A lease break doesn't have to be a headache

Hearing the words “I want to break my lease” can bring fear and terror into even the most experienced property manager. These words can almost always predict a headache in one way, shape or form and it can become a stressful situation for the tenant, landlord and of course us as the property manager.
It seems that tenants, and even landlords, breaking their leases are becoming far more common these days. The break of lease situation is not something we are immediately taught to handle, and has traditionally been left unspoken about as nobody wants a client to break their lease.
I learnt very quickly from some mistakes I made when dealing with a lease break, so this week I ran a webinar on this exact topic to share everything I have learned to make the situation the least stressful as possible. In preparation for my webinar session I delved down into how to best handle a break of lease situation, create a procedure and communicate this effectively to your tenants and landlords to reduce stress for all parties involved. 
Beyond the legislation side of things, a few of the main points to take away included:

• A strong procedure – Your break lease procedure needs to be set in stone and consistent across all staff in the business. I need to be able to walk into your business and sit in the property managers seat and know exactly how to deal with it at every step of the way. When you know the procedure it makes it much easier to train on it, communicate it to your clients and leaves less room for grey area.
• Transparency – Being transparent to all parties on their obligations and risks is key, ensuring the person breaking the lease agrees to all the terms in advance in writing and is aware of any risks. Why not even provide the tenant with a break lease form from the sign up meeting (along with a normal vacate form) so the tenant knows exactly what they need to do if a situation does arise. This also keeps communication lines open and hopefully they will be open to talking to you ahead of a potential lease break, and know that you have a process to deal with it.
• Communication – You may think you communicate well normally, however in a break of lease situation you need to step this up even further. Lease breaks are one situation where you need to over-communicate with both parties. Remember to keep both the landlord AND the tenant updated across the leasing process.
• Understanding – Remembering that generally speaking, no one has started their lease planning to break it. There are some really difficult and challenging situations that cause people to have to break a lease - financial, relationships, relocations and more. We need to put ourselves in their shoes and do what we can to make it less stressful. When they are getting fired up, remember where they are coming from and it will help you respond in a better way.
• Keep good records - Keep records of everything from copies of notices down to the number of enquiries received each week, price reductions, reasons for applications not being accepted, comparable properties and more. Keep everything in one place (for a free copy of my checklist on what evidence to keep in-case the break lease escalates click here)
•  Mitigating Loss - Our main duty in the break of lease situation is to minimise any potential loss to landlord and mitigate the tenants potential loss. This means that the methods we usually rely on to get a property leased may not be sufficient. What more can we be doing to assist in finding a replacement tenant? Additional marketing? Rent reduction with the tenant paying the shortfall? 

Want to know your best marketing weapon?

Beyond the latest designer website, past the shiny DL cards, afar from the perfectly designed brochures, away from the beautiful window display is one very important marketing tool that is often forgotten and overlooked - yet it is the easiest to manage, the lowest cost, and the most effective tool......

Have you guessed it yet?

It’s YOU.

You are the most powerful marketing tool you have at your disposal right now. The way you speak to people, the way you present yourself, the way you appear in the market place, can be ten times as effective as a marketing tool compared to some of the latest and innovative ideas in the industry.

It’s been very interesting for me being on the other side of the property management transaction recently as a prospective tenant looking for a rental property in my local area. I’ve been able to review how fast enquiries are responded to, the conduct of the leasing consultant at the open, the manner of the property manager processing the applications, right through to the sign up process and moving in.... There have been some very impressive dealings, and also some left a lot to be desired. I’m pleased to say I’m lucky enough I’ve ended up with one of the best.

I would imagine that many of these agencies with the less than desirable service to prospective tenants are at the same time probably trying to grow their businesses through marketing, prospecting and new business tactics, without looking at what is actually happening on the front line. From this experience I know which agencies I will be recommending to friends and family and which agencies I won’t.

We need to remember that prospective tenants may not only one day be our future clients, but they also currently know our future clients (their friends, families, colleagues, circles) and of course we want them to be speaking positively about us and our service across their networks!

