

You’d have to wonder what the property manager was doing, missing three goats! There are few creatures less secret than a goat. Shameless is a better adjective.

I can understand how it was missed, they only arrived after the inspection, which gave the goats a clean 6 months, pleanty of time.

We were eventually tipped off by neighbors (it’s our old house, they still keep in touch) about them, but the property manager had no reasont to be out that way outside of inspection time, it’s not like canberra where a property manager migth have 3 houses on the same street, this is a big old place on a dirt trach out the back end of Mittagong.

I don’t know what Mum put on the register, but I’ll ask, becase now that you mention it, damn, that would be awsome!

OpenYourMind OpenYourMind 5:23 pm 23 Nov 11

Bluey said :

In answer to the question:

Yes.

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

Landlords charge what the market is willing to pay. I suggest taking the course ‘Introductory Economics 101’

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