The long-distance landlord

PORTFOLIO POINT: Anyone planning on buying an investment property in another state should understand that different rules apply in dealing with tenants.

Many landlords would love to increase the rent on their investment property more often, or perhaps call the shots when it comes to finding the best tenants. We’re constantly told that we shouldn’t be too emotional about finding or buying an investment property, but chances are some landlords do have a small soft spot for their property portfolio or humble retirement nest egg.

Wherever that particular pad may be, different rules apply around Australia for increasing rent, obtaining bonds and evicting tenants. In many cases, it seems tenants are given second and even third chances to make up for rental arrears. As disappointing as that may be, rules are still rules, and landlords should know what’s acceptable and unacceptable in their investing state of choice.

New South Wales

Rent. New South Wales landlords have it pretty tough when it comes to increasing the rent. They can only do so once the fixed-term period lease expires. If the tenant decides to stay on, they must be given 60 days’ notice before the rent increases.

The rent can’t be increased automatically during the first six months. It also can’t be increased during a fixed-term agreement of two years or less, or more than once in any 12-month period. If tenants receive a rent increase notice and they’re not happy with it, they can terminate their rental agreement with just 21 days’ notice.

Tenants can also complain about the rental increase and take the matter to the tribunal. However, the Residential Tenancies Act doesn’t have a limit for rental increases, which means it’s up to the landlord to decide how much they’ll increase the rent.

Bond. A landlord in NSW can charge a maximum of four weeks’ rent and can’t request any bond “top ups” during the course of the tenancy. A landlord can claim the bond for money still owing in rent if the tenant doesn’t hand over all the keys and locks and if there’s damage to the property. This includes missing or torn curtains, stains or burn marks on the carpet, badly scratched wooden floors, burns or cuts to the benchtop, broken glass, holes in walls and water stains.

Evictions. The Fair Trading Office says if you serve your tenant with a termination notice, the tenant can move out before the notice ends. If there’s a contract, the tenant is responsible for paying rent until the last day of the fixed term. Landlords should be aware that no further rent is payable from the day the tenant moves out. You can also evict your tenant after 14 days if the tenant is 14 days or more in rental arrears.

Victoria

Rent. If you have a fixed-term agreement with your tenant, you can’t increase the rent before the end date. You also can’t increase the rent more than once in any six-month period and you must give your tenant 60 days’ notice. Tenants can complain to Consumer Affairs Victoria if they think the increased rent is excessive.

If you rent out a property on a room-by-room basis, tenants can complain to the Victorian Civil and Administrative Tribunal (VCAT) if you increase the number of people in the house but don’t reduce the rent. VCAT can set a maximum rent for 12 months, and six months for properties with multiple tenants.

Bond. Landlords can’t charge their tenants more than one month’s rent if the weekly amount is $350 or less. However, you can charge more than one month’s rent if the property is your principal place of residence and you plan to live there again at the end of the tenancy. VCAT usually sets the bond allowed.

If you own a property with share accommodation, you can’t charge more than 14 days’ rent either.

Evictions. Landlords can give tenants instant and immediate notice to vacate if there’s malicious damage to a property or if the property has been partly or completely destroyed. You can also evict a tenant if they’ve been violent or threaten the safety of another person or premises nearby. If you own share accommodation and evict one person, that particular tenant must leave immediately and can’t return to the house for two business days.

If the tenant owes at least 14 days’ rent you can send them a breach of duty notice. If you’ve already sent them three such notices, you can order them to vacate after the third one expires. A landlord can issue a 60-day eviction notice, if, after 60 days, the property is to be sold, demolished, repaired or renovated. But to evict your tenant for no specific reason and if the tenant is on a fixed-term lease, you need to give them a massive 120 days.

Queensland

Rent. Believe it or not, landlords in the Sunshine State are entitled to increase the rent on their investment property by as much as they like. The Residential Tenancies Authority (RTA) says the rent can be increased by what’s considered a “reasonable amount”, but that figure is at the discretion of the landlord.

“There’s no specific amount where we say 'that’s fine, that’s not fine’,” an RTA spokesperson says.

