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Discover the secrets of successful property management and investing on "The Property Investors Handbook" podcast. Join Colleen Sutherland as she shares expert insights and strategies for acquiring, managing, and maximising returns on real estate investments. Whether you're a beginner or seasoned investor, this podcast is your essential guide to navigating the world of property investment. Tune in and unlock the keys to financial success in real estate.
Produced by Pod Pro Australia
Hello and welcome to another episode of the Property Manager's Handbook. My name is Colleen Sutherland and I am the Principal and Director of Sutherland's Property Management.
Today again I've got Aaron with me who is a wealth of information and I had more to say or more to hear from him. So welcome Aaron. Thanks for having me again. That's okay. Hey Now we left off talking about how we met. The business structures, what you're doing now and why you're doing it. business owners.
And again, it's to better serve the clients as well. But one thing I wanted to pick your brain about or just chat about is the new legislation. So we had the pandemic in 2020 and straight up, we got an emergency response, but I feel like that was a segue into changing the way we do things.
everything.
Yes, I agree.
So what about, like the first changes? You sort of like, it felt like Are we easing into this? Yeah.
I think that they did need to stage it in some ways to help people prepare for it. I think one of the things we do very well as property managers is learn how to pivot and pivot very quickly.
I think that some of the new legislation changes, are definitely necessary to help balance things out a little bit and, you know, for the most part, it's always the minorities and the minorities are the ones that scream the loudest and, you know, you jump up and down and get their way a lot. The minority of landlords might be doing the wrong thing, but the majority are doing the right thing.
The majority are mum and dad investors, just trying to, you know, get ahead, yeah, get ahead and build for their future. So I think that some of the new legislation is necessary. I mean, definitely I fully support the, the new laws around domestic violence. You know, that definitely needs to be in play.
I also
really support the minimum housing standards. So they put a structure around that. Other than just. Throwing it out there and seeing what happens, which is what the legislation used to be about, but now there's more of a framework around that. Yes,
so the minimum housing standards, absolutely necessary.
Domestic violence, absolutely necessary.. Capping the number of rent increases per year, maybe not so necessary. Yes. Because I think what the government don't understand, and they don't understand it because they really don't interview enough of us individually.
Sometimes I think though, do they interview us?
Yeah,
well I think that they're probably not, either they're not listening to us or they're not asking the right questions. Yes. I mean, it's interesting when they always say, we've taken advice from the industry here. I've never been asked any questions from the government, otherwise I'd happily answer and give my opinion.
But, for example, the rent increases, you know. Yes. You would know, as I know, I had clients where they would do a six month lease, they might put the rent up by 10, then they'll do a 12 month lease. Yes. And then they may have another rent increase built into that 12 month lease to go up another 10. Now some might say that's greedy and that word gets thrown around a lot and I don't like it because I don't think that landlords are greedy at all.
No. I think that If you look at the way that the staggered rent increase used to work, it was good for the tenant because it gave them time to prepare. For a new budget. It gave them time to plan and prepare for that increase. But it also gave them security. That they will be in that property for two years or three years or whatever that term might have been.
And yes, there's going to be staggered increases in that time, but they have time to prepare for it. Yes. Rather than now with the new laws, we're seeing landlords go, okay, well, if I can only do it once a year. It's going to be this much money. It's going to be a big increase, 100, 90, whatever it might be, because they're not going to get that opportunity again.
I think as well, I kind of see why the government want to do it. They're trying, they are trying to push for longer term leases. And I support that in some ways, but I also think that landlords should be able to still have those staggered rent increases and retain control a little bit. Yeah. So there's definitely some new laws that.
I support. Yes. But there are some new laws that I think have tipped the balance a little bit too far.
Yes. Yeah. Yeah.
Yeah.
So we were going to, we always got told that we were having a two stage, change, which is fine. And it came across a lot of, different areas, you know, down to repair orders, and forcing the landlord to make that repair.
And again, in some ways, that's great because that landlord. only wants to do the bare minimum and sometimes it's got to go beyond the bare minimum for minimum housing standards. Yes. But I felt that it was a little bit of an overreach of, dictating to the landlord what he should be doing and giving more back to the tenant.
Yes. And at the end of the day, like you said just before, that it's just the majority that it affects. The majority of people or landlords are excellent landlords. Yeah. And they fix things, they, you know, have got it as an investment so they're not just going to tip you out and things like that. But I think where it's come into play is that it's so far the other way.
Yeah. That, and what I've seen in my business, and just in one month, and again, not a huge business. Six landlords went, I can't do this anymore. Yep. There's no benefit in it for me. And they sold. And they're selling.
Yep.
And it's.
So I think, you know, because it was the minority that were doing the wrong thing.
Yes. A better way that the government could have handled it would have been to work more closely with industry, with property managers and business owners on the ground and say to them, okay, do you have any tenants that have complained about maintenance not being done? Yes. Do you have a landlord that's not doing maintenance regularly and refuses to do maintenance?
Now, you're not going to be penalised if you dob them in or if you give us their details and tell us who it is, but it's so that they can then individually go to that person and say, Hey, these are your obligations and requirements under the law as a landlord that you must do these things. So we're going to give you six months or 12 months to do it.
And if you don't do it, then we will enforce some kind of penalty. But instead, they went. The ula? Yes. And did the whole change, that's what I was about to say. To affect the majority. Yes. So now everyone is suffering with the new laws that are tipped in favor of the tenant and the minority are laughing because they're still not doing what they should be doing.
