You have two options

When you own a residential investment property you have two options. You can either manage the property yourself or you can use a real estate agent to manage it for you. In making the decision about whether to self manage or not, there are some important issues to consider.

• Will you save money by managing it yourself?
• Are you prepared to organise all the repairs and deal with tenants?
• Are you ready for the responsibility that this involves?
• Do you know what your rights and responsibilities are?
• Do you know the tenant's rights and responsibilities?
• How do you find out?
• How will this affect your tax?

The following information will explain some of your options and responsibilities regarding property management.

Top of page

Managing a rental property

Before you do anything about finding a tenant, read our publication the Tenancy handbook which provides comprehensive information about the rights and responsibilities of tenants and landlords under the Residential Tenancies Act 1987.

As a landlord you are obliged to give a copy of the Renting guide brochure to your tenant before the tenancy begins. It is available in two versions, one providing contact numbers for tenant advisory services in the Sydney metropolitan area and the other for regionally-based services. The Renting guide is also available in 17 community languages. Pick up a copy in any of these languages from a Fair Trading Centre or the Renting & Strata Services Branch of the Office of Fair Trading.

You will also need to buy a residential tenancy agreement for you and the tenant to sign before the tenancy starts. These are available from large newsagencies or stationery stores and often come with a copy of  the Renting guide.

Whether you decide to use an agent or manage the property yourself, as the landlord you are always required to follow the provisions.

A landlord must:

• give the tenant a copy of the residential tenancy agreement (lease), property condition report, a list of all entry costs and a copy of  the Renting guide at the beginning of the tenancy
• ensure the property is vacant, reasonably clean and fit to live in at the start of the tenancy
• lodge the bond if it is charged
• pay for all water and sewerage service charges
• ensure the property is safe and secure
• carry out necessary repairs to the property
• issue receipts for rent paid in person or by post, and 
• respect the tenant's peace, privacy and quiet enjoyment of the property.

A tenant must:

• pay the rent on time
• keep the property clean and tidy
• tell the landlord when repairs are needed
• not use the property for any illegal purpose
• not alter or add to the premises without the landlord's consent
• not sublet the premises without the landlord's consent, and 
• not keep pets without the landlord's consent.

Top of page

Using an agent

Managing through an agent might sound expensive but in the long run, it may be the best option. A managing agent can act as a buffer between you and the tenant, especially when there are problems. The tenant may see an agent as having more clout, particularly as failure to pay rent may result in eviction. A managing agent's responsibilities include:

• finding and screening tenants
• signing a tenancy agreement
• lodging the bond with the Office of Fair Trading
• dealing with tenants in all matters
• arranging repairs to the property
• collecting the rent and transferring it to your account, and 
• conducting property inspections.

The agent you choose should always have your best interests at heart so shop around and ask plenty of questions until you find an agent you feel comfortable with.

Top of page

Property management agreements

When you enter into a property management agreement the terms and conditions are binding.

You may be able to specify that repairs costing more than say, $100, require your approval. The agent will then handle minor repairs up to that amount.

Agreements must be terminated in writing. Standard agreements for property management usually contain a clause stating that a notice period applies to the termination of the agreement. It is in your interests to keep the notice period short, say a month or two.

A number of real estate industry bodies have codes of conduct for their members. If you're unhappy with the conduct of an agent, check to see if the agency is a member.

Top of page

Agency fees

Most agents charge a commission fee based on a percentage of the gross annual rental. This can be negotiated but it is usually 5-10%. The agent usually sends you a monthly account but more frequent payments can be negotiated. The account shows the amount of rent paid to the landlord less any costs and agent's commission.

The agent also charges the landlord a letting fee for reletting the property to a new tenant. The letting fee is usually the equivalent of one week's rent but, as with all agency fees, it is negotiable.

The cost for minor repairs is usually deducted from the rent and listed in your monthly statement as a separate item. Most agents will make a copy of the receipt available to you upon request.

Property management fees are not set by law so you can always try to negotiate the fees with the agent.

Top of page

When things go wrong

If you are managing your own property the first step in solving a dispute is to discuss the matter with the parties involved. Check the tenancy agreement and read The tenancy handbook or call the Office of Fair Trading for help in clarifying the situation.

If you still can't resolve the problem, you may have to take your case to the Consumer, Trader and Tenancy Tribunal. The Tribunal is an independent decision-making body that hears and decides on applications for orders.

Top of page