Allen Realty property managers have experienced record low vacancies, currently sitting at 99% occupancy rates. Unlike rental agents throughout the rest of the country, most Auckland agents continue to report high demand and low vacancies throughout the first five months of the year.

Although current vacancy rates are low and rents are on the rise, many property managers have reported a slight decline in tenant enquiries over the last six weeks. Historically the winter months often slow down in the rental market as less tenants move, resulting in lower demand. Many commentators expected influences such as the Rugby World Cup and Christchurch earthquake to stimulate Auckland’s winter market during 2011. However it appears the traditional winter slow down has once again struck, especially in some areas such as Albany (58 3-4 bedroom properties available on Trade Me as at 14 June 1011). The market may not be as quiet as previous winters, but property owners may experience a slight decline over the next quarter.

The latest statistics released from the Department of Building and Housing show good increases in medium rents over the last year. According to these statistics the May 2011 average rent is up 4.7% compared to May 2010. They report the Central Auckland average was $442 (a rise of 6.9% from May 2010), North Auckland was $446 (a rise of 4.9% from May 2010) and South Auckland was $399 (a rise of 6.4% from May 2010). Property owners should note that these average rents do not provide a good basis to determine rent reviews as there are many variables over many suburbs. You can read a recent blog on The Art of The Rent Review for further information on rent reviews.

Between June 2010 and June 2011 most suburbs have seen strong demand and rising rents. For two bedroom homes, key areas showing increases have been Avondale 13%, Grey Lynn/Arch Hill 13%, Mission Bay/Orakei 12%, Mt Wellington 13%, Remuera South/Meadowbank 17%, St Heliers 13% and Western Springs 14%. Medium rents for three bedroom homes show some similar increases including Kingsland 11%, Kohimarama 18%, Royal Oak/One Tree Hill 10%, Western Springs/Morningside 11% and Titirangi 10%. You can view the latest market rent statistics on the Allen Realty website as well as variances between 2010 and 2011.

As winter sets in landlords should be aware of the traditional decline in demand and be proactive in marketing and presenting properties in order to attract tenants and compete with other landlords. Start marketing properties as early as possible and attend to any necessary maintenance prior to showing tenants. There are some issues that need particular focus during the winter months and our previous article A Landlord’s Preparation for Winter gives some good advice on these issues. Other articles of interest may be How to Rent Your Property Faster and The Tenant Selection Process.

You can register for future rental market updates at www.allenrealty.co.nz.

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What are the current legal requirements?

The Residential Tenancies Act 1986 does not have specific sections that apply to the requirement of landlords to provide smoke alarms. However, section 45C specifies a landlord must “comply with all requirements in respect of buildings, health, and safety under any enactment so far as they apply to the premises.” This means that all houses must comply with the Building Act 2004.

The current Building Act 2004 requires that all new houses and consented alterations provide “means of detection and warning” in the event of fire. Like the Review of the Residential Tenancies Act, the Department of Building and Housing is currently preparing a Building Act Review, so changes may occur. Although the current regulation does not apply to existing properties, the requirement for alarms will usually be triggered if you are carrying out any building works that require an application for building consent from your local council.

What is the best type of smoke alarm?

The two main types of fire alarms available are Ionisation and Photoelectric alarms. Consumer.org.nz have carried out research on various alarms and report the following:

Ionisation alarms sense the volatile combustion products from hot flaming fires, but don’t do as good a job sensing the smoke from cooler smouldering fires because fewer combustion products are present.

Photoelectric alarms shine a light beam across a chamber and detect if the air in the chamber becomes partially obscured, detecting smoke from both types of fires.

The NZ Fire Service also provides some good recommendations on the types of alarms that are available. The best type will usually depend on the type of property, your budget and personal preference.

What other options are there?

Alarms can be powered from different sources. Battery Operated (DC) smoke alarms can provide detection if there is a power failure, provided they are installed correctly and the batteries are charged. This is often the most cost effective. AC powered smoke alarms are powered by mains and will only provide detection if power doesn’t fail. These can be slightly more expensive and must be installed by a certified electrician. AC with battery back up is generally the most comprehensive and will provide detection even when there is power failure – as long as batteries are fresh and correctly installed. Many smoke alarms now have long life batteries that can last up to 10 years.