Yes. In some aspects, but the government are too, like a toothless tiger. They don't have anyone on the ground. Then going around and checking that. There's minimum housing standards in place, and that the property has been brought up to, you know, spec and legalities and all those kind of things. So it's interesting, but I think they could have definitely done it working closer with industry to really narrow down.
Narrow it down, that's right. Who are the real problematic landlords, because there's only going to be a handful. Yes. Let's focus on them. Let's educate them more about what their obligations and requirements are. Then let's give them 6 or 12 months to fix things and if they don't comply, then we come down on them.
Then we say to them, you're obviously not fit to be a landlord because you don't want to look after your property and you're not concerned about your tenant's health and well being. Yes. Get out, sell your property and move on. But for the ones that are doing the right thing, now they're being penalised.
Like
they cast the net over everyone. Correct. And they've caught the easy ones. Yes. Basically. Yes. So what I find is the government tend to throw it all out there for both tenants and landlords and just throw it out there and see what happens.
Yes. There's not a lot of thought in
it. And that's where that proactive approach, which is not something that renowned to do.
And I don't want to government bash. It's just that they are so tunnel vision on certain policies that it affects so many people. We've had to pivot so many times to make sure we are working. within the new compliance because the threats of fines and penalties and if you don't do that, this, then we'll do that.
It's sort of like, hang on a minute, pull up with the sledgehammer approach and let's work through this. So they give us such, strict timelines of when it's to be implemented. We got one, was it in June? I think that we got one, we had two weeks notice. that the rent increase now isn't with the tenant, it's at the property, which is two separate things.
Yes. So I just find that you really need to work with a proactive property manager to be on top of these changes. And these are some of the changes just in recently that we've had. So let's just, work through the ones that came in on the 30th of September, 2024. And what it actually means. The first one was the new bond maximum.
Yes. What are your thoughts on that?
Look, I think that I don't think that it's the right way to go about it. I Think that what they could have done is kept the legislation the same In saying that if it is over 700 a week that it is negotiable But still put a limit around that negotiation. Yes Because sure, there might be again, a minority that might take advantage of that and say, Okay, well, I want you to pay seven or eight or nine or 10 weeks rent as your bond because I can ask for it.
And that might be a bit excessive. But they could have said, If the weekly rent is 1, 000, then it is negotiable, but up to a maximum of six weeks or a maximum of seven weeks. Because
when a tenant is in default, and those tenants do go into default. Absolutely. A week of, rent and versus their bond is used up extremely fast.
Yes. And then there's nothing left for the cleanup costs, get rid of that rubbish, fix those holes in the walls. And unfortunately, they happen. No matter how much rent you're paying. So,
well, if you consider, and I've always worked off this, theory as well and kind of calculation, most bond cleans are about the equivalent of one week's rent.
Easily. On par. Yeah. You know, 700 a week, you could expect that you're going to pay 700 to 800 for a bond clean. 2, 000 a week, you're probably in a very big house or a, a much bigger property anyway, at least. So there's going to be more work there. So it probably could be a 2, 000 bond clean. So you're right at capping it at four weeks, it doesn't leave a lot of.
Security for the owner that if they do fall six weeks behind, well, there's 6, 000 gone. You've got 2, 000 left to clean it, do some repairs and restore it back to its original condition. Yes. So.
Yeah, and I find that, didn't it used to be 700 with, and then over, oh sorry, 750, and over that you could sort of negotiate a bond.
So, now they've reduced the amount of,
My understanding of it was that it was, If the rent is 700 or less, four weeks, 700 or more, could be negotiable. Right, I thought it was 750,
but yeah. So now it's just across the board, no matter how much your property is, four weeks max. That's it, four weeks maximum.
Yeah.
And you've got to think, There's probably not many of them, or not as many these days, except in more of the regional areas. However, the regional people will tell you as well that rents are ridiculously expensive out there. But once upon a time you might have had a rent roll with a lot more properties that were 300, 350, 375, 400 a week.
Those rents have obviously gone up. And so if you're only saying 350 a week, times four, we're talking a maximum of 1, 400 for bond, then, you're, you're even more so where you've got such a lesser amount. So it's even
more important now for property managers that when the rent goes up, so does the bond.
So you were just saying that it's only in Queensland that we can top the bond up like that to match the rent increase. As opposed to the four weeks bond held it with the bond board.
Yes. So I think that it was either WA or South Australia where it used to also be, available, but my understanding now, and obviously I am Queensland trained and licensed, so I'm not a hundred percent across the other legislation, but I know bits and pieces from working with other agencies.
But Queensland is one of the, the only States now where bond top ups are still possible. Yes. But unfortunately. And it's vital. It is vital. Surprisingly, so many property managers don't do it. And they don't top
the bonds up. Yeah,
they don't do it. Oh. They don't follow the process correctly. And they don't look at it as significant.
Crazy, isn't it? Yeah. Because what, they'll look at it and go, okay, if the rent went up $20 a week, then the bond is only increasing by $80. Yeah. Now that mentality is, it's only $80. It's only $80. What's that $80 gonna do? . But that $80 could be the difference between having enough to get the carpets clean, to have a pest control.
To
pay the
water. Pay the water bill. Yeah, exactly. So they don't look at it as ne necessary because they look at the amount as minuscule. Yeah.
Yeah, yeah, yeah. Hey, let's keep talking on those. Legislation changes in the next podcast because, there is so much to the detail of what they just throw out and go, well, you can't do this anymore.
So let's talk again in our next podcast, but thanks so much for being with me today, Aaron. It is great to be, bouncing off somebody else, with these legislation. Thank you. I'm glad to be here. Thanks so much.
Thanks.