This got me to thinking if we only realised that the best opportunity we have to market our service, is actually how we conduct our service and ourselves, how much easier it would be to grow our businesses?! Instead of spending thousands on marketing campaigns, what if we spent that time and money investing in improving, training and developing our own skills.

Remembering that YOU are the most important marketing tool that you have at your disposal and that the way you conduct yourself, present yourself, and treat your clients will ultimately provide endless positive marketing, referrals and business for years to come. 

Don't miss our webinar next Wednesday where we'll give you fresh ideas to help you generate buzz around your brand and put the 'marvellous' back into your marketing.

Changes to the NSW Residential Tenancies Act 2010

Under the RTA 2010, when an owner decided to place the property on the market for sale, a tenant was able to terminate a fixed-term agreement without compensation to the landlord (even if the landlord did not intend to sell before the agreement was entered into, but subsequently decided to do so)

The revised changes to the act this month will allow the tenant to terminate a fixed term agreement if the landlord notifies them of their intention to sell – unless the landlord disclosed the proposed sale of the property before entering into the agreement as required by section 26, then tenants will be unable to terminate the fixed term agreement.

As a reminder section 26(2) requires a landlord or landlord’s agent to disclose to a tenant, prior to the tenant entering into a residential tenancy agreement, any proposal to sell the premises but only if a Contract for Sale has been prepared.

We recommend that you include as part of your process when signing a new lease that the question is asked of the landlord if they are considering selling the premises during the fixed term. In which case it is necessary to disclose this information to the tenant to ensure that they cannot give notice should the landlord go ahead with the sale during the fixed term.

Real Plus have added a step on their New Tenancy Procedure template to ensure this step is added to your new tenancy process and we would suggest you do the same on your internal checklists and procedures.

Any queries on this don’t hesitate to call us on 02 8355 4999

Why do relationships fall apart at the vacate?

One area where relationships fall apart time and time again is at the end of the tenancy. Across all of the agencies we work with, this is one area of property management that whilst a company might have a great internal system, the system fails when it’s not communicated to the tenant or landlord thoroughly.

As a result, much time is spend to-ing and fro-ing between the landlord and tenant arranging the vacate inspection, finalising payments, reporting on the inspection and finalising the bond.  A lot of client frustration and misunderstanding, and hence conflict comes from a lack of communication of the process. Often we know that things are under control, or what the next steps are but we are not communicating this to our tenants and landlords.

Clients are more likely to get frustrated with us when they feel like they don’t know what is going on or when delivery expectations haven’t been set. We know from our end that things are being taken care of and a system is being followed.  However, from the outside looking in, the clients don’t know what we do every day that makes up the process and may feel that areas that have not been communicated to them are areas that are not in control.

To lift your success and avoid stress in the vacate process:

• Automate – automate how your vacate process is communicated. Instead of just sending a letter confirmation, give the tenant a step by step guide of how the vacate process will run.
• Systemise – firm up your internal procedures for the vacate, when was the last time they had a review and you looked at how you can streamline the process?
• Over-communicate – Quick messages to the landlord and the tenant to tell them where things are up to, even if you know they are under control, will stop them chasing you for an update on things, saving you time and stress.

We’ll have many more tips on vacating and communication during our next educational webinar on Creating the Ideal Vacate – click here to register. 

If you are Real+ member, click here to visit Real TV where you can watch the webinar, 'Creating the Ideal Vacate'

When do I get my bond back?

When do I get my bond back?

At Real+ we often like to take a moment to think about things from the tenants perspective. This allows us to not only improve the property management process to make things as streamlined and easy for us as possible, but also gain a greater perspective of understanding when communicating and dealing with tenants.

This week I took a moment to think about things from the tenants perspective at the time of vacate, final inspection and bond refund.  I took a moment to think back to the times I have myself vacated from a property, what my expectations were compared to what happened, and then put that into perspective as to how I had handled vacating tenants as a property manager. This vacate stage seems to be one property management function that is handled quite differently from agent to agent.