Where should I install fire alarms?

All properties will generally have different requirements depending on the location, size, number of levels and exits. Generally alarms should be installed in hallways as close to the bedrooms as possible, as the alarms must be audible to people sleeping on the other side of closed doors. The bigger the home the more alarms are required and most alarms will come with instructions on where to install them. The NZ Fire Service provides some good guidelines and The Building Act 2004 provides information on the specific types of smoke alarms that are required and some guidelines on where to install them. All alarms should be installed in conjunction with the manufacturers’ instructions. There are also guidelines on where not to install them, such as kitchens.

Other important issues to consider

Smoke alarms may be ineffective if covered in dust/dirt or obstructed in any other way. This is likely to occur if tenants smoke in properties (usually flats and apartments) and cover the alarms. Many building managers will tell stories of tenants obstructing smoke detectors and some body corp rules/building regulations now prohibit this obstruction and issue fines to tenants who do this. The fire service may also charge tenants or landlords for false callouts.

Educating tenants in utilising the effectiveness of the alarms is also the key, including the potential outcomes if they obstruct alarms or fail to check them regularly. Smoke alarms will also be ineffective if they are not installed in the correct locations in the home.

Smoke alarms are also available for people with hearing impairments. These special purpose alarms provide additional warnings such as visual alarms and when one is activated, generally all activate to provide a more comprehensive warning system.

In closure smoke alarms are a single warning device and should not be relied on as a complete fire detection system. A comprehensive system would also include the use of sprinkler systems, fire-resistant materials and fire exits.

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All landlords should provide window coverings. Gone are the old days when some landlords let tenants provide their own coverings. If you don’t have them installed then tenants will rent elsewhere. We recommend that rental properties should have cost effective, durable, modern coverings that fit each window. The location of your property (and the prospective tenant market – you should know your market) will help determine what sort of blinds/curtains you install, but there are some good guidelines to follow.

We recommend that landlords with properties out West or South (where there is often more wear and tear than in the central city) stay away from venetian blinds made of aluminium slats which although look smart, are damaged easily. The blinds and cords can be damaged as tenants clean them, or careless tenants open the windows without lifting blinds (by reaching between the slats) or the wind can cause damage to the slats. Executive properties and apartments in central Auckland may be better suited to these blinds as the properties are often not subject to the same amount of wear and tear. Vertical fabric venetians have plastic beading that keeps the blinds together and these can break easily, so the same rule applies. The one good thing about all venetians is that they are easily serviced with many companies out there providing a maintenance service. Roll down sun shade blinds are great and have a modern, clean look and are very durable but are often the most expensive choice so exceed many landlords’ budgets.

Curtains and nets seem to be the most preferred covering in most rental properties. Bedrooms require both curtains and nets whereas lounges and dining rooms can often get away with just curtains. Kitchens, toilets and laundry’s can get away with nets only. Nets in wet areas should be trimmed high so they do not hang in the vicinity of taps etc. Nets should be white and you can purchase nets with built-in zipped cuts that allow you to trim the nets to the height of your windows. Nets should be hung on cords on the inside of the window frame but not attached to the glass. Curtains should be hung on rails on the top of the window frames so when closed they hide the nets. If you invest in new curtains make sure that they are hung correctly to maximise presentation and prolong the life of the curtain.

Nets provide additional privacy when curtains are open but also allow a small amount of sunlight to shine through which has obvious benefits to your rental property. More sunlight means less moisture which has a positive effect on tenant’s health and also increases the life of all of your chattels including carpets and paintwork. Curtains should be thermal backed to provide maximum insulation. You can increase the life of your nets/curtains and blinds by tenant education and improving insulation and air flow. For example tenants should be told to regularly open windows and encourage air flow. Property owners with moisture problems can reduce these problems by installing fans and air/heat transfer systems such as HRV (Home Ventilation System) products which circulate air around the home. This will help avoid mould growth and discoloured window coverings.

