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October 2009
Greetings to all rental and managing agents!
It seems almost unreal that Christmas is almost here and that our year of 2009 is ending. This has certainly been an interesting year for real estate and despite all assurances from the well established estate agencies that the property industry would have recovered by the end of the year; there is very little evidence of this.
Sales are few and judging by the amount of students learning the basics of residential rentals, estate agents are reconciled to the fact that it will be some time before the market reaches the heights of a couple of years back.
The economic downswing has created problems for the rental market mostly with regard to financial matters. Landlords have become more exacting about the condition in which they are prepared to have their properties returned and many more tenants are unemployed and are unable to pay their rent. We have all had to develop strategies to overcome both of these rather than hand tenants over to attorneys and incur more expenses. Remember you are unable to charge penalties for late payment of rent unless you are registered with the debt collectors association.
Termination and renewal of lease:
There is a contentious clause in the Rental Housing Act which is incorrectly interpreted by many rental agencies and that is clause 5.3(4) of Chapter 3, Relations between Tenants and Landlords. The clause reads:
"If on the expiration of the lease the tenant remains in the dwelling with the express or tacit consent of the landlord, the parties are deemed, in the absence of a further written lease, to have entered into a periodic lease, on the same terms and conditions as the expired lease, except that at lease one month's written notice must be given of the intention by either party to terminate the lease."
This is purely a repeat clause. It means that if the landlord (agent) does not contact the tenant before the termination date of the lease there is an unspoken (tacit) agreement that the lease will continue on the same terms and conditions as the previous lease. One months notice should be given of the intention to end the lease - note that notice of intention to end a lease may be given at any stage of a lease because it is not notice to vacate.
Most leases are for a fixed period and then go onto a two monthly basis leaving both the landlord (agent) and tenant believing that either of them only needs to give two months notice to vacate and that is the end of the lease. This clause of the Rental Housing Act is firmly against that in that it is interpreted that unless another lease agreement for a two monthly period is negotiated at the termination of the original lease, the original lease repeats itself.
Therefore your lease diary is essential in reminding you that at least 75 days before a lease is due to expire you should be contacting your tenant to renegotiate the next period of the lease. It is possible that you have already done this in your current lease as often an option exists which takes the lease into the second year. It is still essential that you make contact because the tenant may move out without exercising the option and without notifying you. Remember everything in writing - verbal agreements are difficult to prove and often regarded as hearsay.
RentalKeeper has the facility of reminding you in a lease diary. You may download this management package from our website for 10 days and if you experience any problems call Debbie who will give you firsthand advice and help. We sincerely recommend this package particularly for the smaller agencies and have priced it extremely reasonably in comparison with whatever is available. Give yourself a Christmas present which will bless you for many years!
Student Accommodation
A number of agents specialize in letting student accommodation. Your most serious problem is the inspection of the accommodation before and after the lease period, which must be carried out according to the Act. The students never arrive for the inspections or they leave before any inspections can be carried out often leaving you with angry parents who are demanding their deposits.
In order to overcome this I suggest that you notify the student and parent of the date and time of the inspection, arrive and if no one is there go ahead and do the inspection. Your lease should state that if the tenant does not arrive for the inspection that he agrees that all is in a good state and condition. Allow the student to send you a defect list within a week and attach both the inspection and defects list to the lease.
When the lease ends, again send both the student and parent notification of the outgoing inspection pointing out that these must be conducted by law and that if this inspection is not attended, the tenant loses his rights and the landlord may deduct damages from the deposit without having to refer to the tenant. The Act covers you in this instance and as long as you do the necessary notifications and have proof thereof, you will not be in the wrong.
Finally, I was fascinated to learn recently that in the 1500's houses had thatched roofs - thick piled straw piled high with no wood underneath. It was the only place for animals to get warm, so all the cats, dogs, mice and bugs lived in the roof. When it rained it became slippery and sometimes the animals would slip and fall off. Hence the saying "it's raining cats and dogs"
All the best
Vivien & Debbie
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