Some questions I felt went unanswered as a tenant (despite my own property management knowledge, and the receipt of a generic vacate letter) were around when they planned to show prospective tenants through the property, whether I was supposed to drop the keys to their office, when I would be meeting them for the vacate inspection, and most importantly (the most common frustration of tenants and hardest things for a property manager to guarantee):

• How long would it be until my bond was refunded?

Most tenants are relying on and budgeting on that money for some purpose so understandably they get frustrated when it’s not as easy as keys back, bond back. As a property manager, I know I couldn’t guarantee a time frame for the tenant as to when they would get their bond back, it depended on whether they’d returned the property in good condition, if it was clean, if extra work was required, if all the keys were returned, how quickly the landlord confirmed it wass okay to release the bond etc. So many variables.

If we can’t 100% guarantee the time frame, what can we control? How can we avoid an angry tenant at the vacate inspection? Well not only can we control how we communicate the process, but also how we provide expectations to the tenant across the vacate process. This will help alleviate some frustrations. Often we know what the process is and what the tenant can do to ensure they have the best chance of a speedy bond refund, however we are not communicating this to them each time.

Next time instead of sending out the generic vacate letter, why not provide the tenant with an outline of the process and what steps they can take to ensure their bond is refunded as quickly as possible! We have created a handy checklist you can provide to your tenants when they are vacating called the “How to ensure a Speedy Bond Refund Tenant Checklist,” click here for your copy.

If you are Real+ member, click here to visit Real TV where you can watch our webinar on Condition Reports!

Time to Turn Complaints into Compliments?

I’m sure many of us in property management have noticed that our landlords and tenants are becoming more educated and demanding than ever. The skills of a property manager now need to extend to far beyond a collector of rent or a coordinator or repairs with expectations of a property manager higher than ever. This is partly because our client’s are easily educated by the internet, are persuaded by stories in the media, and are able to communicate both positive and negative experiences far easier amongst their community through social media.

Thanks to this, those we perceive to be “difficult clients” are far more prevalent in our day to day dealings and situations with potential for conflict are arising more often. At Real Plus our most common request for training is on communication and conflict resolution. What we see is that even experienced property managers in general are not always equipped with the communication and conflict resolution skills needed to cope with these increased demands, expectations and knowledge.

The most successful agencies we work have ongoing training plans into place to grow and develop their teams and business to both educate themselves, but also find ways to educate their clients, therefore becoming the expert in their field. Ongoing training will also enable them to add an array of communication techniques and training into place to help their teams avoid conflict and turn potential complaints into compliments. Some tips for ensuring you are staying one step ahead include:

• Stay educated – Ensure you know what your clients know so that you can proactively tackle any potential issues
• Keep training – Undertake ongoing internal and external training so that skills are continually being developed to deal with ever increasing client needs/demands 
• Peek out of industry – some other industries such as retail and hospitality can bring some great communication, conflict resolution and customer service skills to the table
• Look to improve – don’t assume that because it’s been done a certain way for a long time that it’s the best way to do it
• Listen – the best advice anyone working in property management can take on board, often we don’t actually listen and this is the root of most potential issues

If you are Real+ member, click here to visit Real+TV where you can watch our webinar Communication Concepts: From Complaints to Compliments

From the Eyes of a Prospective Tenant

I have recently been in the market for a rental property. Whilst conducting my own rental search, I have been taking note of my consumer experience as a prospective tenant in order to be able to deliver live customer feedback, information and training to our property management clients.

I’ve almost felt like a mystery shopper at times, secretly taking note of the quality of advertising & photos, accuracy of descriptions and photos, response times from agents, presentation of the agent and presentation of the property. Along the way I also reviewed the application process across several agencies and in particular - how I have been treated as a prospective tenant and ultimately how this affected my decision in choosing which properties to visit and ultimately lease!

There were definitely some property inspections and agent response times that left me feeling bad for the landlord that the agent’s actions had turned me off renting their property! And even further still that if I was a prospective landlord that I would not be choosing that agent to lease my property.