We suggest that you purchase neutral colours that don’t clash with tenant’s furniture and personalities – for example, don’t choose multi coloured rainbow or pink/orange curtains. White curtains mark easily so contemporary grey/brown colours are always a good option. Presentation can be maximised by having consistency in all rooms and not different colours in every room. If your children’s bedrooms have kiddie cartoon curtains it may be worth replacing with normal curtains to increase your potential tenant market. Your property may then appeal to a wider range of tenants such as professionals or students.

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Your tenancy will be governed by a Tenancy Agreement and The Residential Tenancies Act. After decades of renting properties to tenants on behalf of property owners we have put together this list of important issues for you as a tenant to consider when choosing the right property for your family. This will hopefully reduce the potential for problems with landlords and save you time and energy.

Most tenants main criteria when looking for a property is location. You should narrow down locations that you wish to consider prior to beginning your search to save you time. Auckland is a big city so there is no point in viewing a property unless you are happy with the location. Key points to consider when considering an area is the proximity to local schools, transport, shops and other infrastructure, as well as proximity to your family and place of employment.

What should I expect from a suburb?

Presentation of the neighbours, their vehicles and properties give you an indication of the types of people that live in each street. A drive-by down the main roads will show you what facilities/amenities and goods and services are available in the area.

How do I research a suburb?

You can use technology to your advantage by using Google maps to assist you with your research. Google maps provide a map view and also a satellite image view so you can check out photos of the location via the internet prior to inspecting. Never make a decision on a specific area based on what a landlord says eg. “This is a good street” as you need to satisfy yourself to that regard! You can also check schoolzones.co.nz to find out more about the local schools. Reading local community newsletters will also educate you on the area and what it has to offer. You can read community newspapers online at stuff.co.nz/auckland .

You can use various websites to find and compare rental properties. Try www.allenrealty.co.nz, www.trademe.co.nz or www.realestate.co.nz.

What rent will I pay?

The location will influence the majority of the rent. Some of the rent will be influenced by the amenities and condition of the specific home. Market rents are affected by demand and supply in each suburb so if rental properties are in high demand in that area you can expect to pay more. As a general rule, the closer a property is to the city centre the higher the rent. You can view average rents for most Auckland suburbs on the Allen Realty website www.allenrealty.co.nz

When you finally choose suburbs to concentrate your search on there are specific issues you should look at. This will ensure that you end up with a property that ticks all your boxes that you will be happy with long term.

• Security: Check locks on all doors and windows – most properties are rented ‘as is’ so property owners won’t necessarily be obligated to upgrade something.
• Maintenance: Assess what you will have to maintain as part of your tenancy eg. whose responsibility is the lawns and gardens? Hedges should generally be a joint responsibility with tenants and owners. Do you maintain the swimming pool or does the owner? Who sweeps the driveway or maintains any common areas?
• Insulation: Make sure that you are satisfied with the property and confident that it will be warm and dry. Look for signs of discolouration on flooring, paintwork, and window coverings (curtains/nets) which show evidence of any moisture. Remember that most rental properties will suffer from some degree of moisture. Make sure properties have adequate ventilation. If you can open windows regularly and operate fans or heat pumps then this will assist with airflow and reducing moisture.
• Noise: The location of the property will affect the amount of noise you should expect. If a property is on a main road or in the CBD you should expect a certain amount of associated noise. If there is a building site next door you should also expect some noise. Often apartments in the CBD have double glazing which will help reduce this issue. The owner of the property cannot directly affect or change this aspect of a property so it is important that you do your homework.

When you choose a property to apply for and a landlord accepts your application then you will have to negotiate a tenancy. The following issues need to be negotiated first, as once you sign a tenancy agreement it will be too late to change your mind.

• Tenancy Term: The landlord and tenant should agree when the tenancy starts and if it is a fixed term (eg. 6 or 12 months) or a periodic tenancy (month to month).
• Agreement in Writing: All tenancy agreements should be in writing and should confirm the obligations of all parties including and not limited to the bond, rent due dates etc.
• Bond: Once you pay the bond then the landlord is required to lodge your bond with the Department of Building and Housing within 23 working days of receipt. You should receive written notification of the lodgement of your bond within 5 weeks of the start date of your tenancy.

