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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 Investor's Handbook. My name is Colleen Sutherland and I am the Principal and Director of Sutherland's Property Management. I've had Aaron with me a couple of times and he's with me again today.
Thanks, Aaron. Hi, how are you? I'm well, thank you. In our last podcast, we were talking about the legislation changes that have come in. And in particular, right at the start, we were only having two, but now we've got 2. A and then in May 2025, we'll have 2. B. So we'll talk about them then. But I just wanted to talk more with you today about the most recent legislation changes and the ones leading up to it, but the most recent ones, you know, off the top of our head because I think we're all getting used to all the other ones.
So when a tenant signs an agreement, sort of like a contract, but we're not calling it a contract, but they've signed an agreement to move in on this date and move out in 12 months time. So life moves and then in between that time, they've got to break the lease.
So, There's been more framework around that for the tenant and in favour of the tenant. Can you, help me to explain that please?
Yeah, so that particular change is interesting just in the way that they're going to be calculating things. You know, the, the previous law was that if the tenant chose to take a 12 month lease and six months in, they needed to vacate early.
Some in the industry might say there's no such thing as a break lease, Colleen, it's a Oh, that's right. Yes. It's an early vacate. Yeah, it's a breach of tenancy. Yes. And so let's say they did vacate in six months. You know, of that lease agreement, they would be responsible for reasonable re letting costs, which usually covered the let fee of one week's rent plus GST, the advertising that the owner would incur, and then they would continue to pay rent, but it would be then known as Compensation for loss of rent up to and including the day before the new lease started.
And I don't think that was a bad way of doing things. I think that, the government could have kept that law the way it was, but maybe tweaked certain aspects of it. But now they've kind of done it on a scaled amount where they're looking at it saying, 12 month lease. They've lived there for three months and they want to vacate, so they've exhausted 25 percent of the 12 month tenancy.
So they're going to be charged, you know, whatever the fee, I think it's three weeks rent, is it?
I think so, yes, I was just looking at it in there. Four weeks rent.
Yeah. in our notes, but. Yep. What I don't necessarily agree with is the removal that's the only thing that you can charge. So what they're saying is it's okay for the tenant to need to vacate.
And I agree that they should be, there should be reasons where they can get out of a tenancy because people's circumstances do change. We know that happens. That's reality. But it's not the owner's fault that person's circumstances change. And some are saying that the arrangement for advertising is an agreement between the landlord and the property management agency.
And it is, but if that tenant. Is vacating and that owner is then going to already paid. Yes. They've already paid advertising once to find that tenant. Now they're going to incur an additional, advertising fee because that tenant has had a change of circumstance and not honoring his agreement. Correct.
Not honoring the agreement till the original end date. And it's not unreasonable to then say to the tenant, we will do this for you. We can advertise to find you a new tenant, but it's going to cost you this much because you need to reimburse the property owner for that cost, because they weren't expecting to have to pay for it again, because they paid for it, yeah, three months ago when they found you.
So, yeah, I think that they could have kept that in there. It's going to be a tricky one because I think
kept it in there, but understand why it's in there. Correct. very much. And I think, you know, it won't be until there's been some QCAT, cases, set as precedence. That's not always a good thing, but, you know, set as precedence on those costs.
Yes. Yeah. Yeah. So, the next one is, paying for utility bills. and Minimizing that time the tenant has to pay and that sort of thing again maximizing that time.
Yeah So again, I think we're talking about majority minority. Yes, and there would be a minority very you know, very small or a few landlords that We're a bit lazy with passing on their water charges, and, you know, rightfully
property managers are not personal assistants. We look after the property. We don't handle their personal affairs, their financial affairs, reminding them to send bills through to us and all those kind of things. That's not really our responsibility. If they do want us to pay the bill, there's a method and a process they can follow.
Yes, that's right. sent to us, so that we then get the bill and we take action. Yes. So I do think that I can understand why the government are putting a bit of a tightening around this, but I still think it's going to create a lot of headaches because You know, they're kind of saying now the landlord has to pass on that bill within four weeks of receiving it.
Well, is it receiving it or is it issue date? Because that's still up in, in arms.
Well, most, and I think that's probably why they're getting a lot of people to receive things by email.
Yes.
And then that's to flick it straight onto ours. Yes. To issue to the tenant.
So what I'm seeing though, and tell me if you've experienced this in your office, A lot of businesses will opt to have email bills because it's much easier than going to the P.
O. box and picking up 50 or 100 water bills. However, I'm seeing that there is more error for taking the email option because it's so much easier for that bill to never arrive in your inbox. And that's a good thing. And I'm sure some landlords probably think that we're lying when we say to them, I'm really sorry, Mr.
and Mrs. Smith, we didn't get the bill. If we had have got the bill, we would have paid it for you. We've been paying your bills for the last two years. Or it goes into your junk or Correct. It goes into cyberspace and you never see it. And they're legitimate reasons as to why we don't get it. But that's not going to fly in this instance.
Because if we So, if we don't receive it, and then we can't pass it on, then the owner is not going to be able to get reimbursed. be a disadvantage. A disadvantage, exactly. And then guess who they're going to expect to pay that water bill? Yes. The agency. Mm hmm. So, I still think that we should actually be getting them posted via to a PO Box.
I do too, yeah. Yep. Because it reduces the loss. I mean, sure things still go missing in the mail every now and again, but less risk, probably less likely. But I think that there will be some things that will come out about this, where there will be. potentially a lot of landlords that won't get them out on time.
They won't be able to claim that money back. And I see two things either happening. If you're an agency that is currently charging a fee to process water bills and collect that, then You'll need to put some stronger processes and contingencies in place to protect yourself so that you don't end up having to pay that water bill.
