1. Can I choose the Tenant I want?

Of course you can. The owner, in consultation with Wood Property Partners, can personally select the tenant they think is most suitable. The owner may instruct the agent to secure a tenant with certain characteristics i.e.: professional couples, families, etc., in preference to others. The effect of being too selective however may limit the number of prospective tenants. There are also legal issues to consider like the Discrimination Act when selecting a tenant.

2. Can I inspect the property when I want?

Not really. The tenant is entitled to quiet enjoyment of the property they are paying you rent for. However as a condition of the lease the tenant permits the owner or Wood Property Partners to inspect the property periodically during the tenancy. We organise those inspection on your behalf and you’re welcome to come along with us.

3. What is the average length of lease?

Most residential tenancies are for 12 months. This is agreed at the commencement of the lease. However most tenants stay in a property for about 2 years.

4. Am I able to terminate the tenancy?

Yes you are. Obviously we are talking about someone’s home (the tenants) so the law quite rightly, puts in place terms and conditions and processes to govern an owner terminating a tenancy. Suffice to say a problematic tenant gives the owner more cause to terminate a tenancy.

5. Who pays all the rates and taxes?

The owner. Under residential leases the owner is responsible for payment of rates like council, water, sewerage and drainage, Land Tax and all owners’ corporation charges.

6. Who pays for consumption of water, power, gas etc?

The tenant is responsible for usage costs like phone, power, water, internet, and gas.

7. Who is responsible for general maintenance?

The owner and tenant. Both share responsibility for the upkeep and maintenance of the property. The owner agrees to keep the property in a good tenantable condition and the tenant agrees to maintain it in accordance with the original condition report save for fair wear and tear and to report any maintenance in a timely manner.

8. What level and sort of insurance cover is required?

Well it depends and every owner should get advice on this. If the property is part of an apartment complex the owners corporation is responsible for building insurance and things outside your apartment, while the owner is responsible for things inside the apartment, which leaves you to consider:

  • Public liability
  • Accidental or malicious damage by a tenant
  • Theft of items by a tenant
  • Loss of rent
  • Legal expenses
  • Damage caused by fire, storm, water leaks, etc

 

Some of the most important insurance today is loss of rent and public liability. We recommend owners ensure they have full coverage for loss of rent and public liability. Wood Property Partners can put you in recommend someone.

9. Will you pay my mortgage directly?

We can pay your rent in to any bank account you wish. If that is a mortgage off set account or similar that’s fine. However it’s important to clarify Wood Property Partners are not responsible for maintaining your mortgage. Also interest rates change so the amount that needs to go to a mortgage will change.

10. How do I work with the Owner Corporation?

It’s in your interests to maintain a close contact with the owners corporation via your buildings committee. Wood Property Partners normally do this on your behalf so that the building is maintained correctly and your investment is protected.

11. Is GST payable on Rental income?

Our understanding is that your rent is input-taxed and doesn’t include GST in the rental charge. You also can’t claim credits for the GST included in any costs relating to the rental, such as agent’s commission or repairs and maintenance on the premises. Importantly we are not qualified to give tax advice and you should seek independent advice from a qualified adviser that we can refer you to.

12. How long does it take to replace a tenant?

Hopefully no time at all but of course it depends. It can however range from one week to 4 for 5 weeks or even longer if the owner is holding out for a specific type of tenant or a premium rent. This is where Wood Property Partners can really help to advise you on what tenants want and where the rental market is for your specific property.

13. What is the normal investment return?

If we are talking about an income return it is usually between 3% to 5%. This is also called a yield or capitalization rate. We prefer to talk about total return which includes capital growth as there is no point buying a high yielding property if the capital value is stagnant or even declines. Total return for quality property over an extended period property is around 12%.

14. What happens if a tenant trashes my property?

Firstly we initiate action to terminate the tenant assuming they are now in breach of the lease and are unable to rectify the damage.

15. How much should I increase the rent when a tenant is replaced?

Regular small increases is better than less frequent large increases. The answer however is perhaps predictably… it depends. Wood Property Partners access to current and relevant information means we are able to advise you (the owner) on the market rental level of directly comparable property and how many days they spend on market to lease.

16. Can I claim the agents commission as a tax deduction?

Yes you can. Expenses incurred in managing your investment are generally tax deductible from the income. This include the agents fees, reasonable travel expenses, insurance premium, plus the other costs like rates, taxes, and owners corporation charges.