Articles in Category: Property Management information

Article and information that are of interest to property managers. Note; some articles may be Queensland legislation focused.


Rent bidding apps - be careful Queensland

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The following information has been sourced from the Property Management Excellence PME manual (which is part of the PME system).

4.2 Rent must be advertised at a fixed amount

The RTRA Act requires that rent be advertised at a fixed amount (section 57). Words such as negotiable and price ranging are prohibited. Tenants may wish to make an ‘offer’ however,  property managers cannot encourage or solicit offers from prospective tenants.

If tenants indicate that they want to offer another price, property managers are encouraged to advise the tenant to ‘put their preferred terms forward’ and as the agent for the owner, the lessor will be provided all applications for consideration. Property managers should not discuss price (other than the listing price) with the tenant or any other party, other than the lessor.

57 Premises must be offered for rent at a fixed amount

 

(1) A lessor or lessor’s agent must not advertise or otherwise offer a residential tenancy for premises unless a fixed amount is stated in the advertisement or offer as the amount of rent for the premises.

Maximum penalty—20 penalty units.

(2) A lessor or lessor’s agent must not accept a rental bond from the tenant of premises if the residential tenancy for the premises was advertised or offered without stating a fixed amount of rent for the premises.

Maximum penalty—20 penalty units.

(3) A person does not contravene this section merely by placing a sign on or near premises advertising or offering a residential tenancy for the premises without stating the amount of rent for the premises on the sign.

Rent auctions – source www.rta.qld.gov.au

Rent auctions (also known as rent bidding) are where prospective tenants are asked to bid on how much rent they will pay. Rent auctions are illegal but could occur in isolated cases.

In Queensland, a property being advertised for rent must advertise a fixed price. A lessor/agent may not advertise a rent range, put a property up for rent auction or ask for offers.

Tenants and lessors are able to negotiate the amount of rent to be paid.

Fast facts

  • Failing to advertise a fixed price is an offence.
  • The agent does not have to display the price on a ‘for rent’ sign at a property.
  • Lessors/agents are not obliged to inform tenants of another tenant’s offer.
  • A tenant who believes a lessor/agent has exhibited deceptive or misleading behaviour may complain to the Office of Fair Trading (OFT), the Australian Consumer and Competition Commission  (ACCC) or the RTA.

Residential Property Investors lose depreciation and travel deductions

Sourced article

Federal Budget 2017 - Residential Property Investors lose depreciation and travel deductions

Anthony J Cordato
 
Australia May 12 2017
 

From 1 July 2017, Australian Property Investors will lose two long-standing tax deductions for residential properties as a result of the Federal Budget 2017.

The following extracts state the current law (from the ATO Guide) and the new law (copied from the Budget papers). The precise terms of the new law will not be known until the new measures are legislated.

1. Depreciation of fittings and fixtures

Current Law: Deduction for decline in value of depreciating assets (i.e. depreciation)

When you purchase a rental property, you are treated for tax purposes as having bought a building, plus various separate items of ‘plant’. Items of plant are depreciating assets, such as air conditioners, stoves and other items.

You can deduct an amount equal to the decline in value for an income year of a depreciating asset that you held for any time during the year. However, your deduction is reduced to the extent your use of the asset is for other than a taxable purpose. If you own a rental property, the taxable purpose will generally be for the purpose of producing rental income.

Source: ATO Guide for Rental Property Owners 2016 (page 18)

New Law: limit plant and equipment depreciation deductions to outlays actually incurred by investors

From 1 July 2017, the Government will limit plant and equipment depreciation deductions to outlays actually incurred by investors in residential real estate properties. Plant and equipment items are usually mechanical fixtures or those which can be ‘easily’ removed from a property such as dishwashers and ceiling fans.

This is an integrity measure to address concerns that some plant and equipment items are being depreciated by successive investors in excess of their actual value. Acquisitions of existing plant and equipment items will be reflected in the cost base for capital gains tax purposes for subsequent investors.

These changes will apply on a prospective basis, with existing investments grandfathered. Plant and equipment forming part of residential investment properties as of 9 May 2017 (including contracts already entered into at 7:30PM (AEST) on 9 May 2017) will continue to give rise to deductions for depreciation until either the investor no longer owns the asset, or the asset reaches the end of its effective life.

Investors who purchase plant and equipment for their residential investment property after 9 May 2017 will be able to claim a deduction over the effective life of the asset. However, subsequent owners of a property will be unable to claim deductions for plant and equipment purchased by a previous owner of that property.

