As a landlord or property manager, collecting rent is arguably one of the most important aspects of renting out a property. Unfortunately, it can also be one of the most difficult. This is because there’s so much to keep in mind in terms of legal requirements and entitlements.
Adopting good property management practices and understanding fundamental tenancy law, can help you avoid common rent related problems, including:
Asking for too much rent upfront
When it comes to landlord rent collection, this is a real issue. Legally you can ask for 1-2 weeks of rent to be paid in advance at the start of a tenancy, depending on whether your tenants pay weekly or fortnightly. This acts as the first payment of rent and you are not entitled to ask for any more until the next official rent payment is due. It’s important to be aware of this, as it’s an offence to ask for any additional payment in advance or before the previous rent has expired. It also has more serious consequences with fines of up to $1,000.
Providing proof of purchase
To stay on the right side of the law, you must also provide your tenants with receipts for rent paid where there is no other proof of payment available (e.g. automatic payments or online banking transactions). For example, if your tenant chooses to pay by cash you must to give them a receipt as soon as you are handed the money or you could face a $200 fine. Proof of payment will help avoid any complications relating to potential rent disputes during the life of the tenancy agreement.
Read more: Testing rental properties for methamphetamine contamination
Charging too much rent
Property prices are never fixed. In-between tenancies you can adjust the rent to reflect what is happening in the market. Landlords can get in trouble if they demand rents well above what the market indicates tenants should pay. The market rent is judged on the size and condition of the house and the area it is located. So, the amount you charge for your rental property needs to be similar to the rent of other comparable properties. Again, failure to do this is an offence and you can face fines of up to $200.
If you’re unsure about how much rent you should be charging, Tenancy Services can give you an estimate price.
If you are not a seasoned landlord with a successful career of managing rental properties, all this information might be overwhelming. If this is the case a property manager could be your best bet of keeping your finances under control and avoiding fines from Tenancy Services. When money is involved, minor issues can suddenly become massive, turning what might have been a simple mistake into an ugly mess.
For more best practice tips to help you better manage and protect your investment, download our free guide:
