Landlords: Protection against bad tenants

Residential tenancy agreements cover the protection and rights of the tenant, but what about the protection and rights of the landlord? Here’s a breakdown of the landlord’s rights, the tenant’s responsibilities and what can be done if a tenant refuses to meet their obligations.

Some landlords have an abundance of horror stories about bad tenants – tenants who damage the property, disturb the neighbours or engage in illegal activities. One landlord stopped allowing tenants to paint the walls after a particularly creative renter threw handfuls of glitter at the wet paint. The glitter remained long after the tenant had left – despite numerous coats of paint.

Another landlord had tenants install a blow-up swimming pool in their third floor apartment. The occupants of the apartment below were less than impressed when water started leaking through their ceiling. The landlord was furious.

When one tenant stopped paying rent, his landlord paid him a visit only to discover the tenant had done a runner, taking with him the linoleum floors, kitchen cabinets and toilet. The only thing left behind was the kitchen sink.

When faced with such stories, it’s good to know that landlords do have protections, starting with a number of tenant obligations. Tenant obligations vary from state to state, but there are plenty of similarities.

A tenant must:

• pay rent on time
• take reasonable care not to damage the property (including common areas)
• report property damage as soon as possible
• keep the premises in a reasonably clean condition.

A tenants must not:

• use the premises for an illegal purpose
• use the premises in a manner that would cause unreasonable disturbance to their neighbours
• install any fixtures to the property without their landlord’s permission
• assign or sublet the whole or any part of the rented premises without written consent of the landlord.

This last point may include subletting the premises via Airbnb – I’ll share an interesting case study below.

Rental agreements and statutory obligations

The rental agreement will outline specific obligations agreed between the parties. Some obligations also arise under statute. Each Australian state and territory has its own Residential Tenancies Act. Victoria’s Act, for example, imposes a number of statutory obligations on tenants that may not be mentioned in the rental agreement.

Bad tenants

If a tenant fails to meet their obligations, their landlord (or agent) should first try to resolve the dispute directly with the tenant. If unsuccessful, it may be time to explore other options.

Where a tenant has failed to meet a statutory obligation under the relevant Tenancies Act, the landlord should give (serve) them notification of the alleged failure. This is known as a breach of duty notice. If the landlord wants the tenant to vacate the property, they must serve a notice to vacate.

There are specific requirements relating to the content of these notices and the manner in which they are served. Contact your state or territory’s residential tenancy authority for more information (for example, NSW Fair Trading or Tasmania’s Consumer Affairs and Fair Trading). Some of these authorities also offer a free conciliation service.

Once notice has been served, if the tenant doesn’t comply with the notice, the landlord can apply to the civil and administrative tribunal in their state or territory to hear the dispute (for example, SAT in Western Australia or NTCAT in the Northern Territory).

Where a tenant has failed to meet an obligation under their rental agreement, the landlord can apply directly to the civil and administrative tribunal to have the matter resolved.

Tribunal process

The process for going to the tribunal involves four steps:

1. Make an application.
2. Provide it to the tribunal.
3. Serve it on the tenant.
4. Appear at the hearing.

When serving the application on the tenant, it’s advisable to use registered post. Some applications concerning particular disputes must be served by registered post or in person.

Check your tribunal’s website for information about how to make an application. Landlords should note there’s usually a fee associated with having matters heard by the tribunal.

Outcomes

The tribunal has wide-ranging powers to enforce tenant obligations. Examples include enforcing a notice to vacate and making the tenant pay compensation to the landlord.

Airbnb case study

The popularity of Airbnb has given rise to disputes about illegal subletting. While each case study is different, here’s one that deserves consideration.

The Victorian Civil and Administrative Tribunal (VCAT) recently heard a matter involving the alleged illegal subletting of a property via Airbnb. The VCAT member (similar to a judge) found in favour of the tenants.

It was decided that the tenants had not entered into a tenancy with any of the Airbnb guests and, as a result, had not assigned or sublet the premises. Instead, the Airbnb guests were found to have held a revocable licence.

One of the key reasons for this decision was that the Airbnb guests did not have exclusive possession of the property. This was determined by a number of contributing factors, including:

• the agreement expressly stated that the use of the rented premises was under licence
• the short-term nature of the stays of Airbnb guests
• the tenants’ retention of the property as their principal place of residence
• the ability of the tenants to access the property while Airbnb guests were staying.

Protect yourself

There are three simple ways to help protect yourself against bad tenants:

1. Check their references.
2. Take out landlord insurance.
3. Choose an agent who is competent and capable of managing your property.

From the outset, be clear with your tenant about their obligations. Make sure they get a copy of the rental agreement and, where applicable, a copy of the owners corporation rules.

Just as in any relationship, disputes can arise between landlords and tenants despite best intentions. And just as with other relationships, the key is to know where you stand and to keep the lines of communication open.

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