Plenty of property pitfalls for self-managers

Last month, a private landlord was prosecuted by the Department of Commerce (Consumer Protection) and fined $7200 for repeated failure to lodge a security bond with the Bond Administrator, failure to provide a receipt for the bond, failure to use the correct form and information when entering into a written tenancy agreement, and failure to provide a property condition report at the start and end of a tenancy.

Acting commissioner for Consumer Protection David Hillyard said the landlord took bond money in cash and kept it in her safe or had it deposited directly into her bank, intending to use the money for damage to the rental property and unpaid rent as and when various tenants left, which was a misuse of funds that belonged to the tenants.

She also used a 2005 REIWA tenancy agreement form and created her own lease agreement, which included unacceptable conditions such as no children being allowed to visit the property.

Standard lease agreements were introduced in 2013 and tenants must also be provided with specific information when taking on a new agreement.

In November, another landlord was prosecuted and fined $24,000, also for failure to lodge a security bond with the Bond Administrator.

This landlord spent the bond money and also took too much rent up front.

Under the relevant legislation, a landlord is not legally allowed to take more than two weeks rent in the first two weeks of a tenancy.

This landlord made tenants pay four to six weeks rent.

The tenant also felt harassed when the landlord constantly arrived unannounced and uninvited and repeatedly phoned and texted her.

Landlords can only conduct four inspections per year and must give notice of no less than seven days and no more than 14 days for any routine inspection.

REIWA statistics indicate about 40 per cent of investment properties are self-managed by private owners and president Hayden Groves expects this number to fall.

“Managing a property is more complicated than it used to be and unless you have time to dedicate to managing your property and staying on top of regulatory changes, it is not worth doing it yourself,” he said.

“The fee you pay your property manager transfers part of the risk to them and if something goes wrong, the landlord is justified in asking ‘what were you doing?’”

Mr Groves also said using a property manager helped keep the landlord/tenant relationship at arm’s length.

“Property managers are more likely to have a no-nonsense, professional approach and when an issue arises, such as rent arrears, they can deal with it compassionately and within the law,” he said.

“Many private landlords often build relationships with their tenants and might let the rent payments slip if their tenant loses their job, for example, and before they know it the tenants are months behind and they don’t know how to deal with it.”

Mr Groves said complaints against agents had fallen since the introduction of compulsory professional development, while prosecutions against private landlords were increasing.

“Tenants often call REIWA if they are having problems, but if they are renting through a private landlord we cannot help them,” he said.

“We can give them an indication that something is wrong and direct them to the Department of Commerce, who will investigate and prosecute if they feel it is necessary.”

Landlords and tenants can find out more about their rights and responsibilities at the www.commerce.wa.gov.au/consumer-protection or by contacting REIWA. n