Property Management

Once you have completed a thorough marketing campaign for your rental property and selected a suitable tenant, you will need to negotiate the terms of the tenancy. In order to facilitate this process, the important terms should be discussed by phone at the time of offering the tenant the property.

1. Tenancy start date. You should negotiate a start date that is suitable to both yourself and the tenant. It is common to meet in the middle if there is a period in between when the prospective tenant can move in and the availability date of the property.
2. Weekly rent and bond. The rent and bond amount as well as frequency of payment needs to be discussed with the tenant. Rent should be paid in advance and weekly payments are the norm, but payments can be made fortnightly or monthly if agreed.
3. Term of the tenancy. There are usually two types of tenancies. A Periodic Tenancy has a start date and no end date and continues until either the tenant or landlord gives the required notice to terminate. A tenant can give 21 days’ notice to vacate at any stage during the tenancy, and a landlord can give 42 days’ notice if they plan to sell or are moving in, or 90 days’ notice in any other situation. (For further information on terminating periodic tenancies see Section 51 of the Residential Tenancies Act). A Fixed Term Tenancy has a start date and an end date and cannot be terminated by giving notice. Usually fixed term tenancies are for 6 or 12 month periods. You can apply to the Tenancy Tribunal to terminate the tenancy during the term if either party breaches the terms of the agreement.
4. Chattels to be included. These are items of furniture or appliances etc that are to be included in the rental such as fridge, heating, stove or dishwasher. Any chattels that don’t work or are not included should be discussed and recorded at the start of the tenancy.
5. Other important terms to consider include:

• The maximum number of residents permitted
• Responsibility of lawn and garden maintenance
• Pets or no pets allowed
• Any  other specific terms should be discussed before finalising the tenancy agreement

Once the above terms have been agreed a written tenancy agreement can be completed. This is required by law to record the terms of the tenancy. (The Department of Building and Housing provides a basic tenancy agreement on their site). Once the tenancy agreement is completed, a deposit should be receipted and this is usually one week’s rent. Copies of the agreement should then be issued to all parties. Prior to the tenants moving in a property inspection should take place and a copy of this report given to all parties.

Property management is about people and the tenant selection and negotiation of terms process is all about customer service. Tenancy applications can fall over at the last minute as tenants can change their mind, however a landlord will have a lot more success in gaining a long term tenant if they offer a professional service and have effective communication skills.

An important aspect of property management is managing rent arrears, and monitoring rent payments is an essential component of this service.

All landlords are required to maintain detailed records and this should include the daily monitoring and reconciling of rent payments. Efficient record keeping also has the benefit of reducing the risk of rent arrears, especially if an effective tenant selection process has taken place at the beginning of the tenancy.

Rent is in arrears when the date a tenant has ‘paid-to’ is reached – if your tenant is paid up to today he won’t be in arrears until tomorrow. If a tenant has missed their rent payment then this is a breach of the tenancy agreement and they should be notified immediately. The missed payment could be a result of a misunderstanding or bank error, however if there is no valid reason, a written ‘14 day notice’ should be issued requiring the tenant to pay the arrears within 14 days. This notice is a requirement of the Residential Tenancies Act (RTA) if you wish to make an application to the Tenancy Tribunal to recover any outstanding rent.

Once a ‘14 day notice’ has been issued and if the tenant is less than 21 days in arrears, a landlord can apply to the Tenancy Tribunal to recuperate any arrears (under Section 56 of the RTA). The application can request that the tenancy be terminated along with the refund of the bond to cover any unpaid rents.

All applications to the Tenancy Tribunal go through an initial mediation process to provide opportunity for both parties to reach an agreement for the recovery of rent arrears. This takes place after the expiry of the ‘14 day notice’ (if the tenant is still in arrears), and can take place over the phone. If an agreement is reached at mediation this is witnessed by the mediator and is sealed by the Tribunal as a legally binding and enforceable court order. A bailiff may then use this court order to carry out an eviction if necessary.