Don’t get me wrong, many of the agents were doing a great job, however my experience was very interesting and eye opening which has helped me identify some key areas that leasing agents need to work on at the leasing stage of their property management process. (Without meaning to toot our own horns, I was very pleased to see that one of the best experiences I had was with an agency who is a Real+ Member undergoing regular training across their property management team – the proof is in the pudding).

So, want to know more? Well next week I’ll be hosting a webinar on leasing – in which we’ll be talking about ways to get properties leased faster, reduce vacancy and ways to make your lives easier. I can tell you now that what I’ve learnt from being a prospective tenant will be going into this session so be sure not to miss this one if you want to know how to improve your leasing process!

If you are Real+ member, click here to visit Real+TV where you can watch our webinar Just Leased! Leasing made Faster, Smarter & Easier.

NSW Swimming Pool Laws Postponed

The NSW Office of Local Government has postponed laws that will require all swimming pool and spa owners to have a certificate of compliance, which are now due to come into effect on 29^th April 2015.

Council officers have reported that it can take up to three months to issue a compliance certificate from the initial inspection, leaving real estate representatives concerned that not all of their properties would have been compliant before the cut-off.

The delay in commencement of this legislation will allow for a smooth transition period, and means at this stage no further action is required from you as a property manager. Be sure to inform your home owners of this change, and over the course of the year start including pool compliance registration into your procedures to ensure you are prepared once this legislation has been implemented.

You can read more about this Pool Legislation in our blog post, here.

How Would You Rate Your Rent Review Process?

We all know an essential part of our property management process is the rent review. At this stage we are generally finding out what the tenants plans are and if they want to stay on, then letting the landlord know the current rental value. But what if we took this simple rent review s step further and conducted a complete tenancy review with the landlord?

What if next time the rent review comes up we conduct the tenancy review as if we were sitting at a new listing presentation with them to discuss their needs by asking questions such as:

• “Paul, before we review the rental value on your property I just wanted to have a chat about you. What are your plans for the next 12-24 months?
• How have you found the tenancy so far? What do you think of the tenants?
• What is going to be most important to you in reviewing this tenancy? Increased rental value? Or tenant security?
• When would you like us to next review the rent?
• Do you have any plans to move back in or sell in the foreseeable future? As we can work on a plan towards that together.

Perhaps the landlords wants, needs and expectations have changed since you appraised their property 12 or more months ago. Things change so quickly in all of our lives, we need to remember that our landlords are people like us and things change in their lives too, therefore we need to consider their needs which are constantly changing just as our own are.

Originally your landlord wanted a family in their property, but are quickly realising that perhaps that professional group would have been better. Perhaps they were planning to stay away for 3 or more years but now plan to return home in six months time. Perhaps they are thinking of selling in a year but may not realise increasing the rent now risks the tenants vacating closer to the sale time.

This new process of reviewing not just the rent, but the tenancy itself will enable you to best recommend options to the landlords based on their needs (and not what we assume their needs are based on our process). Most importantly, just by opening up this whole new world of communication you are improving the relationship between yourself and the landlord by showing you actually care about their wants and needs. Imagine the possibilities.

If you are Real+ member, click here to visit Real+TV where you can watch our webinar: Systemise for Success - Rent Reviews.

Are You Demonstrating Value?

A Facebook conversation caught my eye yesterday. There was a quickly developing chain of comments on the back of one friend’s status. The status was regarding her extreme disappointment with her property manager and asking around for an opinion as to whether she should self-manage.

People that I didn’t even know were owners of investment property were suddenly coming out of the woodwork to express their disappointment with their property managers too.

The conversation revealed complaints of lack of customer service, no response or communication, comments around not seeing value in having a property manager (to put it nicely) and comments around it being better to manage their properties themselves.

After 10 years working in property management, these kind of comments really disappoint and concern me. The fact that we are not seen to be the professionals we should be seen as, that people do not see value in what we do, and that there is a notion that property managers are “useless” means that something is not working.

