Leasing out a property is a great way to earn some steady passive income.
Whether it’s your granny flat out the back or a second home, becoming a lessor can change the way you live your life.
In such challenging times as these, property disputes are becoming more and more common. Getting caught in a legal dispute with a tenant can become long and expensive if you’re not careful.
Knowing your responsibilities and legal obligations as a property owner and lessor is therefore very important.
In Western Australia, there are certain rights and obligations placed on both you, as a landlord, and your tenants. (Quick tip, if you need professional advice pronto, property lawyers Perth are who you need!)
Here are ten things to know before your ad goes live.
1. Don’t discriminate when choosing a tenant
You might be thinking what? Really? That’s a thing? Yes. Discriminating based on age, race, gender, or religion is a serious crime and being liable is a serious issue. Steering clear of this as a property owner is critical. You want to make sure your tennant is able to pay your rent and isn’t in debt, but be sure to remain inclusive and open ended when choosing who ends up with the keys.
2. Understand how the Bond works
A security bond is made in advance by the tenant to cover any potential costs they incur once their rental period is up and they want to move out. This could be for any of the following:
- Unpaid rent
- Damage to property (broken appliances, furniture, stains, etc)
- Unpaid bills and other costs that may arise as a result of their tenancy
Be aware that you don’t need to ask for a bond, but it’s a good idea especially if you value the condition of your home as it stands. There are limits on how much the bond can be – for example, it typically cannot be over 4 times the weekly rent. However, if your property is over $1,200 in weekly rent then you can raise the bond beyond this limit. If your tenant is keeping a pet that is capable of transmitting diseases – then a $260 additional one-time pet bond can be charged – this money is for fumigation before the next tennants arrive. Overcharging on the bond, or not charging a bond and asking a tenant to pay damages down the track could result in a dispute, so make sure you’re above board from the beginning.
3. Inform your tenants of their rights
As a lessor, you must inform the tenant of their rights. That doesn’t mean you have to sit them down and tell them, but as long as you include them in the handover documents, you will have met your obligation. The tenant’s rights are located in your respective State or Territory booklet. This includes all the basics such as the right to quiet enjoyment of the property.
4. Ensure your property is up to standard
Ensuring you have a property condition report signed by your tenant is a critical step in ensuring there aren’t any disagreements down the track. This includes a list of dated photos or even a video library of any chipped walls, floor scratches, and other defects that exist on the property prior to the tenant moving in. You must provide the tenant with two copies within 7 days of moving in. If there are disputes at the end of the tenancy, the courts may use this as evidence. Be aware that the tenant cannot be liable for any normal wear and tear that occurs as a result of their time spent in your property.
5. Know the rent standards
It’s tempting to squeeze as much rent out of property as you can. After all, you want to make money from your property. But overcharging rent can become a serious issue – especially if your tenant is unhappy about it. When it comes to raising rent, make sure you follow the strict rules like providing proper 60 days notice to the tenant and including the exact amount and start date of the new price. The type of tenancy will also dictate when and how much the rent can be raised.
6. Pay all the duties and taxes promptly
You have the responsibility to pay all the local council rates, taxes and annual maintenance, and insurance for your property. Failure to do so can result in some awkward situations that you’ll want to avoid. You’re also expected to pay for any abnormal maintenance like clearing up debris after a storm or fixing the irrigation.
7. Think you might be in trouble? Get property legal advice today
Renting your property can be financially rewarding, but falling short of your obligations can lead to a legal minefield. Getting the right advice along the way is critical, racially if you see some early warning signs. Acting quickly can save you time and money, especially if your matter ends up in court. Get professional property settlement lawyer advice today and have peace of mind knowing your income and property are secure.