In the third instalment of our autumn news season, we turn the focus on property management. Autumn has been an exciting time with our expansion of management services into Geelong. We also take a look at assessing tenant applications with no rental history, and finish off with some analysis of changes in the legislation that will affect the rental market this year.
PORTFOLIO EXPANDS INTO THE GEELONG MARKET
We have been recommending Geelong as a prime investment location for some years now. Its increasing population, infrastructure (old and new), and relocation of government agencies are just some of the macro forces too hard to ignore. As we have purchased a growing number of Geelong properties for clients, the question has often been raised: when are you going to open a management branch in Geelong? Well, we have an answer…..now!
We’ve opened an office in Geelong
We have found an office in Lt Malop Street, Geelong – right in the heart of the CBD. This office gives us a local presence, and enables us to extend the Portfolio Property Management service to our Geelong clients. What’s made it easier to open in Geelong is securing the services of Neda Walker to run our Geelong branch. Neda is familiar to many of our clients.
Neda’s joined our team
Neda’s experience in Geelong property management is exceptional. As a fully licenced real estate agent, she brings the perfect mix of experience and knowledge to the role – not to mention the fact we’ve dealt with Neda for many years.
What does this mean for our Geelong clients?
We have access to Neda’s networks: Carpenters, electricians, plumbers, gardeners and handymen – contacts developed throughout her 20 years in the industry who are trustworthy and provide practical advice. They understand the difference between a legitimate issue and a precious request. We also have access to Neda’s tenant network, many of whom have her number saved in their phones. While we maintain an active database of Geelong tenants through the online enquiries we receive for properties, Neda is well known throughout the tenant community, so they often call her when searching for a property.
We have the expertise of a property manager with unparalleled knowledge of our clients’ properties purchased in Geelong. Not only does she bring continuity of management, but perhaps more importantly, continuity of maintenance history – she knows the back story of our clients’ properties.
We can deliver the management service that our clients expect. Neda will only be managing a portfolio of properties half the size of what she had in her last role, while being able to leverage the existing support structures in Portfolio Property Management. This means she’ll have over double the capacity she had in her last role which means more time to spend on the needs of our clients.
We’re really excited by the opening of the Geelong office, and we hope it will cement our place in Geelong as the leading property investment group for private investors. Neda will be making contact with our Geelong clients in the coming weeks (if she hasn’t already), and we hope you’ll join us in welcoming her into the Portfolio fold.
PROSPECTIVE TENANTS WITH NO RENTAL HISTORY
Not all prospective tenants have a previous rental history, with some moving out of home for the first time or moving from overseas, where it is sometimes difficult to obtain a rental reference.
This creates a dilemma for the landlord as they have no basis to determine if a tenant will be reliable with rent payments and maintaining the property in good order.
It is possible to determine the character of an individual to an extent by their employment history and what their employer has to say about the character of the person. However with a younger person it may just be the one employer so it is little to go on.
The Residential Tenancies Act states that for properties under $350 per week the landlord cannot ask for both a bond and guarantor. With properties over $350 per week, both a bond and guarantor can be obtained. However, is there really an advantage of having a guarantor? Whilst it is good to know that the guarantor trusts the prospective tenant, it is a difficult process to recover any necessary funds. Having the guarantor as a co-tenant who doesn’t occupy the property, however still has joint responsibility, is generally seen as more effective and gives the person a more direct responsibility to the tenancy.
Screening a prospective tenant as carefully as possible helps us to keep things running smoothly with your investment property. Also, as a standard procedure with all our properties under management, we require the equivalent of 6 weeks rent as bond. The exception to this rule is for properties under $350 per week, as the Residential Tenancies Act states that for properties of this value the bond held can only be the equivalent of a month’s rent.
CHANGES TO LEGISLATION
Currently the Victorian Government is undertaking a review into rental laws which could include the removal of no pet clauses, allowing the tenant to make non-structural changes to properties without a landlord’s permission and restricting rent increases to once a year (currently rent can be increased every six months if in line with the market).
One change that is definitely to take effect from next year is Victorian renters will be able to sign standard leases of longer than five years. As it stands, the Residential Tenancies Act is not applicable for a fixed term agreement of over 5 years.
The changes will result in all of the current protections under a standard lease agreement, as specified in the Residential Tenancies Act, to be valid for a fixed term lease exceeding 5 years.
A standard fixed term lease in Victoria is 12 months and, in our experience, very few tenants want to commit for a longer period. However if a longer period is required, we are always happy to request this from the landlord.
Also being introduced is a new tax which would see properties that have been vacant for over six months in a calendar year taxed at 1% of the property’s capital-improved value. Premier Daniel Andrews said there will be exemptions for a property being left vacant, including holiday homes, deceased estates and Victorian residents who move temporarily overseas. As yet we do not have a clear picture of how this will work, and what all the exemptions will be. This vacant property tax has also been addressed in the federal budget, with an annual charge on foreign home owners who leave property vacant. The fee starts from $5,000 for properties up to $1,000,000 in value, then increasing to $10,100. This applies to properties which are the subject of foreign investment applications lodged from 7.30pm on 9 May 2017, so will not apply to existing owners.