Renting in Canberra – nothing but trouble?

Property Manager 21 September 2010 78

for lease

There’s been plenty of previous discussion on RA around issues for renters in Canberra. There are plenty of stories of tenants who are kept in the dark about their rights, or treated by their landlords or property managers as second class citizens.

On the other side there’s plenty of times when a landlord either has issues with their tenant, chosen agent, or when self managing they have no one to turn to for advice – sometimes leading to poor decisions which can create unwanted conflict with the tenants. No one is perfect, and it’s always tough to manage conflicting priorities that involve someone’s home.

Who’s offering to help? Tenant’s Advice Service can be useful if you can catch them during their limited availbility (and only if you’re a tenant!), the tribunal will give you a definite answer after taking your time, money and giving you a headful of frustration. Why are there no other places for people to turn when they are dealing with these issues?

I’ve been in property management for a while now and I wouldn’t dream of saying that I know it all or that I’ve seen it all… but I want to be part of the solution, not part of the problem. What issues are you facing with your Canberra rental property?

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78 Responses to Renting in Canberra – nothing but trouble?
Property Manager Property Manager 11:46 am 22 Sep 10

#31: The short answer is this – the owner (or agent or whatever) can advertise at an increased rent if the market suggests it is suitable; but they also have a ‘Duty to Mitigate’ any loss (compensation) you may have to pay – Section 38 of Residential Tenancies Act.

This means that if they leave the property advertised at an inflated rent and have not been getting any positive response from the market then they may be failing in their duty to mitigate. If the tribunal rules that this is the case they may in fact have to pay compensation to you.

Hope this helps.

Property Manager Property Manager 11:43 am 22 Sep 10

#30: FD10, that truly sucks. I can’t defend the actions of agents who would treat you like that, there’s absolutely no reason to be so unprofessional. What I can offer is this:

Historically many houses have been damaged, and rents unpaid, by tenants in a similar demographic to yourself. It’s not fair that the rotten apples would ruin the bushell, but it happens.

The best advice I can offer is much what I tell most applicants – a landlord wants to know two main things when seeking tenants: will they pay the rent, and will they look after the property. Without a prior rental history it is hard to provide evidence that you have done so, and often students have lower incomes making it difficult to prove the financial stability.

Whenever you lodge an application make sure you add to it with good clear copies of photo ID, written references, letters confirming financial support from family etc. If all else fails, get a family member to apply as a co-tenant, giving the owner the security of knowing they can chase them in the case of any issues.

It’s not particularly fair, but as has been suggested by others there are a lot of problems with our current rental market, and when given the choice many landlords will make a decision that doesn’t favour you – give them a reason to think twice.

Property Manager Property Manager 11:35 am 22 Sep 10

#27: On the contrary Jethro, while I won’t respond to the comments surrounding Ponzi Scheme as I can’t see how property investment is remotely like a pyramid scam, I’ll happily respond to your claim that Property Managers have contributed to the increasing pressure on renters through upward trends in market rent by saying this – you are right.

Property Managers are legally bound under the Agents Act to work in the best interest of their client, and part of this would naturally be to achieve the best possible rent return. While I understand that the value of rent as a proportion of income is becoming more and more difficult to manage I don’t think it is reasonable to lay the blame for this at the feet of the agent. By definition, an “agent” is simply working on behalf of their client.

I would suggest that the two main causes of this dilemma would be supply and demand across the entire housing market, which is largely caused by the local government’s land release policies; and the landlords’ inherent interest in achieving a decent return on the investment – which has cost them a small fortune in the first place, not to mention ever-increasing costs through general rates and land tax (again at the hands of the local government), as well as other statutory charges.

In response to your question of a property manager’s income to social value – without property managers you would have only private landlords, some better than others. Some are actually the nicest people you’ll meet. Let me tell you though, there are a lot of landlords who are actually kept in check by their property manager. If left to their own devices many would do no maintenance, try to increase rent every second week, and drop around for a surprise inspection whenever they felt like it.

Before you crucify me for shifting the blame, consider this: I do completely understand your point as I am a renter myself. Given my family’s personal financial position I am in a constant state of ‘panic’ (for want of a better word) that the rent is going to be increased (it’s been more than a year, so it could happen at any time) creating chaos on our already tight budget. I understand this financial predicament as well as any renter and it makes me sad, angry, frustrated and depressed all at once – I can’t see any realistic way that I can make the jump from renter to home owner with the way rents are. But I can’t see how blame for this massive social issue can be laid at the feet of property managers. Please see my response to post #33 as well for an explanation on how rent increases are calculated as it further illustrates that it isn’t the agent’s fault (in most cases).

prhhcd prhhcd 10:59 am 22 Sep 10

Here is some free advice, and no, unlike our Newbie “Property Manager” I will not be making money out of this sometime in the near future.

Select your tenants well, treat your tenants well and have open channels of communication with them and voila – you have yourself a happy relationship.