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As professional property managers we often have property owners that contact us to enquire about either giving their tenants notice so properties are vacant just prior to the event, or alternatively renting out their family homes over this period. Many have been lured by the buzz of the World Cup fever and rumours of easy money and great returns. However, I believe that this potential market is over-inflated and many property owners will find themselves disappointed unless they face certain realities.

This RWC market will predominantly only benefit owners of furnished apartments and houses that are vacant at the time of the event. Those landlords who plan to give existing tenants notice to vacate so they can get higher rents for the period of the RWC, must think about the opportunity cost involved. They may secure double the normal return for 3-4 weeks of the tournament but then may also experience a week or two of vacancies prior to the RWC tenancy and the same afterwards before securing new long-term tenancies after the events. These vacancies may wipe out any potential profits and this is before you even think about potential damages to your property from a party who may be in the country for 3 weeks, never to return.

Any smart investor will ask − why terminate a long term tenancy to secure a better return for 3 weeks? With more tenants coming and going, there are greater risks of vacancies, damage, wear and tear and depreciation. There are also additional costs including marketing and the logistics of signing up tenants also to be taken into consideration. Landlords may need to pay for power/water/gas as tenants only staying a week or two certainly wouldn’t want to set up their own utilities accounts. There is also much debate about whether the Residential Tenancies Act would even govern theses short-term tenancies. Section 5M of Residential Tenancies Act excludes tenancies “where the premises are let for the tenant’s holiday purposes”

In many instances it won’t necessarily matter what legislation governs the tenancies as the tenants are visitors and could be gone before you even notice any problems, let alone take action against them. Landlords need to look at the big picture. The majority of visitors attending the event will surely stay in short-term hotels/motels/hostels and serviced apartments. They will spend most of their time out and about watching rugby and exploring New Zealand. The majority will only require basic short-term accommodation and not large furnished houses. They want to be spending little time on cleaning/cooking so most will opt for serviced accommodation. Many visitors will want to follow teams around the country and not commit to 2 or 3 week tenancies in one location.

Although there are many negatives to consider, there will be many landlords that will make the most of opportunities to rent out properties short-term for the event. I expect that some visitors, mainly families, will try and utilise this private market rather than staying in serviced hotels/motels/hostels and apartments. The majority of this market will be made up of private homes (not rental properties). Some visitors will want a base for the event and after the event, for extended stays.

For those looking to take advantage of this market, think outside the square! If you want to compete with other property owners then think about offering a rental package for a week or two that includes some of the following, which will help differentiate your property from the thousands of other landlords looking to cash in.

1. A pick-up service from the airport.
2. A bottle of NZ wine, a crayfish, and/or a dozen oysters upon arrival
3. A car with the property
4. A cleaner once or twice a week
5. Complimentary tickets to a minor game at Eden Park

The most important aspect is that property owners should know who is renting the properties. Deposits and Bonds should be taken and contracts completed stating maximum numbers of tenants, rules and regulations. You may only have one bite at the cherry so if it’s worth doing it’s worth doing well!

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On any given day in any major city, there are hundreds of “For Let” advertisements chasing the elusive best tenant. In the main, the bulk of the ads are placed by private landlords (although this is changing), followed by licensed real estate property managers, and then non-licensed property managers. The amount of money spent on advertisements in the New Zealand Herald each month could be enough to feed a small third world country.

It seems that the first reaction of most private landlords and property managers when faced with a vacancy is to reach for the phone and place an advertisement in the paper. However there are alternative options to attract tenants which are more effective.

There are 8 broad “sources of tenants” that we find useful to monitor.

1. Renewals−Existing tenants renewing fixed terms or moving into other properties we manage.
2. NZ Herald−Largest metropolitan newspaper in Auckland market.
3. Web Page−Allen Realty web page plus various other sites we use
4. Local papers−Suburban and other print media.
5. Corporate referrals−Organisations that refer tenants to us.
6. Signs−For Rent signs on vacant property.
7. Other referrals−Referrals from sources other than corporate.
8. Other−All other sources

The following table summarizes three recent months of letting data, and from those we can make some interesting assumptions and conclusions. These show the % of properties rented for the month via each source.