“The tenant might dispute the rent and if they don’t agree they can negotiate.” The tenant’s options are to ask for an RTA Form 16 (a dispute resolution request) or alternatively, seek legal advice and go to court. Of course, the other obvious choice for the tenant is to simply move out if they think the increase is too high.

Bond. A bond in Queensland, while often necessary, is actually not compulsory. “Most people don’t know this,” the RTA spokesperson says.

“It’s very prudent and wise to get a bond, but it’s not legislated to be necessary.” If a bond is taken, it must be lodged with the RTA within 10 days. For a property with a rent of less than $700 a week, the maximum bond that can be charged is four weeks’ rent. If it’s more than $700 per week, a landlord can charge as much bond as they like. Sounds too good to be true, right? Well, there is a catch: the tenant must agree to the figure.

Evictions. If a landlord wants to evict a tenant, they must be given two calendar months’ written notice or wait until the end of their rental contract, whichever is greater. If the tenant is on a periodic agreement and there’s no contract, they must be given two months’ notice.

If a tenant refuses to leave, landlords can lodge an “urgent application to terminate due to failure to leave” through the RTA. If the case gets to the civil court, police will be instructed to serve a warrant.

Troublesome tenants who don’t pay rent come under another category. It seems they’re given lots of chances too. They must be sent a breach notice after seven days and then given a notice to rectify the breach after another seven days. If they still haven’t paid the rent by then, they must vacate the premises. Any other breach, such as not maintaining a garden, requires another 14 days’ notice.

The RTA says the tenant’s obligation is to keep the premises clean and maintain everything within the framework of the fence, including the garden.

ACT

Rent. Landlords can’t increase the rent in the first 12 months of a tenancy, and for an existing tenant they can only increase the rent once each year, according to the Commissioner for Fair Trading. Tenants must be given eight weeks’ notice if there’s going to be a rental increase. If the tenant isn’t happy, they can leave the property by giving three weeks’ notice or complain to the Residential Tenancies Tribunal before the increase occurs.

Bond. Landlords can’t charge more than four weeks’ rent as a bond. Landlords can, however, request that a tenant fills out a guarantee or indemnity form, but the total cost to the tenant still can’t cost more than four weeks’ rent.

“For example, if a house is rented at $250 a week, the bond can be a maximum of $1000,” the Commissioner for Fair Trading says. “If the tenant pays a bond of $600, then the guarantor can only be held liable for $400.” The bond must be lodged with the Office of Rental Bonds.

Evictions. A landlord can issue a notice to vacate the property if the tenant has been given what’s called a “notice to remedy” on two previous occasions and has failed to pay the rent. A notice to remedy can be sent on the eighth day after the rent was due.

South Australia

Rent. Rent can be increased once every six months from the date of the last rent increase, or from the date the tenants moved in. Landlords must give tenants 60 days’ notice of a rent increase. For fixed-term agreements, you can only increase the rent if it’s a condition on the lease agreement. If the tenant believes the rent increase is unreasonable they can complain to the Residential Tenancies Tribunal and ask for the rent to be changed to a reasonable amount.

A tenant can be issued a written notice if they’re more than 14 days behind in their rent. If the amount owing isn’t paid by the date stated on the notice, the lease agreement can end the following day.

Bond. If the weekly rent is less than $250, landlords can ask for four weeks’ rent as a bond. If the rent is $251 or more, landlords can ask for up to six weeks’ rent as a bond. All bonds must be lodged with the Consumer and Business Services (CBS) until the tenancy ends.

Landlords can also ask for up to two weeks’ rent in advance to be paid along with the bond. You might want to think about increasing the bond, too. This is legal if it’s been two years since you first received a bond or since it was last increased.

A landlord is also entitled to claim part or all of the bond for unpaid rent, damage to the property or the costs of readvertising a property if the tenant leaves a fixed-term agreement before the end date.

Evictions. Landlords can apply to the Residential Tenancies Tribunal to immediately evict a tenant without notice if they cause serious damage to the property or put the safety of others at risk. You can also apply to end a tenancy agreement if the tenant interferes with the peace, comfort or privacy of the neighbours.

A tenant must be more than 14 days behind in their rent before landlords can send a written notice to remedy the breach. If the rent isn’t paid within seven days, the tenant must be given one further day to leave the property.

