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Love Thy Tenants And Thou Shalt Be Rewarded

Wednesday, March 06, 2013


Last night we had our inaugural APIA landlord tenant round table discussion at the North Auckland meeting group.  The panel consisted of landlords, tenants and those who are both a landlord and a tenant.    While we accept that the Residential Tenancies Act outline the legal framework within which landlords and tenants must operate, at the end of the day, residential tenancy is about people doing business with people.  A successful business relationship stems from good communication and also an understanding of the other party's approach.  

I am going to take this opportunity to reiterate our position - The Auckland Property Investors' Association is not anti-tenant.  We are however anti-bad-tenants just as much as we are anti-bad-landlords.  As we represent buy and hold investors who value long term tenancies and sustainable working relationships, we advocate strongly for the improvement of tenancy literacy both for landlords and tenants.    As such it was incredibly beneficial to hear from both landlords and tenants last night.  The session teased out some really valuable information and I thought it would be too cruel not to share.


Landlords and Tenants - 2 Different Approaches To Residential Tenancy


  1. While many landlords (in particular those who own more than one property) deal with our rental properties in the collective, tenants approach tenancies from a very individualistic point of view.  You are dealing with a number of properties, your tenant is dealing with one property and one landlord.  
  2. Tenants like the flexibility renting afford their lifestyles.  What they dislike is the lack of control they have over their own homes in terms of aesthetics, maintenance and repair.  To that end, tenants appreciate a landlord who is reasonable and open enough for them to have input in the aesthetics, maintenance and repair of their own home.  Oftentimes those who are reasonable will not make outrageous requests and are happy to pay for their suggestions. 
  3. It is also not uncommon that landlords too feel a sense of disempowerment.  From a landlord’s point of view, exclusive possession by the tenant means that we are relying on our tenants to look after our investment properties as we cannot always be there to protect the property. 
  4. When tenants are informed of a rent review, they often go on Trade Me to look at what other rentals are out there on the market.  Notices of rent reviews can be very unsettling so tenants tend to act upon that sense of uncertainty and look at contingencies.  
  5. Like landlords, tenants treasure a sustainable working tenancy relationship.  Both parties are aware that residential tenancy is a business transaction that is over and beyond the simply weekly rent payment and receipt. 


Practical Tips and Reminders for Landlords


  1. Water being one of the most damaging element for properties, if you own a block of flats consider installing isolating valves for all units so you can contain water damages to one unit when they happen.
  2. Orientate your tenants so that they are aware of the site layout, location of the water main, power meter, water meter and fuse box.  With this knowledge your tenants can quickly isolate the source of property damages when they happen.  While your tenants mitigate the damages, you will buy yourself some time to get on site.  For those who are inclined, consider giving your tenants a tenant pack containing all of the above information so they have an information source for future reference. 
  3. Consider giving your tenant a list of contact details for your tradesman network so that in case you cannot be reached during an emergency, there will still be a mechanism whereby damages are being addressed to straight away by a tradesman.
  4. The best time to adjust rent is immediately after a tenancy and when you have had a chance to clean up and update the property.  
  5. Regular inspections can not only help you keep on top of your maintenance schedule but also establish your presence as the landlord.  By sending a message that you take a hands-on approach, you can spur your tenant into keeping on top of their rent payments and keeping the property clean and tidy.
  6. If time and resources allow, drive by the property every now and then.  There is a lot of information about the state of the property to be gained by a simple drive by.  But don’t forget your tenant has exclusive right of possession (subject to RTA exceptions) so drive by only, don’t commit trespass. 
  7. As much as you are able to, be present during routine maintenance and repair (such as water-blasting and gutter cleaning) because again that helps establish your presence on the premises. 
  8. Replace the batteries of smoke alarms when you inspect the property.  There are some services out there that will charge you an astronomical amount for replacing smoke alarm batteries regularly when at the end of the day it does not cost that much to buy some batteries and have them with you when you inspect the property.
  9. Rent increases are inevitable in an environment where landlords are meeting raising costs.  Tenants are not unsympathetic but most of them are unaware of the difficulties landlords face.   Communicate reasonably and responsibility with your tenant, turn their minds to the increasing expenses you are faced with and you will find good tenants will be a lot of receptive of a reasonable amount of rent increase.
  10. Be aware of your RTA rights and obligations because tenants are becoming savvier.  The by-product of a seller’s housing market is an increase in the number of people who will struggle to buy their first home.  Specifically there will be a growing number of young professionals who are educated and empowered enough to understand their rights and obligations as tenants under the RTA.  As such it is important for landlords to be aware of, at the very least, unlawful acts they can potential commit under the RTA so to keep disputes and disruptions to a minimum.  
  11. After you had given notice of a rent increase and two weeks before the new rent becomes chargeable, send your tenant a letter, email or text to remind them to change their automatic payment authority with the bank so that the right amount is paid on the due date.  
  12. When notifying your tenant of rent increase, consider inserting the following at the end of the letter: Please be aware that it is your right as tenant to make an application to the Tenancy Tribunal under s25 of the Residential Tenancies Act for a rent reduction should you consider the new rent to be substantially over market rent.  It is not that we want our tenants to challenge rent increases but instead it is a message to our tenant that there is not underhandedness in our assessment of market rent and that as landlords we have nothing to hide.  
  13. All landlords should have a clear idea of how rent arrears are to be managed, addressed to or even tolerated.  However if you are aware that a tenant is ‘sailing close to the wind’ financially, it is vital that you act quickly the moment rent starts to fall behind.
  14. Market rent is the manifestation of the collective charging behaviour of landlords in an area.  Be aware that if you are under-renting your property substantially, you are essentially driving down prices for other investors and that will in turn affect the value of your rental property.  

Finally


A massive thank you to Roger, Tim, Bex and Huw for taking part around the round table last night.  Residential tenancy is about human interaction and you guys had been tops at giving us insightful information on your perspectives! 

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