But if you're an agency that's currently charging and processing water bills and not charging for it, they're going to just push back and say, we're not doing it anymore. Yeah. So you simply, you pay it. Once you've paid it, you send it to us and we'll collect the tenant side of things, but you still need to do it in four weeks.
Otherwise, you're not going to get your money. Yes.
Yeah.
And I think that's a little
bit unrealistic. So, If the owner doesn't have the bill directed to us, to the agency, I think that it's so easy for the landlord to miss giving it to us. And many times we've got, oh, here's four water bills. Well, that's a whole 12 months.
Legislation states we can only go back six months. Six months. And, and sorry, we can't claim it. Not even if it goes to QCAT, they will knock that back.
I think that there is a lesson here for the landlords too, and it is going to help them to be a little bit less tardy. Yes. So if they are forgetful, we all, as humans, we often, you know,
we all forget.
We're all guilty of it. Unwell, they could be away on business, overseas on holidays, and you think, Oh, did I pay that water bill? Yeah,
exactly. It can sometimes be easily overlooked. Yes, but I think it will give them a bit of a shake up that, a proactive office will take the approach as I'm sure your office has done, where you would have emailed out the clients and said, Hey, this new law now applies.
Please understand, even if you send it to me four weeks and one day. Yes. I'm not going to be able to collect that money for you. So you need to get better at either remembering to send it to me, have an auto forward set up so that when the bill pops in your inbox, it also comes to mine, or do something to safeguard yourself because I'm not going to be paying your tenants water bill because you didn't send it to me on time.
Yes. Yes. Yes.
And I know that sounds like a bit of a harsh stand, but we need to, Again, this word proactive. Minimize any risk management to the landlord. And you have to take, as a landlord, you need to take some sort of responsibility, or how can I set this up to go straight to them so I don't even have to think about it.
Because it's QCAT that are going to knock it on the head.
Yes, correct. Yeah.
One of the other ones is the rent free option to pay your rent. Now, I was all up in arms because no other business gives you a rent free option unless you're a direct debit and you pay the bill direct debit. Not even when I get, say the electricity bill.
in the post and I keep getting emails, text messages to say put it on email and you know, you won't ever forget one. But like you said, when it comes in a bill format, you're sort of a little bit more aware. So, you know, you get charged 2. 20 to have a printed format come to you. And I'm being charged 2.
75 by Netflix because I won't have a direct debit because I want to sort of be a little bit more in control myself. But it's now come that unlike any other business, we have to opt for that rent free period. Yes. So I think
it's, I think my opinion of it is that the government are looking at it that the tenant is paying rent.
Obviously housing is a necessity. So they're looking at it going, well you shouldn't have to pay a fee to pay your rent. But, having a mobile phone, some would say is a necessity, especially if you're someone with a disability and you require that immediate, you know, access to a telephone for whatever reason.
Having electricity and running water, I would consider would be a necessity. But those companies haven't been scrutinized the same way that landlords continue to be. Yes. In saying the poor tenant, the poor tenant, you have to give them a free option to pay. Yes. It's not right. So the electricities can still profit and make so I think they are looking at it incorrectly.
Yes. The other thing that I think that no one is actually paying attention to, the whole reason that these payment platforms became available in the industry. was A, people wanted to be able to know that we'd received the money faster. Yes. Banking processes have thankfully caught up a little bit.
Unfortunately, they're still not where they need to be in that I can send money to you, Colleen, and I can do it via an OSCO payment, and you'll get that money instantly. Straight away. Unfortunately, OSCO payments don't work the same just yet with trust accounts. Right. When they do, that will make it much easier.
The sooner they fix that problem, and we can say to the tenant, pay your rent today, oh yep, we can see it in there today, then we won't have an issue. They've brought out these payment platforms to make it streamlined, to make it faster, to make it more convenient. Reduce human error. Reduce human error. But also reduce trust account fraud and no one really looked at that, right?
There were so many instances where tenants, not just tenants, but contractors, creditors, whoever, suppliers, all had access to your trust account information. And I remember about six years ago where I got called into a situation where a tenant had vacated, The vacate didn't go quite well and the tenant was a little bit sour.
And so they gave the agency's trust account details to their gym and to their other insurance, to an insurance company and set up direct debits to direct debit the trust account for their monthly premiums. Wow, I haven't had that one. Right? Yeah. Now this is what the governments aren't really looking at or thinking about.
Maybe they're looking at it that kind of fraud is getting less and less because of banking technology getting better and perhaps it is, but it was a more about thousands of tenants or thousands of landlords or thousands of plumbers and electricians. Having someone's bank account information. And how easy that is to then create a fraudulent situation.
And cipher money or transfer something because they've got your BSB, your account name, your account number, you know. And so, That's why they came in. Do I think that tenants should pay a fee to pay the rent? I don't think it's a bad thing that they have to. I think that they could be, maybe they could streamline it a little bit and just say, look, I think that 3 is a bit excessive.
It should only be a 1. 20 or a dollar or 99 cents or whatever it is. But yeah, I think it's going to create a lot of problems and really the only way that the agency will have to get around it now is to allow tenants to continue to direct deposit into the trust account. It's
direct deposit or cash?
Yes. No one takes cash anymore.
Well, no one wants to get in the car and drive to the real estate office and pay the cash.
We haven't, I haven't been in an agency that's taken cash almost since I started like 2006. Yeah. Yeah. But it's also an insurance aspect as
well. Absolutely. Yeah. Yeah. We could talk all day about these legislation changes.
We haven't even touched the surface. I know. We're very passionate about it, but, unfortunately time's beating us. So, thank you so much, Aaron, for joining me again today and hopefully we can do some more podcasting in the future. We will, I'll be back for sure. Thanks for having me. Thanks so much, Aaron.