The Amendment Bill in October 2010 was introduced to support the housing market towards improving transparency of the RTA. Months later I see it moving in opposite directions. Looking at recent tenancy orders there are many signs that treating tenants and landlords equal was never the real agenda.

How minimize risks when signing a new tenancy?

As landlord you only have one chance to get it right when choosing a new tenant and for managing related risks. That chance is when signing the tenancy. Before offering a tenancy you as landlord need to be certain. As tool you possibly have in place is the tenant screening process. But the only protection that can save you thousands of Dollars for rent arrears or damage repair is the tenancy agreement. Even then a outcome at the Tenancy Court will surprise you as the adjudicators are not bound by other tenancy precedents and they can 'wing it' with astonishing results like this in a recent case. The adjudicator introduce the term “first time tenant” meaning that the tenant could pretend not knowing and did not need to give any evidence.  So put it down in your tenancy agreement!

Delayed procedures cost a fortune

When a tenancy fails a sensible decision would be to move on. The eviction process can be costly. For instance, to evict a tenant for rent arrears in a periodic tenancy the landlord has to give 10 days notice and can parallel file an application at the Tenancy Tribunal for terminating the tenancy if the rent is 21 days or more in arrears. The procedure can be so time consuming that the landlord has to claim weeks of unpaid rent. Obtaining finally an order, see the article “Debt Recovery – Is debt collection a problem for you?”  the likelihood to recover debts is slim.

The solution is a fixed-term contract with a short duration

Even an optimized tenant screen process cannot protect you from outstanding payments. One successful solution for that is the keep the time frame for a tenancy as short as the advanced payment cover. We only offer short fixed-term tenancies and have a renewal process in place to serve the interests of both parties. Good tenants are cooperative and who are not might not be the right tenants anyway. But if something goes wrong, for both parties the tenancy ends painlessly with no delays.

In a nutshell, landlords who do not adapt by re-developing letting procedures and customized tenancy agreements lose money. Taking control over the duration of a tenancy is an effective way to manage risks. In a worst case scenario, the loss of a week rent and the inconvenience to find a replacement tenant are minimal compared with weeks, even months of battle to get something sorted with help of the Tenancy Tribunal.

And regarding the enforceable compensation for damage the limited amount of maximum 4 weeks rent won’t pay landlords’ bills anyway – right?

Be careful - you can’t afford to lose!

Klauster

NB The Home Owner's Blog