Sponsored by Terri Scheer
Cameron Bayley
Around 71 per cent of Australian property investors own just one property, ATO data shows. It follows rental property owners are far less likely to be estate magnates building an immense portfolio, but rather middle-income couples investing in something they can later sell to help fund retirement.
This also means that despite what some rental myths may have you believe, most landlords are regular people trying to protect their investment. Although stereotypes and misconceptions abound, solid information can help. Here are some common myths you might be able to disregard.
MYTH 1: Landlords prefer single tenants to couples
Thinking landlords prioritise a single occupant over a duo is more a symptom of application anxiety than reality.
Your prospective landlord is more interested in how responsible you look, says Maria Carlino, national head of property management at The Agency. “The biggest thing, or the most important thing, for our owners is to have tenants that actually look after their property. That’s number one.”
Focusing on an applicant’s relationship status can raise anti-discrimination issues. “This belief can conflict with anti-discrimination principles,” she explains.
“Under law, landlords and agents must not discriminate based on relationship status. Applications should be assessed on objective criteria such as financial capacity, rental history, and references – not personal characteristics.”
MYTH 2: Offering more rent will get your application over the line
Tenants shouldn’t mistake a rental viewing for an auction, and offering above the advertised rent is not permitted in some jurisdictions. In NSW, Carlino notes that rent bidding is prohibited. “The NSW Fair Trading guidelines make it clear that landlords and agents cannot solicit or encourage offers above the advertised rent.”
Even if applicants offer more, it shouldn’t hold any sway, she adds. “Agents must not create competitive pressure or run a bidding process. Selection should be based on suitability, not who offers the highest rent.”
In fact, as renters become more aware of their rights, Carlino says they may be more likely to challenge this. “They may dispute it with the NSW Civil and Administrative Tribunal if there is a situation that they’re not happy with.”
MYTH 3: Tenants are liable for any damages
From time to time, tenants may accidentally cause damage – whether it’s breaking a light fitting or cracking a window. Depending on the circumstances, landlords may seek to recover some repair costs from tenants.
However, this isn’t to say that all damage is the tenant’s responsibility. There’s an important distinction, Carlino explains. Citing the Residential Tenancies Act 2010 (NSW), she notes a distinction between issues “caused by negligence, misuse or intentional acts” and “repairs arising from normal use”.
Just as we humans aren’t immune to the ravages of time, neither are our homes. “Tenants cannot be charged for general ageing of the property,” she states. Things such as worn-out carpets, peeling wallpaper and locks breaking down – general wear, tear and gradual deterioration – are generally matters landlords will need to address.
MYTH 4: The landlord’s insurance covers tenant property
One error that tenants often make is trusting that their landlord’s insurance will cover them in case of a break-in, for example.
That’s not generally how landlord insurance operates. “Landlord insurance is designed to protect the landlord’s asset, not the tenant’s belongings,” explains Carlino. “Tenants may wish to consider their own contents insurance if they want protection for their belongings.”
For owners, however, having landlord insurance can make sense. A specialist policy may help cover costs such as tenant damage or loss of rent in the case of an unexpected vacancy, depending on the policy terms and the circumstances. “Even if you’ve got reliable tenants, you can’t predict what will happen in the future,” says Carolyn Parrella, head of customer service at Terri Scheer. “They could lose a job, or their relationship could break down, or they could get a medical illness that prevents them from paying the rent.”
MYTH 5: Tenants can’t do any repairs
Real estate agents are used to getting calls for very small crises, from a stuck door to the unwelcome appearance of cockroaches. While tenants should advise their landlords or agents of any alterations they’re making to the property, in NSW, they may be able to carry out certain “minor repairs” under the Residential Tenancies Act 2010 (NSW). These are intended to be low-level actions, like arranging pest control, or installing child-safety gates. In some cases, tenants may also be able to seek reimbursement for eligible repairs, subject to any requirements or limits in the legislation and their lease.
It’s one reason why having healthy communication between those living there and the owner (via a property manager) benefits all. “When your tenant knows what you expect from them in regards to taking care of the property, they are much more likely to look after the home in the way you want them to,” says Parrella.
Terri Scheer is Australia’s leading landlord insurance specialist. For more information, visit www.terrischeer.com.au.
This article is general information only and does not take into account your objectives, financial situation or needs. Consider whether it is appropriate for you and seek independent advice before making any decisions.
Insurance is issued by AAI Limited ABN 48 005 297 807, trading as Terri Scheer. Before buying insurance, read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) available at www.terrischeer.com.au.