What this table shows is that over a three month period an average of almost 40% of Allen Realty’s’ new tenants come from internal sources. Internal sources include our web page, www.allenrealty.co.nz, existing tenant movements/referrals, office listings, for rent signs and our prospective tenant database.

Other external New Zealand property websites are also useful sources at about 50% of all new tenancies. But most interesting to note is that the New Zealand Herald and local newspapers are NOT a significant source of attracting new tenants (this is probably one reason media companies are purchasing many websites). In this day and age where tenants have greater resources than the past, the majority of prospective tenants are not using the Herald and other papers to source property. Websites (whether an agents or external) provide prospective tenants with a platform to view properties, including many photos, and to also make comparisons between properties. From their home or office they use the web to investigate the area, its amenities and infrastructure. It is also interesting to note approximately a quarter of tenants secured actually use the web to apply to rent the property. So not only is it beneficial to advertise on-line but also to have a platform whereby tenants can apply on-line. It is not only about reaching your audience, but making it easy for them.

Clearly internet advertising must be a priority and it is essential to list properties on multiple sites. Although the cost of one advertisement on line is increasing (trademe is currently very high at $99 per listing), many property managers cover the cost of this charge in the management fees which average $22.50 per week plus GST. However, check the fine print as some property managers (usually unlicensed) on-charge this cost. Realestate.co.nz is also a good site, and like trademe, all Allen’s’ properties are listed on this site automatically.

Another interesting point is that our tenant vacancy rate stays reasonably stable year in and year out. Regardless of seasonality, tenant friendly rental markets, landlord friendly rental markets, the number of properties available in the market, government policy, or any other external factors, our vacancy percentage rate remains stable. This is only because we source a high proportion of new tenants from mediums other than the “open market” where most landlords are competing. If we were only advertising using standard mediums we would expect a higher vacancy rate as the market experiences its seasonal lows. However, like other professional property managers Allen Realty has an advantage in attracting new tenants, as not only do we cover many bases but enquiries come to us.

All landlords, large or small should be recording the source of the new tenant, so they can decide where to allocate their resources based on facts. If a private landlord or small rental agency relies solely on newspaper advertising, the result could be little success in attracting tenants, and long vacancy periods. Think outside the square and maximise your exposure! Those landlords using multiple mediums to advertise for tenants will generally be the investors that get more bang for their buck!

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Often the winter period is the quieter time of the year for the rental property market (as less people are moving at this time) so just prior to winter all landlords should be prepared in advance to take steps to ensure their property is ready to market to new tenants. Winter is when competition is the highest for tenants so there are specific issues to consider when for planning for this period. Property owners need to be on their game to ensure that their properties stand out from the crowd and will appeal to prospective tenants.

Generally your property manager sends you periodic inspection reports on the condition of the property and any issues to be addressed either now or at some stage down the line. The reason for this is that landlords hate surprises and your property manager’s communication gives you the time and resources to plan for any maintenance and improvements in advance. As a property owner you should begin planning for these issues prior to tenants giving notice and properties becoming vacant. This means taking steps to collect quotes, organize work where necessary and budget for the work in advance. Landlords who wait until properties become vacant are those likely to experience far greater vacancies between tenancies as the process grinds to a halt as they wait for quotes and tradesman.

All properties generally rent quicker in the summer months. This is due to many reasons including a higher demand for property in general. There is also the fact that almost all properties look better in the summer months when the sun is shining, the smell of the cut green grass is appealing and most properties show little sign of moisture or dampness. Winter months require addressing specific issues which I have noted below that may not matter so much in the summer. These important issues should be addressed when tenants give notice (not when they have vacated, but in the last weeks of their tenancy). Remember that all properties are generally marketed while tenants are still in occupation so often you can’t afford to wait until the property is vacant. It is also important to understand that tenants are only required to present a property to a “reasonable standard” so they will never address exterior issues 100% and owners need to be prepared to address the rest.

