Managing a rental property

Self-managed landlords

There are advantages for landlords who choose to manage a rental property themselves, such as having control over the process and saving on agent fees.

All landlords, including self-managing landlords, must make sure they follow residential tenancy laws. This includes reading and understanding the Landlord Information Statement before entering into any tenancy agreement.

Using an agent

Landlords who do not live near the rental property, are busy or do not know the law very well may wish to use an agent to find a tenant and manage the property on their behalf.

An agent who manages residential property for a landlord must either be:

• a licensed real estate agent (that is, they hold a real estate licence)
• an assistant real estate agent (that is, they hold a real estate certificate of registration and work under the supervision of a licensed real estate agent).

A landlord can make sure they are using an appropriately licensed agent by doing a licence check or by calling 13 32 20.

Regardless of who manages the property, landlords remain responsible for ensuring residential tenancy laws are complied with. If an agent manages a property on a landlord's behalf, agents also have a responsibility to comply with residential tenancy laws.

Questions landlords should consider asking when selecting a licensed agent

• How much are the management fees and what is included and excluded?
• How long have they been a property manager?
• How many properties do they currently manage?
• How long has the property manager been with that agency?
• What systems are in place to check compliance with health and safety requirements?
• How do they manage requests for repairs from tenants?
• Do they check repairs once they have been conducted?
• What systems are in place for locating and screening prospective tenants?
• What steps do they take if the tenant is late with the rent?
• How many times have they been to the NSW Civil and Administrative Tribunal and what is their success rate?

Entering into an agreement with a management agency

A landlord who uses an agent will need to enter into a written management agency agreement.

The fees and conditions of the agreement are negotiable.

Only a licensed real estate agent can sign an agency agreement with the landlord.

A landlord should make sure all the agent’s responsibilities are clearly specified in the agency agreement.

When making an agreement, the landlord should consider:

• How often do they want inspections to take place?
• Would they like a copy of inspection reports and other documents to be sent to them?
• Do they want to be contacted about all repairs or only repairs costing more than a nominated amount (for example, $200)?

A management agency agreement usually contains a notice period clause if either party wants to end the arrangement.

If there are concerns that a property manager is not acting in line with the management agency agreement, landlords should always refer to the terms and conditions of their agreement to ensure they are being met.

Responsibilities of a managing agent

A managing agent's responsibilities include:

• finding suitable tenants
• ensuring the tenancy agreement is correctly completed and signed by both the landlord and tenants
• lodging the rental bond
• managing the tenancy for the landlord on a day-to-day basis, including:
  • arranging repair or maintenance work
  • collecting the rent and maintaining rent records
  • conducting regular property inspections
  • managing any disputes
  • paying bills on the landlord’s behalf (for example, water and council rates)
• paying the rent to the landlord, less any authorised expenses (for example, agency fees). This must be done at the end of each calendar month unless the landlord instructs the agent otherwise.

To ensure a property manager will carry out the above responsibilities (and any additional terms that may need to be added), landlords should check the terms and conditions of the proposed management agency agreement for their property.

Fees an agency will charge a landlord

Most agents charge a letting fee and a management fee based on a percentage of the gross weekly rental.

The percentage that a landlord will be charged will be set out in the management agency agreement, along with any other required fees.

Fees charged to the landlord could include advertising costs, preparing the tenancy agreement and representing the landlord at the Tribunal if there is a dispute.

Changing arrangements

• Bond records need to be updated if management of the tenancy changes.
• A management agency agreement should be terminated in line with the termination notice period outlined in the agreement.
• The agreement can be terminated at any time if both the managing agency and landlord come to a mutual agreement.
• The termination notice should include a request that the property manager confirm how all tenancy records, keys and other items related to the property will be transferred to the incoming managing agency.
• The Change of managing agent or owner information form should be provided to the Rental Bonds Board to ensure that any bond monies for the property are allocated to the incoming managing agency.