First-time Landlord? Here’s What You Should Know
Let’s get you caught up with the basics.
If this is your first time renting privately, it’s not a bad idea to bookmark this blog in your browser. Since you’ll effectively be your own real estate agent, we’ve summarised all the basics you should know as a first-time landlord.
Types of Leases
A lease, also known as a residential tenancy agreement, is a legal contract between tenants and landlords, which outlines the rental terms and conditions that both parties agree to.
In most cases, leases are fixed-term or periodic. A fixed-term lease states how long the agreement will run for, such as 6 or 12 months. After this time, any tenant choosing to remain in the property may be asked to sign a new fixed-term lease or they may continue on an automatic fixed-term tenancy.
A periodic lease, also known as a month-to-month lease, does not run for a fixed time and may continue for as long as both parties agree.
Each state in Australia has different laws and regulations on tenancy agreements. This might include the information that you must provide to your tenants before signing a lease agreement, property condition reports and where to pay or lodge your bond payments.
Generally, most states will require you to provide your tenant with the following information:
- Your state’s information booklet for renting
- A copy of the Tenancy Agreement
- A copy of the Rental Bond lodgement
- A Condition Report (a copy for them to keep plus the original for them to complete and return)
- Receipts for all payments (bond, monthly rental payment)
- Emergency contact details
- Information on routine inspections you plan to conduct
- Photocopy of keys and remotes for the property (if any)
It’s crucial that you’re familiar with your obligations as a landlord, as you may be liable for fines or legal action if you don’t comply. And no one wants that, now do they?
Most states in Australia provide standard format leases for private landlords to use. These forms can be found via the links below.
A Rental Bond acts as security against the Tenancy Agreement and they usually total a maximum of 4 weeks rent. The bond is paid at the beginning of a new lease and is returned to the tenant at the end of their tenancy unless the terms of the lease or housing laws have been broken. In which case, an official claim must be made by you, the landlord, to your respective state’s Bond Authority.
All states require that the bond payment is lodged with the state Bond Authority. For information about bond payments and how to lodge your bond, please visit the links below.
A condition report notes the condition of the property at the start of a tenancy, including any furniture or other fittings that are provided as part of the rental. These reports are often required when you take a rental bond from your tenants, however, they’re a good idea even if you decide not to.
We highly recommend taking photos of your property when you complete your copy of the report, which should be done prior to your tenant’s move-in date. Be sure to include these photos with your official written condition report.
The main benefit of completing a condition report is that it captures the state of your property before the lease begins and can be compared to the state your tenant leaves your property at the end of their lease. This comparison can be referenced in any disputes you may have with regards to damages or overdue rental payments that would prevent your tenant from receiving their full bond payment.
A Few More Things to Consider
Residential Tenancies Act
Be sure to read through the Residential Tenancies Act specific to the state in which you own your property. The Act outlines both yours and your tenant’s rights and provides a framework for regulating lease arrangements, especially when it comes to disputes. The important things also lie in the fine print, such as your responsibility as the property manager to meet certain electrical or water standards, or providing smoke detectors. Knowing these laws well will help arm you against disputes and guide you in being a proper landlord.
Unfortunately, this your traditional homeowner’s insurance doesn’t cover your investment property. So it’s a great idea to protect yourself against any unexpected damage (think: theft and natural disasters), liability or rental income defaults. If you’re a great landlord, you’d also recommend that your tenant gets contents insurance, as your plan won’t cover damage to their belongings.
Before officially renting out your property, it’s important to know both good and bad tax implications that come with being a landlord. Be sure to read up on Capital Gains Tax and assess whether renting is the right move for you. On the other hand, there are other tax considerations such as your eligibility for rental property depreciation tax deductions. (We think it’s best to call in your accountant for advice on this).
Want More Information?
Government and Consumer Affairs websites in each state have some helpful information on renting for both landlords and tenants. Have a browse via the links below.
- VIC Consumer Affairs renting information
- NSW Fair Trading renting information
- QLD Residential Tenancies Authority renting information
- WA Government renting information
- TAS Government renting information
- SA Government renting information
- ACT Tenants Union renting information
- NT Consumer Affairs renting information