Trees, Gardens & Hedges: As all prospective tenants usually do a drive by from the outside of a property prior to viewing the inside so these issues require special attention. All trees/hedges should be trimmed back as much as possible which will improve sunlight on the property and though windows (less dampness) and stop leaves gathering around the yard. Gardens should be given a mini spring clean just prior to tenants vacating. Usually outgoing tenants will only maintain a garden to 75% so owners may need to complete this to maximize presentation. Lawns & edges should be attended to. By weed matting all gardens and clearing weeds not only do gardens look tidy but combined with the above issues, the entire property will appear to be LOW MAINTENANCE which is what all tenants look for.

Insulation: Winter brings this aspect of properties to the front of prospective tenant’s minds. Often some tenants will not rent in summer as they want to see a property in the winter first. These days insulation requirements are a lot stricter so many older properties may have poor or sub standard insulation. When prospective tenants are inspecting properties they will be looking at walls, ceilings, nets, curtains and windows for evidence of mould and moisture. The increase in recent media reports about poor insulation and education on heath risks, have driven tenants concerns. It goes without saying that generally the better insulated properties, will be the ones that rent the first in winter. Chattels such as heat pumps, HRV ventilation units and bathroom fans, will also assist in reducing moisture, and making properties more appealing. Subsidies are now available from the government for landlords insulating rental properties, and if you have a current tenant who is a beneficiary then extra subsidies apply. Better insulation and less moisture is also an investment in your chattels, such as curtains and nets which will last longer in a better insulated property. If surfaces show signs of moisture then they should be painted.

Lighting & Security: Often tenants who are viewing properties after hours in winter, will visit a property in the dark. This is when lighting and security becomes important. All properties should have security sensor lights/bulbs installed which pop on as soon as the tenants walk down the driveway or path. This gives tenants a sense of personal safety and security as soon as they step on to your property. Not only will they see what they have come to look at, but they know that if they lived there, they could feel secure. Alarms will also provide the tenants with additional piece of mind and help you compete with other properties.

Next time you receive an inspection report from your property manager identifying potential issues at your property, it may be worth getting the ball rolling ASAP. If you manage your own property then you should be inspecting quarterly or six monthly to assess the presentation and any issues yourselves. Start organizing quotes so you can budget for the work. Make a list of all issues in advance so if tenants give notice you can begin without delay. Any professional property manager will tell you that their role is a combination of systematic processes we follow each day or week to ensure that the property or portfolio performs well. We are not only managing as of today but planning for the future. In this day and age it is not possible to be re-active and only get involved when a tenant moves out or doesn’t pay the rent. The performance of the property is a direct result of how proactive the landlord is so you need to be prepared and plan for the future. A landlord with a plan is definitely the man/woman!

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In the old days tenants were given the benefit of the doubt and property managers were a little less strict. If a promise was made to remedy in a day or two or a double payment was made next week our Landlords accepted this and property managers recorded the arrangements. This was a product of a time when Landlords and property managers let emotion in to the equation and gave tenants a bit more breathing space. However now property investment is main stream and every cent counts for many investors! The following process is designed to protect the Landlord from the worst case scenario and steps are taken just in case tenants are lying or have no intention to pay rents (this happens more than you would think).

Step 1 – Day 1: A phone call to tenants to advise on the missed payment and that a written notice will be issued immediately (this notice is gentle rent arrears letter but includes all required info for a 10 day notice eg property address, tenants name, date, arrears amount and clause giving 10 working days to remedy the breach in the agreement). If tenants confirm that they will pay the rent in a few days or can they pay double next week then property owners must advise tenants “it is unacceptable to not pay the rent or pay it late” and that action may be taken against them to terminate the tenancy if they don’t remedy the breach ASAP.

Step 2 – Day 3: Phone call or text message

Step 3 – Day 5: A 2nd letter more serious advising that within 24 hours an application to the Tenancy Tribunal may be made for termination of the tenancy.

