Top 10 Things Every Landlord Needs to Know About Property Management Legislation
Whether you are considering purchasing your first investment property or if you are a seasoned investor, understanding the legislation governing property management in South Australia is very important. Your Property Manager will offer advice and you would expect that they are very familiar with the Residential Tenancies Act. Often it is easy for investors to leave the legal understanding to their Property Manager but having a grasp of the basic legislation that affects you as a Landlord can help your investment experience run smoothly.
In this article I will discuss the top ten sections of the Residential Tenancies Act in SA that I believe every Landlord should understand.
- When are you able to enter the property?
When you approve and sign a tenancy agreement with your tenant, or your Property Manager signs on your behalf, you are agreeing to allow the tenants to have possession of the property for the term of the lease. This also means that you are not able to enter the property without reason and you must give the tenants adequate notice to do so.
Below I have outlined the occasions when you or your property manager are able to enter the property and the notice that must be given to the tenant to do so;
|Reason For Entry||
In an emergency (an event that threatens life or property e.g. fire)
|No notice required|
If you need to collect rent (another reasonable alternative must be offered first)
|Not more than once per week, at a time previously arranged with the tenant|
|When you need to complete a routine inspection||
To inspect the premises in accordance with an order of the tribunal
|Notice given on SACAT order|
|If you need to carry out garden maintenance||
If you need to carry out necessary maintenance
|48 hours notice|
To carry out the requirements of a housing assessment order or housing improvement order at a reasonable time
48 hours notice
|If you are advertising for new tenants and need to show the premises to them||
- At the request of the tenants
- During the period of 28 days preceding the termination of the tenancy agreement, but only on a reasonable number of occasions and only at a time within normal hours of which the tenant has been given reasonable notice
|If the property is for sale and prospective purchasers need to be shown through||
If the tenant has given notice of a breach of their tenancy agreement, to determine if the breach has been remedied
|With written notice in the prescribed form given to the tenant no less than 7 and no more than 14 days before the day of entry|
|For some other genuine reason||
If you or your agent believes, on reasonable grounds, that the tenant has abandoned the premises
|No notice required|
- Your tenants right to quiet enjoyment of the property
Giving the tenant possession of the property also entitles them to quiet enjoyment of the premises. This concept of quiet enjoyment means that the landlord is required to ensure that the tenant is able to use and occupy the premises and that they can do so without significant interference from the landlord or any party acting on behalf of them. This includes your Property Manager or tradespeople.So your property manager cannot show up for weekly routine inspections and you aren’t able to attend the property at 6am to mow their front lawn. Both of these examples affect the tenant’s quiet enjoyment of the property.
- Property Security
A rental property must be given to the tenants in a “reasonably secure” state. This does not mean that the property is so secure that no one will ever be able to break into it but it does mean that the tenants need to be able to secure the property so that their belongings are safe. There is no need to install expensive security systems or cameras but I recommend making sure that all external doors and windows are secure and the locks are in good working order. If there is an issue with these items during the tenancy you will need to have them repaired as soon as possible.
- What is the landlord obliged to repair?
A landlord must present their rental premises and all ancillary property are in a reasonable state of repair at the commencement of the tenancy and this state should be maintained throughout the tenancy. This means that it is the landlords responsibility to ensure all appliances, fixtures etc. are in working order when the tenants move in and throughout the tenancy, taking into account the age of these products. For example, if the tenants have rented the property with a working split system air-conditioner and, through no fault or misuse on the tenants behalf, the air-conditioner stops working the landlord is required to have the air-conditioner repaired or replaced. If the landlord has been notified of this issue and fails to do anything about it within a reasonable amount of time then the tenant may be entitled to compensation. I would recommend keeping some extra funds aside so that if these unforeseen issues do arise you are able to attend to them promptly.
- Maintenance of property fixtures & fittings?
It is the obligation of the landlord to maintain any fixture or fitting provided when the property is let to the tenants. This includes blinds and curtains, appliances, door handles, tapware and light fittings. Many landlords find it hard to believe that it is their responsibility to replace consumables such as batteries in remotes and even replace light bulbs. Because these items are a fixture of the property and need to be kept in working order, if the tenant notifies their agent or landlord that they need replacing then it must be done at the owner's expense.
If you live in the local area and are able to this type of simple maintenance yourself I would recommend doing so as it is not cost-effective to send a handy man out for this type of task. If you are not able to do this yourself then I would suggest getting any other preventative or required maintenance done at the same time to minimise your call out fees. If the handyman is going out to the property to carry out some other work it is worth asking them to replace any required light bulbs and/or batteries at the same time.
- Garden Maintenance - who is responsible?