We know how tough and demanding property management can be. We know the flack PMs can cop whilst working long and hard to navigate the complexities between keeping landlords, tenants, and contractors happy, whilst acting within office procedures and the legislation of your state. And we know how hard it can be to get back to everyone in a timely manner.

We are further challenged now than ever before as we are now expected to be experts in so many areas and wear many different ‘hats’ for our now well-educated 'Google generation' of landlords and tenants. Unfortunately now, even 20 years' property management experience sadly doesn’t mean we have all of the skills to deal with the expectations those educated clients of 2014 have of us.

In saying all of this, research shows that this notion of 'useless' being perceived from the outside often comes down to a basic lack of communication.

There is no doubt that ever-mounting inbox can become overwhelming. Top that with the clients phoning to see if you got the email that is sitting in your inbox and it can start to feel like there is a big monkey sitting on your shoulders.

What we need are additional techniques, skills and systems to overcome these challenges, and to fulfil our roles. Ongoing training and continual learning (for both property managers and their managers) is going to be the only way to deal with this.

There are a few (seemingly simple) communication techniques that you can use to better deal with these clients and mirror the level of customer service that they are expecting:

• Set expectations from the start of the relationship (such as your expected response times to phone/email/texts). Also seek out their preferred method of communication. It's no use waiting on a response to emails if they are a phone person.
• Set expectations on the whole property management process from the start - i.e. how often routines take place, what is an urgent vs non-urgent issue, how does the invoicing and statement process work
• Readjusting expectations if external factors mean you cannot deliver a result
• Have an auto response on your email account that thanks the client for their email, and gives them an expected response time. Also indicate response time on your voicemail (and of course deliver on that expectation)
• Update your client – even update them before they ask for an update, even update them if there is no update

Of course, all of these tips will only work if you do what you say you will, when you say you will do it. If you are prone to forget, diarise call backs in your outlook calendar at the end of the conversation. Utilise modern technology to assist with 'to do' lists and managing your time. 

Having your time more efficiently managed, (i.e. using blocking techniques) will make sticking to your own communication program easier. If you are unsure of how to implement and manage any of this, seek additional training.

If we start to use tips like these, and ensure we are constantly training and developing ourselves, perhaps we can start to change the notion of property managers being “invaluable” to being worth every cent of management fees. And that next time someone asks if they should self-manage – that the responses might look a lot different. 

The Rise of Long-Term Renters

As we have seen the number of Australians who own their home decline over the last decade, we continue to see a rise in the portion of the population who are renting long term – renting for a continuous period of 10 or more years.

Here are some quick stats on the current long-term rental landscape:

• In the last decade, the percentage of people renting compared to owning a house has risen from 18.4% to 25.1%.
• $347 is the average amount a household can expect to pay on housing per week – which is 19.7% less than homeowners with a mortgage pay per week.
• The average renter spends 20% of their gross income on rent.
• 10 years ago, around 27% of renters had been renting for 10 years or more. Today, 33.4% of renters have been renting for 10 years or more.
• 31.8% of people feel they need to rent for longer periods of time to save for a larger house deposit.
• The number of middle-aged Australians renting long-term continues to increase.
• More and more families are occupying rental properties, whilst the number of single person rental households is declining.
• A significant proportion of people who rent don’t feel a sense of community in the area they live, and are less satisfied financially.

What does this mean for property managers?These statistics highlight how important it is to value and take care of your tenants, rather than viewing them as dispensible. If tenants are frequently moving in and out, a property is going to experience a lot more wear and tear.

Property managers should encourage their landlords to find long-term tenants and keep the positive aspects of not having a vacancy in mind when considering when and how often to raise the rent.

CTTT to Become Known as NCAT

As of January 1 2014, the Consumer, Trader & Tenancy Tribunal (CTTT) will become NSW Civil and Administrative Tribunal (NCAT).

CTTT is currently composed of 23 separate NSW tribunals and this system can be quite confusing. NCAT seeks to integrate these existing tribunals to provide a single gateway in an effort to improve the accessibility, efficiency and accountability of the tribunal system and increase the public’s confidence in these services.