Step 4 – Day 7 or 8: This is the day that the rent will now fall two weeks behind if rents not paid. Apply to the Tenancy Tribunal, ph call/text & written notice to tenant that an application has been made.

Note: The best policy is that applications to the Tribunal for the recovery of rent arrears should be made on or before the tenant gets two weeks in arrears eg on or before day 7 or 8. DO NOT wait for 10 day notices to expire as bonds will NEVER cover rents by the time you make an application or get to the Tenancy Tribunal (eg. You are planning for worst case scenario). If you make an application before the 10 day notice expires then Tenancy Services will schedule your mediation for the earliest available spot after the 10 days has expired. If a tenant remedies the missed payment you can always withdraw an application. The reason you don’t make an application on day 4, 5 or 6 is that most breaches are remedied within this timeframe and even if you did make an application to the Tribunal on these days you would not get a hearing date any earlier than if you made an application later on day 7 or 8 (as the mediation will still be scheduled after the expiry of a 10 working day letter). It is also important to understand that tenants are not sent letters or called every day as this can be seen as harassment and is unnecessary as it may only antagonise tenants.

If notices go unanswered then you will need to follow up the notice with an application to the Tenancy Tribunal. When making an application to the Tribunal a landlord should always plan for worse case scenario. Don’t just ask for the recovery of rent arrears and assume that tenants will remedy once you have been to court. In your application you need to ask for the ‘termination of the tenancy, payment of rent arrears, and bond refund’. If mediation fails and you find your self in the Tribunal then they only have the power to award you what you have asked for in the original written application.

If you experience arrears problems on an ongoing basis is also worth considering a three strikes and you’re out policy. Although most landlords won’t rent to tenants unless references are obtained, and tribunal database and credit checks completed, sometimes tenants who pass these checks still have arrears problems. If you have to take tenants to mediation or the Tribunal it is usually worth mediating once or twice. However, if a tenant is taken to the tribunal a third time then we recommend not negotiating and termination is requested with the argument that there is clearly a history of ongoing rent problems. Especially since the owner is not only fitting the bill for each application fee but also foregoing the many hours needed to complete a Tribunal hearing & mediation.

In a world where you may wait weeks to get in to the Tribunal and bonds hardly ever cover everything it is important for property managers and Landlords to take action ASAP in order to limit any potential losses. Also, if Landlords are push over’s in the first instance bad tenants will repeat the breaches knowing they can get away with it so a hard line policy is essential. If you take the above action each time then you reduce the likelihood of repeat offending as tenants know they cant get away with it.

All of the above said, hard line rent arrears policies are essential but I’m sure that you will all agree even more important is a strict TENANT SELECTION PROCESS which will reduce the likelihood of problems from day 1.

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Stains on carpet/lino/nets/curtains and damages to walls are NOT generally considered wear and tear and are usually tenant damage. Cracks in paintwork can sometimes be caused by tenants but are usually caused by movement in walls/ceilings which can occur naturally in all properties. Cracked tiles require more investigation as this could be caused by tenants or an uneven surface or poor grouting and installation. When carpet is beginning to bubble slightly, show loose threads or discolour the age of the carpet is taken in to consideration and often if it exceeds a certain age then wear and tear can be diagnosed as a fault or contributor.

Some issues can be identified as being caused by both wear and tear and tenant damage. For example if damage is started as a result of age but then accelerated by the tenant. In this case the tenant may be responsible for a contribution towards the cost of remedying an issue. Other issues like faint oil stains on garage floors require more investigation as some level of discoloration may be expected over time. The most important issue is what steps the tenant has taken over the life of the tenancy and at the expiry of the tenancy to limit or reduce the problem.

If a maintenance problem has occurred and the tenant has not communicated this to a landlord then the tenant may also be held responsible for the acceleration of the damage. Issues such as mold and moisture can also be a difficult one. If a landlord identifies mold on walls, ceilings, nets or curtains that has caused discolouration or damage to the surfaces then this is usually NOT caused by the tenant even though it may have been accelerated by the tenant not cleaning the surfaces regularly. This problem should not be left until the termination of a tenancy as a tenant needs to be educated throughout the life of the tenancy on how to reduce and combat this problem.