This measure is estimated to have a gain to revenue of $260.0 million over the forward estimates period.

 Revenue ($m)

 

2016‑17

2017‑18

2018‑19

2019‑20

2020‑21

Australian Taxation Office

40.0

100.0

120.0

Source:   2017-18 Budget Paper No. 2 - Revenue Measures (page 30)

RTA submission - pest control

Emailed to the Minister and RTA 9th August 2018

Download the submission in PDF here

  9th August 2018

My name is Stacey Holt from Real Estate Excellence Academy. My company www.realestateexcellence.com.au has over 250 member offices in Queensland. I write this on behalf of my company, my membership and the industry.           

               I write this submission to the Honourable Minister for Housing Mick De Brenni and the RTA to request an amendment to the Residential Tenancies and Rooming Accommodation Act (2008) and or a change in policy.

               The concern and the matter that I wish to address in this submission relates to pest control.

               With the increased enforcement of section 171 in relation to tenants being required to purchase goods or services as part of their tenancy agreement being prohibited, I urgently request the Government to consider an amendment to legislation and or policy due to health and safety of people in rental property.

                        In 2014, the RTA gave the following sage advice in relation to pest control to my company in writing. The view of the RTA has since changed given recent prosecutions under section 171.

 “A tenant cannot be required, by means of a special term in the tenancy agreement, to purchase products or services which include pest control treatment.  Again, any special terms relating to pest control should be worded in terms of the tenant must ensure premises is free from pests or vermin at the end of the tenancy. The focus should always be on the condition of the premises, not whether the tenant has paid for something. 

As soon special terms in a tenancy agreement requires a tenant to provide a receipt of purchase, on the basis that they were shown a receipt for treatment at the beginning of the tenancy, there will be an offence.

The only exemption that would come up regularly would be if the pest control was reliant on the tenant having a pet.  In that case, it could be argued the lessor isn’t requiring purchase of pest treatment as a condition of entering into the tenancy, but as a condition of allowing the tenant to have a pet.”

 Pest control is a licenced field in Queensland and the concerns I am addressing are perfectly stated below from the Queensland Department of Health website

pest control

Suggestions for urgent attention

               Revert to the policy of the RTA provided in 2014 and allow the tenant to be required as a condition of having a pet, a special term of the agreement requiring pest control to be carried out as part of their obligations upon vacating, and a receipt provided from a reputable licensed provider. This is not a condition of the tenancy (section 171), it is a condition of having a pet. This is considered a reasonable outcome as opposed to regulatory change.

               And or;

               Refer to Western Australian tenancy legislation (section 29 referenced below) and allow a bond to be collected from the tenant to cover the cost to ensure health and safety of all tenants continues to paramount. This of course, will require an amendment to the Act.

Possible consequences

               If the above is not attended to within a reasonable time frame by the Government, there is great fear of risk to the health and safety of tenants in rental property, plus, lessors may be forced to increase rents to cover their increased costs due to their obligations under section 185 (RTRA Act).

               Vacating tenants may use dangerous chemicals to meet their obligations upon vacating (section 188 (4). This could lead to a very grave situation. The RTA change in policy has lead to a very grave unintended consequence.

               Lessors may also be prone to not accept tenants who have pets due to the concerns raised in this submission and extra costs that could be imposed on the investor.

       Western Australian tenancy Act

  1. 29. Security bonds

     (1A)   In this section, unless the contrary intention appears —

               pet does not include an assistance dog as defined in the Dog Act 1976 section 8(1);

               security bond includes an instalment of a security bond.

     (1)     A person shall not — 

        (a)     require the payment of, or receive, more than one security bond in relation to any residential tenancy agreement; or

        (b)     require the payment of, or receive, a security bond of an amount exceeding in the aggregate — 

                     (i)     4 weeks’ rent under the residential tenancy agreement in relation to which it is required or received; and

                    (ii)     if the tenant is permitted to keep on the premises any pet capable of carrying parasites that can affect humans — a prescribed amount to meet the cost of any fumigation of the premises that may be required on the termination of the tenancy.

     Penalty: a fine of $5 000.

     (2A)   Subsection (1)(a) does not prevent a person from receiving a security bond in instalments.

     (2)     Subsection (1)(b) does not apply in relation to a residential tenancy agreement where the weekly rate of rent payable under the agreement exceeds a prescribed amount.

