As a landlord, ensuring your property is well maintained means you’re getting the most out of one of your most important investments.
Often the temptation can be to overlook ‘minor’ issues to save some money by not contributing to regular upkeep. However more often than not such a strategy can come back to haunt you.
As per The Residential Tenancies Act 1997, landlords or owners are legally obligated “to ensure a rented property is maintained in good repair”.
This is what every landlord should be doing in regards to property maintenance, so your money is working as hard for you as it possibly can.
Broken window theory
How your property is maintained will influence the type of tenant it will attract.
The popular Broken Window Social Theory holds that signs of disorder create further disorder. It follows that a badly maintained house or unit will likely attract bad tenants leading to a further deterioration in the state of the property.
On the other side of the coin, a well maintained rental property will attract desirable tenants who will look after their home and reduce the level of maintenance required. As such the wear and tear the property endures will potentially be less. A desirable property can also create competition among interested tenants, with the potential to increase the amount of rent they are willing to pay.
“There needs to be a focus on the type of tenant you want to attract,” says Brad Teal’s Rental Department Manager Prue Bryant.
“You want to have tenants who want to look after their home and your property. It doesn’t hurt to give them some encouragement to do that by showing them you care about the property and the state it is in as well as they do.”
Being a proactive landlord
Being aware of your obligations as a landlord or having a pro-active agent who understands maintenance issues and is up-to-date with the state of your property can ensure minor issues don’t become major ones. This can mitigate an unnecessary blowout of costs and/or an avoidable application by a tenant to the Victorian Civil and Administrative Tribunal, or VCAT.
Issues such as water leaks (eg a toilet or a roof) can escalate into costly and preventable damage if they aren’t addressed promptly. They can also give rise to compensation claims if they have made your property uninhabitable and/or have damaged the personal property of your tenants.
If a tenant is forced to move, landlords may also be liable for costs incurred by their renters.
As you can see, what might be a relatively minor issue, can snowball into a much larger and much more costly one. Keeping a close eye on maintenance issues, including wear and tear can help to prevent this.
Regular checks and regular upkeep of your property is important in terms of keeping your investment well maintained but also in showing your tenants that you care.
Of course, there isn’t a bottomless pit of money for you to put into your property and many investors want to enjoy a decent rental yield along with capital growth. Factoring in yearly maintenance spend, allows you to budget better and can help to avoid any big ticket repair costs that can crop up as a lump sum and can hit your bottom line hard.
“However, if a problem emerges that is a result of your tenant’s conduct, such as vermin, under legislation they are required to pay to eliminate it,” Ms Bryant said.
“That’s why it’s important to maintain your property to ensure it’s unlikely to be subject to such issues. But also why it’s important to be across the relevant legislation and your obligations as a landlord.”
If your property is duly maintained, it can also indicate you are a responsible landlord, if you are the subject of an application to VCAT for another matter.
Tax implications of property maintenance
The money you spend on your property as a landlord can have important tax implications.
When you commit to maintaining your property and even improving it, depending on how your tax obligations are approached, you may be able to negatively gear your investment.
This is another reason why it is advantageous to keep your property well maintained.
As always, when it comes to financial issues, it is best to seek independent advice.
Legal obligations as a landlord
As mentioned above, as a landlord there is certain legislation regarding maintenance you need to abide by. These laws have been enacted to protect the rights of tenants but also those of the property owner.
These laws and their application can be complicated. That’s why you need an expert agent who understands the legislation and is experienced in dealing with it.
Now more than ever, it is important to be aware of these laws as they continue to evolve.
Earlier this year, new tenancy laws were enacted to deal with the COVID-19 pandemic and its economic impact.
News tenancy laws will come into effect on January 1, 2021 as part of the Residential Tenancies Amendment Act 2018.
We will cover the implications of these laws, whose introduction was delayed due to COVID-19, in a future article.