The maintenance of the gardens at a rental property is a shared responsibility between landlords and tenants. The daily maintenance such as weeding, mowing and watering is the obligation of the tenants. They must maintain the yards in the same condition as they were when they moved into the property. The landlord is responsible for tree lopping, pruning and maintenance of any irrigation or taps provided.
- What about when the tenants leave? What are their obligations regarding cleanliness?
In the Residential tenancies act it is stated that at the end of the tenancy the tenant must return the property in reasonable condition and in a reasonable state of cleanliness. The term ‘reasonably clean’ is often debated amongst tenants and landlords as everyone has a different interpretation of what they consider to be reasonably clean. For example, leaving food residue on the stove top would be considered to be unclean by the majority of people. On the other hand, there is often the expectation that tenants are to have carpets professionally cleaned at the end of a tenancy, but this cannot be enforced. The issue in question is whether the carpets have been left in a reasonably clean state, not whether they have or have not been professionally cleaned. If the carpets are heavily stained and were not in that condition at the beginning of the tenancy then it may be reasonable to expect that they are professionally cleaned to remove stains but if they are in generally clean and unstained condition then it may only be necessary that they are vacuumed.
This is where it is very important to have a thorough ingoing inspection report prepared prior to your tenants moving into the property. This report is used when the tenants vacate to ensure that the property is being returned in the same condition as it was at the beginning of the tenancy, allowing for fair wear and tear.
- Fair Wear and Tear, what is normal and what is not?
This is a very common topic for debate and I am sure that you will hear this term often during your journey as an investor. The difference between fair wear and tear and damage is another topic that is interpreted differently between different people. At the close of a tenancy the agent or landlord must take into account the condition of the property at the beginning of the tenancy and the probable effect of reasonable wear and tear since the tenants moved in. This will obviously differ depending on the length of the tenancy, you would expect substantially more wear and tear over a 5 year tenancy compared to a 12 month tenancy.
Fair wear and tear is the expected decline in the condition of the property from the tenants normal use, e.g loose door handles, traffic marks to carpets. Damage is not naturally occuring, it is unexpected and may be committed on purpose or through neglect e.g, a hole in a wall, red wine stain to carpet.
- What happens if either myself or my tenants want to terminate the agreement?
If you have signed a fixed term agreement with your tenants then the agreement terminates only in the following circumstances
- the landlord or the tenant terminates the tenancy by notice of termination given to the other (as required under this Act)
- the Tribunal terminates the tenancy
- a person having title superior to the landlord's title becomes entitled to possession of the premises under the order of the Tribunal or a court
- a mortgagee takes possession of the premises under a mortgage
- the tenancy terminates by force of a notice to vacate issued in respect of the premises
- the tenant abandons the premises
- the tenant dies without leaving dependants in occupation of the premises
- the tenant gives up possession of the premises with the landlord's consent
- the interest of the tenant merges with another estate or interest in the land
disclaimer of the tenancy occurs
If there is no specific reason for terminating an agreement then you can only do so at the end of the fixed term period. When the end of the fixed term period is approaching and you have made the decision not to renew the tenancy you must provide the tenant with 28 days notice of this. The tenants can also provide the same notice if they make the decision not to renew their lease.
You can terminate your agreement during the fixed term period if the tenant is in breach of the agreement. That is to say that they have not met their obligations under the conditions of the agreement. A breach can be non-payment of rent, damage to property or illegal use of the property. There is a process to terminate the agreement on these grounds and it must go through SACAT to be awarded possession of the property.
If your tenant makes the decision to terminate their agreement they cannot do so without being liable for compensation. This is known as a ‘break lease’ and the tenants are liable for a portion of the letting and advertising fees as well as the rent until a new tenant is secured and moves into the property. A tenant can also terminate their agreement if the landlord is in breach of the terms. This could be for disrupting their peaceful enjoyment of the property, not keeping the premises or ancillary property in a reasonable state of repair or if they would suffer undue hardship if the tenancy continued.
- What is a Form 2 and how does it work?
If there has been an issue with the tenancy where the tenants are in breach of their lease agreement the first step is to issue a Form 2 which gives the tenant a chance to remedy the breach or vacate the property within a set period of time (7-14 days). If the tenant does not remedy the breach or vacate the premises in the specified amount of time then the matter is referred onto SACAT to apply for an order for vacant possession.
The most common reason for a Form 2 being served is when the tenants are in rent arrears. If your tenant gets 15 days behind on their rent then a Form 2 can be issued. If the tenants do not pay the required amount or vacate the property in the required 7 days then the matter can be escalated to SACAT where a payment plan can be arranged or an eviction can be awarded.