To ensure NCAT can meet the needs of Tribunal users, it will consist of five divisions – consumer and commercial, administrative and equal opportunity, occupational and regulatory, guardianship and victim support. This is a response to the challenge which has been maintaining consistency and transparency across over 30 tribunals whilst still providing quality service.

CTTT have announced that any matters which have been lodged with them and not heard before January 1^st do not have to be relodged with NCAT, and any the resolution of any matters currently in progress will not be affected.

For further information visit: http://www.tribunals.lawlink.nsw.gov.au/

Free Tenancy Dispute Resolution Service for NSW

NSW tenants, landlords and property managers can now utilise a free tenancy dispute resolution service which aims to resolve residential tenancy disputes rather than having them heard by the Consumer, Trader and Tenancy Tribunal (CTTT) which will be known as the NSW Civil and Administrative Tribunal (NCAT) as of 1^st January 2014.

Areas where Fair Trading is able to assist in resolving disputes includes:

• repairs and maintenance
• non-urgent health and safety issues
• alterations and additions
• access to the premises including inspections
• non-compliance with the tenancy agreement
• water saving devices and smoke alarms
• provisions of correct notices
• ending a tenancy
• breaking a lease, and
• condition reports

Rather than have parties go through the standard initial conciliation process at tribunal, this new resolution service seeks to resolve disputes through a teleconference or onsite meeting. This method relies on the co-operation of both parties and their willingness to reach an agreement out of court – Fair Trading recommends that parties involved in a dispute are open to various suggestions of how to settle the dispute.

In any instance where Fair Trading cannot help the parties reach a mutual agreement in regards to the resolution of their dispute, either party can lodge a claim with NCAT. Additionally, NCAT will continue to deal with all other areas of residential tenancy that Fair Trading does not handle.

Visit the Fair Trading – Residential Tenancy Disputes page, or call 13 32 20 for more information about the free dispute resolution service.

RentRight: New Mobile App for VIC Tenants

Consumer Affairs Victoria have developed a free mobile app ‘RentRight’, designed to assist Victorian tenants in knowing their rights and responsibilities, whilst also providing various resources to aid renters in managing their tenancy.

This app provides renters with a wealth of information at their fingertips, but provided Property Managers are diligent in keeping up to date with legislation and best practice, there is no need to see the app as a threat or problem.

Some of the key features of the ‘RentRight’ app include:

• Legislated information for renters on topics where renters may have previously been unclear of their rights and responsibilities. Areas such as leases and notices, standards, repairs, and entry rights are clearly and thoroughly explained.

• Helping tenants understand condition reports. The app outlines the actual purpose of the report, and also the importance of being diligent with inspecting the property prior to tenancy. It specifies the requirements of both the landlord and tenant.

• Lodging legal notices for repairs, damages and utilities directly to the property manager. The app can lodge urgent and non-urgent repairs or damage to the premises, with the functionality to include photos in the notice. It can also lodge a legal notice if the tenant has paid utility charges that are not the tenant’s responsibility.

• Various email templates regarding issues such as ending a lease (e.g. before a lease agreement expires, because the premises are unsafe, because the landlord has given notice to vacate) and breaches of duty (e.g. keys have not been provided, the premises have not been maintained in good condition).

• Calculating weekly rent costs, to assist renters determine how much their payments will be, whether they are to be paid fortnightly, monthly, six-monthly or annually.

• Budgeting calculator which is designed to track the various up-front costs that may be involved in renting a new property.

It is vital that Property Managers continue to educate themselves on industry standards, legislation changes and their responsibilities – lucky for our Real+ members it’s easy to stay on the ball.

The various learning modules on the Real+ learning platform help test your knowledge and see which learning areas may need improvement.

You have access to resources such as learner guides to assist in managing arrears, maintaining property and even landlord letter templates, whilst we also aim to keep you informed on industry changes with announcements in the ‘News’ section of the platform.