For any other breach, you must give written notice of at least seven clear days for the tenant to remedy the breach. If the breach isn’t sorted out within the timeframe specified, the tenant gets even more time – another eight days – to leave the property. Landlords who want to end a periodic agreement must give the tenant 90 days’ written notice. Alternatively, you can give the tenant 60 days’ written notice if you need the property because you or your family plan to live there, major renovations or a demolition is planned, or the property has been sold.

Tasmania

Rent. Fixed-term rental agreements must run for at least four weeks. According to the Office of Consumer Affairs and Trading, rent can only be increased if there’s a written tenancy agreement that allows for rent increases. Rent can only be increased after a notice of 60 days. The tenant can contact the Consumer Affairs and Fair Trading office if they think the rental increase is unreasonable.

Bond. It’s illegal for Tasmanian landlords to charge more than the equivalent of four weeks’ rent for bond. The Rental Deposit Authority (RDA) holds the bond and has three days to return the bond to the tenant after the tenancy ends. If a tenant leaves a property early, landlords should be aware that property managers can actually claim the re-letting costs from the bond, including the cost of advertising, assessing applications and making a condition report for a new tenant.

Evictions. A tenant must be given 14 days to leave a property. If they refuse, landlords can seek an order from the Magistrates Court. Landlords can also give a notice to vacate if there are rental arrears. The notice doesn’t take effect if the rent is paid within 14 days, but if this happens three times in 12 months, the third notice remains valid and the tenant has to leave – even if they pay all the rent.

If an agreement is for a fixed term, the tenant should leave the property on the last day. If they refuse, landlords have 28 days to give them a notice to vacate. If landlords don’t give them notice to vacate and they’re still there after 28 days, the agreement continues as an agreement of no fixed term.

Western Australia

Rent. A landlord can’t ask for more than two weeks’ rent in advance before or during the first fortnight of a tenancy. A landlord can’t increase the rent unless it’s been six months since the last increase. However, a landlord doesn’t have to give a tenant notice of an increase if the fixed-term tenancy agreement is being renewed. Owners and agents can provide for prearranged rent increases by a special clause in the written agreement at the start of a tenancy. Rent can’t be increased in the first six months of a periodic tenancy or less than six months after the previous increase.

Bond. Landlords are only permitted to charge up to four weeks’ rent in advance. Landlords should also note they can charge up to $260 for a pet bond if a tenant has a dog or cat. The only time a pet bond can’t be charged is if the weekly rent is more than $1200 and if the property was a private residence of the landlord for at least three months before the new rental agreement was made.

Evictions. Landlords can end a periodic tenancy agreement without providing a reason if they give 21 days’ notice. However, if there’s a fixed-term lease in place, tenants can’t be forced out without a court order. Landlords can send a written notice to end an agreement but need to seek the court order if the tenant refuses to leave. It gets worse too – if a tenant thinks they’ll suffer hardship as a result, they can ask a magistrate for the order to be suspended for up to 30 days. If the tenant hasn’t paid rent for 14 days, landlords can issue a seven-day notice to pay the rent or vacate the premises. If a tenant pays all the rent owing no later than one day before court action, then the action against the tenant can no longer proceed.

Northern Territory

Rent. Landlords can only increase the rent on a property if they give the tenant at least 30 days’ notice, according to the Northern Territory Department of Justice. However, if the tenant has a periodic lease agreement the rent can be increased at any time if two weeks’ notice is given.

Bond. The bond is usually equivalent to four weeks’ rent. You can keep the bond for unpaid rent, damages and cleaning but must advise the tenant within seven business days.

“This notice must be accompanied with copies of receipts or quotes proving the costs incurred by the landlord that he/she is wanting to withhold,” the Department of Justice says. NT doesn’t have a bond board, which means a bond is held in a trust by a property manager.

Evictions. A landlord can apply to the local court for termination of a tenancy if the tenant’s conduct is deemed unacceptable. In other words, the tenant can be ditched if they’re using the property for illegal purposes or disrupting the peace and privacy of the neighbourhood. If the tenant chooses to leave and the landlord doesn’t agree to an early termination, the landlord is allowed to keep the bond to cover the cost of rent.

This article was first published in Australian Property Investor and is reproduced with permission.