     (3)     Where, during the period of 6 months after the day on which the tenancy under a residential tenancy agreement commenced, the rent payable under the agreement decreases or is decreased, the amount paid in excess of the lower or, as the case may be, lowest rate of rent payable under the agreement during that period, together with the amount (if any) allowed by subsection (1)(b)(ii), shall be deemed to have been paid as a security bond.

     (4)     A person who receives a security bond paid in relation to a residential tenancy agreement — 

        (a)     shall forthwith give or cause to be given to the person paying the bond a receipt specifying the date on which the bond was received, the name of the person paying the bond, the amount paid and the premises in respect of which it is paid; and

        (b)     shall pay the amount of the bond to the bond administrator in accordance with Schedule 1 clause 5A; and

        (c)     shall, at the time of making the payment referred to in paragraph (b), lodge with the bond administrator a record in a form approved by the Minister relating to the payment.

      [(d)     deleted]

     Penalty: a fine of $20 000.

     [(5)    deleted]

     (6)     A person shall not make an entry in a record referred to in subsection (4)(c) that the person knows is false or misleading in a material particular.

     Penalty: a fine of $5 000.

     (7)     The bond administrator must pay the amount of the security bond in accordance with Schedule 1 clause 5.

     (8)     A lessor and property manager must ensure that an application form referred to in Schedule 1 clause 5(1)(a) is not signed by a tenant unless —

        (a)     the residential tenancy agreement to which the security bond relates has terminated; and

        (b)     any amount of the security bond to be paid to the lessor or tenant is stipulated on the form.

     Penalty: a fine of $5 000.

     [Section 29 amended by No. 59 of 1995 s. 47 and 55; No. 69 of 2006 s. 31; No. 60 of 2011 s. 25; No. 18 of 2013 s. 62.]

[29A.      Deleted by No. 60 of 2011 s. 26.]

 Regulation
10A.       Amount prescribed for section 29(1)(b)(ii) of Act

               For the purposes of section 29(1)(b)(ii) of the Act, the amount of $260 is prescribed.

Thank you for your prompt attention to this very important matter. I will be sharing this submission publicly and request that any reply from the Government and or the RTA to this matter will be made public (any contact details will not be provided publicly from the reply).

Yours sincerely

Sent via email This email address is being protected from spambots. You need JavaScript enabled to view it.

Stacey Holt

Company Director

Real Estate Excellence Academy Pty Ltd

0423 018 539

Not all business is good business

We spend so much time at work, we spend so much money in business and we all know life is short.

A senior property manager recently told me about a prospective new client landlord who was belligerent and difficult to deal with from the get go. She wisely advised it would be best to go to another agency as I cannot see us having a successful business relationship. This has got me to thinking… hence this blog.

The adage ‘not all business is good business’ is by far not new; however, in this ever-increasing competitive business world, many of us are almost desperate for new business. I make this generalised statement based on the ‘drum’ that constantly gets beaten “grow the rent roll’. Whilst I agree wholeheartedly that every day businesses should be looking for new business opportunities (as I do in my own business), I do ask in the world of property management, at what cost is this being done?

There has long been a concern for staff in the property management industry and retention of staff. The costs of recruitment are substantial for most business plus the cost whilst waiting for the ‘right person’ to come along. It is interesting in my privileged position to note a trend in portfolio management of decreasing portfolio sizes; 5 years ago, it was common in my view for property managers to manage from 180 to 220 properties, however this trend seems to be on the demise. Lesser numbers seem to be on the increase which I believe to a wise decision. As more and more statutory demands are placed on landlords, property managers have more legislative obligations to manage. All service industry has long had issues with poor customers; property management also has its fair share. Abuse and unacceptable behaviour not just from tenants but also from landlord clients.

It must be said that most landlords and tenants are good people however we all know there is always someone or some people who are outright unreasonable, demanding and difficult to deal with. This could be they have had a ‘bad day’ and take it out on others; more so, the experiences of many are a history of this poor and unacceptable behaviour.

Given the issues that are far from new are staff recruitment, retention, stress and burn out in the real estate industry, it was refreshing to listen to the senior property manager decide that the business of the landlord was not wanted.

I believe the role of a career property manager/tenancy manager is three-fold in general;

  • Income retention (look after what we have)
  • Income growth (new business)
  • Income producing (activities that produce income).

We may want to grow our businesses but not to the detriment of our staff and their mental health plus their job satisfaction (from a business perspective this could lead to business cost). Think of all the time we would have to service our existing clients and seek excellent new clients if we say ‘enough is enough’ to the clients that are costing us money, and sometimes costing businesses more than money.