I look after a few properties for family members and have never had problems just by following that one little rule.
I think we just tend to forget that we need to treat tenants like people too, not like some sort of underclass!

[end rant]

adi adi 10:23 am 22 Sep 10

Woody Mann-Caruso said :

why would you question that cost to have someone spend their entire working week looking after your rental investment?

The entire week? Looking after my investment? You make it sound like you sit there watching the house on a hidden camera, fretting all the while. Well pull the other one, it plays Holiday in Cambodia.

1. Start of tenancy. Put ad in allhomes. Watch tens of applications roll in instantly. Pretend to undertake some sort of objective assessment of which is ‘best’ (ie, discard brown people, pick the white couple with the highest two incomes and no kids.)

LOL. good one mate.

adi adi 10:21 am 22 Sep 10

Woody Mann-Caruso

Being a brown man, agree with You mate.
Well said.

Katietonia Katietonia 10:09 am 22 Sep 10

Property Manager said :

Woody Mann-Caruso said :

What issues are you facing with your Canberra rental property?

Property managers who demand 7% of a weekly rent that’s more than double what it was ten years ago for doing less work.

Based on your example of 7% a property that takes in a rent of $2712.60 per month ($500pw) would cost a tick over $150/month in agent fees; a cost which is tax deductible. Assuming you already have a full time job, why would you question that cost to have someone spend their entire working week looking after your rental investment?

If you don’t think that’s value for money you need to find an agent that is actually worth the money they are being paid. I’m not going to target any particular agents, but there are good and bad as in most industries. The bad ones make it harder for the rest of us to impress – and some of us relish that challenge.

I don’t know why you would spend your entire working week looking one house? What do you actually do to look after it other than check the rent is paid?

Genie Genie 8:57 am 22 Sep 10

Question ?

Who sets the rent ? The landlord or the property manager !?

I’m only asking as recently someone advised me their rent increased by $30 p/w, turned out they were living in a mates investment property and they had no idea about the increase. They had set the rent 2 years ago, never increased it, but the tenants were paying alot more

garner1 garner1 8:37 am 22 Sep 10

Property Manager

You are right. I doubt however that there are that many people who would dig their heels in just to be a douche. More likely that given the tight rental market, it can take months to find a suitable home. Factoring in distance to travel to work, school & daycare etc.
I know that when I was looking for a rental an unnamed real estate took bids, but didn’t advertise the fact. So it was down to people just being desperate enough to start a bidding war on already overpriced houses.
My current rental is adequate, but I had to recently serve a notice to remedy repairs on the owner after he dodged the property manager for 5 months on a list of problems caused by the previous tenants.

Jueves Jueves 7:36 am 22 Sep 10

I’d be interested in Property Manager’s thoughts on the following scenario.

I’m breaking my 12-months lease after 4 months. (Not an ideal situation, but can’t be helped.) I’m being held rent responsible until a new tenant is found, and I have no problem with this.

Up until May this year my rent was $390pw. When I signed the new lease it then went up to $400pw. The property is now being advertised at $415pw. That’s a $25 increase in less than 6 months and I’m concerned this higher rent rate is scaring prospective tenants away.

Does the tenant have any say in this situation? Or is potentially being held rent responsible for longer than if the property was advertised at the current rent rate just part and parcel of being a lease breaker?

FD10 FD10 11:31 pm 21 Sep 10

What issues are you facing with your Canberra rental property?

Actually getting a property. As student first-time male renters, it seems the entire rental world is against us. I have had property managers tell me that “I don’t rent to people like you”, implying that myself and my friends would be a worst case scenario which I highly doubt would be true. Frankly, I find it insulting that they make those assumptions without knowing anything about us.

Also, I’ve had property managers through agencies lie to my face about our application, which makes me wonder if they’re just out to waste our time.

Give us a chance!

el el 9:49 pm 21 Sep 10

Property Manager said :

(…)The last thing I want is to push people away from professional management (I’ll be out of a job),

Oh well, you could always go and sell used cars. Both occupations require a similar skillset: bastardry, dishonesty and a complete lack of ethics.

Property Manager Property Manager 8:25 pm 21 Sep 10

#23: What you’ve described is the standard practice and in my experience would be supported by the tribunal. Essentially you’ve entered a contract and are seeking to break that contract. In doing so it is expected that you will leave the other party (the landlord) in no worse position than if you had fulfilled your contractual obligations. If applicable you are likely to also be invoiced for any advertising/re-letting fees that the owner has to pay the agent (up to one week’s rent). The Residential Tenancies Act ( supports such compensation in sections 62 and or 84 (depending on the situation), and this practice simply achieves the same result without forcing a pretty clear-cut case to the tribunal.