If both parties cannot reach an agreement at mediation the case is then sent before an adjudicator at the Tenancy Tribunal. Although Section 56 of the RTA says the landlord has the right to seek rent arrears and termination of the tenancy, the Tenancy Tribunal can let a tenant stay if the tenant has since remedied the arrears, has a valid reason for unpaid rent or can provide an acceptable repayment plan.

Applications to the Tribunal should usually be made under Section 56 (as above) to result in earlier mediation and the recovery of any arrears. However you can alternatively make an application to the Tenancy Tribunal if a tenant is more than 21 days in arrears under Section 55 of the RTA. Under Section 55 there is no need to wait for the 14 day notice to expire and the landlord can seek termination of the tenancy as well as recovery of rent arrears and a bond refund. Unlike Section 56, if the tenant is more than 21 days in arrears at the date of application, the landlord has the right to seek termination of tenancy. In order to facilitate the application, the landlord should provide copies of all documents relating to the tenancy including the tenancy agreement, any notices issued and rent records.

If a Tenancy Tribunal order for termination of a tenancy has been obtained, the landlord can then use this order to apply for an eviction if necessary. This process involves an application to the District Court for an eviction date.

It is crucial for landlords to have a systematic process for dealing with rent arrears. Allen Realty is a specialist Auckland Property Management company experienced in tenancy law, with highly trained property managers that manage rent arrears on a daily basis.

As property managers, Allen Realty undertakes systematic reviews on all rental properties on a regular basis. This is an integral part of our specialist property management service and ensures that rents are charged at accurate market levels so that our customers have the resources required for property maintenance.

Professional property managers carry out rent reviews about every six months, and if the rent is considered below market value an increase is issued.

To issue an increase there are several legal obligations required under the Residential Tenancies Act (RTA):

• Landlords shall issue 60 days’ written notice, in addition to a period to serve the notice
• Rents can not be increased within 180 days of the start date of the tenancy, or a previous increase
• There is no limit to a rent increase as long as it is not excessive
• For further information on rent increases go to Section 24 of the RTA

As part of the rent review process, a comparative market analysis should be undertaken—a property manager has the advantage of being able to use both current and historical statistics to measure demand and compare rents with other properties in the surrounding area, as rents vary depending on demand, quality and size of the property. The Department of Building and Housing publishes up-to-date market rent statistics which can be used as a guide to determine market values. Section 25 of the RTA deals with market rent.

In order to encourage long term tenancies and reduce vacancies, rents should be around or just under market value. A sudden large rent increase is likely to encourage your tenant to vacate, whereas regular but small rent increases are viewed as the norm. Landlords who are proactive with rent reviews should also be aware that tenants will expect a higher level of property maintenance.

Now is the time to re-evaluate the nuts and bolts of your rent review practices!

The number of tenants within a single rental property will determine the level of ‘wear and tear’ over the duration of tenancies. Keep in mind also that having too many tenants in a single rental property will mean that there will be more individual’s responsible rental payments.

Both of these issues should be taken into consideration throughout your tenant selection process.

As a professional property management company we frequently take over troublesome properties from Auckland landlords, with current tenants, managing  tenancies independently.

Numerous tenancies such as these have encountered issues for quite some time as a direct result of property owners either too busy or simply not having the experience or urgency, tenants have been allowed to continue renting.

Fair wear and & tear is the ongoing deterioration of aspects of a property which has resulted NATURALLY or from AGE. Allen Realty property managers examine all properties regularly and at the end of a tenancy to spot fair wear and tear and/or damage.

When your property is ready for its final touches then installing window coverings will often be the final task prior to marketing for new tenants.

Window coverings complete a property and not only help make the property look modern but they also help give prospective tenants the perception of privacy, security and warmth. Let’s face it ? property is a people business and perception is the key. You have done all the hard work in presenting the rest of your property, so some thought needs to go into window coverings. This article is aimed at assisting you to make the right choices.