If a landlord fails to effectively do this then they too have contributed towards the damage. Tenants need to be educated on opening windows and cleaning surfaces regularly to avoid this problem and property owners need to provide adequate insulation and ventilation. If they fail to do this then it is difficult if not impossible to chase tenants for this damage (tenants would be responsible for cleaning the surfaces but not necessarily the damage if mould has eaten in to surfaces).

Cleaning issues require a similar approach. It goes without saying that if a tenant fails to keep a property clean and tidy throughout the life of a tenancy then the property will degrade a lot quicker. This is NOT fair wear and tear and landlords should not wait until the end of a tenancy to address this issue. Regular inspections and tenant education is again the key to avoiding this issue. The Residential Tenancies Act is relatively vague on condition and requires properties to be reasonably clean and tidy. For this reason all Allen Realty tenants are required to sign a ‘Tenant Cleanliness Statement’, attached to the agreement which outlines specific obligations in a bid to educate tenants so all parties are on the same page with regards to presentation.

During the regular inspections tenants may need further direction (the most common is the use of fly spray and common requests to wipe ceilings) if properties are not up to standard and if problems do persist then we will take steps to terminate tenancies rather then let potential damage occur. If damage identified at the end of a tenancy is due to long term neglect then tenants should be charged but like moisture problems landlords need to take some responsibility for the lack of proactive management.

It is worth noting that a property manager and most property owners will ALLWAYS consider the history of the tenancy when judging what is fair wear and tear/tenant damage. For example, if a tenant has been at a property for years, has paid all rents/water bills in advance, has left the property absolutely immaculate inside and out but a small scratch is identified in the wall at the bottom of the stairs (common areas for damage when moving in or out of a property) the property manager may recommend to the owner that the tenant is not charged. However, if the owner requests we charge the tenant then we will oblige if the cost is reasonable.

Landlords need to be aware of common Tenancy Tribunal practises with regards to wear and tear and depreciation. It is common for adjudicators to enquire about the age and value of chattels and paintwork and proof of remedial work when considering claims for damages vs. wear and tear. Accountants often depreciate chattels using a percentage of the value and age and the Tenancy Tribunal does the same. They may not order the tenant to reimburse the complete cost of fixing damage to as aspect of the property that is years old and not brand new. Landlords must appear to be reasonable with their claims. If a landlord applies with an unreasonable claim then they may lose the benefit of the doubt. If a landlord is unreasonable and tenant proves that the rest of the tenancy has run smoothly then a tenant may receive the benefit of the doubt instead. Be reasonable in your negotiations and do not try to profit. Also bear in mind that if you rent a property to a family of 8 and at the expiry of a tenancy the Tribunal may rule that the landlord must expect slightly more wear and tear then if they had rented to a party of 4. When negotiating all issues need to be taken in to consideration.

When preparing for Tribunal hearings you will require quotes/invoices/invoices/inspection reports and pictures. If you turn up with photos and quotes then you may not receive the cost of the work unless it has actually been done. The tenancy Tribunal is not in the habit of awarding to the landlord when work has not even been completed to remedy the issue. So best practise is to identify issues, identify the course, request a quote to repair, and then negotiate with the tenant in order to mediate an appropriate settlement. You may even offer sweeteners if the tenant reimburses you in the next 48 hours. As you are dealing with people and their emotions the successful outcome always depends on the process being completed the right way.

An experienced property manager can usually identify the difference between damage and wear and tear and negotiate with tenants successfully with no emotion. This can be a difficult and time consuming process for private owners who are busy and more emotionally attached. This is one of the benefits of having a property manager and effective communication between you and your manager is the key to the successful outcome. At the expiry of each tenancy your property manager should report on any damage and the suggestions for reimbursement/compensation so there are no surprises down the line for the property owner.

Allen Realty Ltd offers a competitively priced property management and letting service that will take the hassle away from property investors and improves the performance of your property or portfolio. Our comprehensive service is customised to suit individual client’s requirements. For more information on our services including landlords rights and obligations visit www.allenrealty.co.nz.

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