#25: Tough question. How do you get them to prove that they return phone calls, action requests, understand the tenancy legislation, can negotiate reasonable outcomes with tenants, be pro-active in caring for your investment and so on? It’s pretty easy to pay all that lip service, but so much harder to prove it. First, don’t be fooled by the one that guarantees a significantly higher rent – “buying” a management listing is illegal, but it still happens. Second, know what your expectations are and figure out some questions to see how they respond. In the end I can only suggest that you go with instinct. We’re all offering basically the same product at much the same price, so choose the agent you get the most workable rapport with.

Jethro Jethro 8:03 pm 21 Sep 10

OP: The problem people have with real-estate agents and property managers (and hence the antagonism being directed towards you) is that they really do seem to be people who offer very little to our world (some might say you have a negative impact on society – having helped turn housing from a necessity of life that most people on a wage could aspire to, to nothing more than a nationwide Ponzi scheme that rips of both investors who are going to be wiped out when the housing bubble bursts and renters who are paying $350 a week for a 2 bedroom townhouse in Gordon or $400 for a 3 beddy in West Macgregor – to choose two examples from the cheapest end of the scale…. unbelievable really when you consider that the minimum wage is only $570). Yet estate agents are making an absolute fortune off of the fact that people need to live somewhere and are not confident that they can handle the arrangements themselves.

Your income to social value ration is unfortunately very lopsided.

I am sure you will reply with some passive-agressive condescending reply, as you have to the other people who have reacted angrily to the reminder that we live in a society that supports a real-estate industry.

toriness toriness 7:40 pm 21 Sep 10

Woody Mann-Caruso said :

What issues are you facing with your Canberra rental property?

Property managers who demand 7% of a weekly rent that’s more than double what it was ten years ago for doing less work.

you’re lucky to only pay 7%. the standard is 10% or so i was told 5 years ago – i negotiated down to 8% because i was buying at the same time off same real estate agent.

imarty imarty 7:36 pm 21 Sep 10

So what about advice on the best way to choose a property manager?

enrique enrique 7:30 pm 21 Sep 10

Property Manager said :

If I can achieve this while answering questions and offering assistance that is fairly thin on the ground, is that a bad thing?

Not at all, good on you for giving something back.

far_northact far_northact 7:28 pm 21 Sep 10

Ok. So as a tenant paying an above market rate (ie one bdrm in gunners 400wk). If I want to break lease 6 months early – landlord can charge difference between market rate (350wk) and what I’m paying, against me, for the next 6 months…. Assuming I find alternate tenant. Anyone know if this is legal? (fixed term 12 mth contract because no one in Canberra needs to be flexible?)

Property Manager Property Manager 6:48 pm 21 Sep 10

#19: As always Hutch, well constructed comments and all valid.

#20: Your information is fairly accurate, but the following should be noted:
– As explained above the owner can serve a termination notice during the fixed term as long as they provide at least 26 weeks notice and the end date is not within a fixed term.
– During a fixed term the owner may apply to the tribunal for a termination and possession order (eviction) on the grounds of significant hardship. They need to prove their hardship would be greater if the tenancy continues than the hardship the tenant would face if it were to end. Pretty rare cases to the best of my knowledge.
– You are correct, the tribunal is the only body with authority to evict a tenant. Digging in your heels and forcing a landlord to the tribunal for an eviction order after they have issued a valid termination notice is not going to help anyone though. Chances are you will end up paying the owner compensation for any loss they have faced through your unwillingness to cooperate with the termination notice, unless you can provide a substantial and valid reason for not cooperating.

When any party digs in their heels and tests the limits of the legislation any chance of a reasonable outcome is all but lost, whether it’s the owner, tenant or agent who digs in, everyone pretty much loses.

Property Manager Property Manager 6:33 pm 21 Sep 10

#15: Thank you for removing any ambiguity in your early comment.

#16: I understand that is how it may look, but the comments from people who have happily changed from self-management to a professional agent are suggesting the opposite. I am sorry that your opinion on the value of property managers is so diminished, I hope that if you find yourself as a property investor at some point that everything is smooth sailing for your self-management so as to prove your comments. In response to your last question – I am not Erik’s wife, I have not (and have no intention of) disclosed which agency I work for, and just quietly I was quite amused to see Jazz ripped to shreds for ‘turfing.

# 17: Because you’re a cynic like many of us that frequent this site 🙂 Fair question though, I would’ve been wondering the same. I have no intention of declaring which agency I am with, and I guess the primary motivation from a commercial sense is to demonstrate that there are agents with a clue who do their job well. If I can achieve this while answering questions and offering assistance that is fairly thin on the ground, is that a bad thing?

#18: Thanks Hutch. Davecdp could serve a Notice to Vacate on the tenants prior to the end of the lease, as long as he provides not less then 26 weeks notice, and provided the termination date is after the end of the fixed term lease. By this method he stands to have his house back maybe a month earlier. Of course you can market a property for sale with a tenancy in place and let the purchaser decide whether they need the property.

Another note on any notices (including termination notices) – make sure you allow 4 business days for postage, as per the Legislation Act. Without that your notices could possibly be declared void by the Tribunal.

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