Managing your managers

A two-bedroom apartment in sought-after Prahran should have no shortage of tenants. At least, that’s what Linda Perry thought.

Her daughter had bought an investment property and the family was at a loss as to why it remained vacant.

“We eventually discovered they [the agents] were advertising the wrong description of the apartment, saying it had ‘modern appliances’, etc and was much more upmarket internally than it actually was.”

“The rental price didn’t match the property description and people were coming through feeling deceived. They even had the wrong area listed,” says Ms Perry.

They only discovered this by attending an open for inspection themselves. The property manager arrived barely five minutes before opening time, with no idea where anything was and not even enough forms for applicants.

A phone call to the estate agent afterwards was met with hostility, says Ms Perry, who was told she was in the wrong for being there. “There was no apology or compensation.”

So the family found another property manager and, within a week, the apartment was let.

From a landlord’s perspective, a good property manager should find suitable tenants, collect bond and rent, and ensure tenants are meeting their lease obligations.

Depending on what is also specified in the leasing and managing authority (the document or contract that forms the agreement between landlord and agent, required under Section 49A of the Estate Agents Act 1980), property managers may also conduct routine property inspections and rental reviews, advise on improvements that will increase the property’s value and pay outgoings, such as council rates and corporations fees, on behalf of the landlord.

But what happens if property managers fail to do their duties properly?

“The first thing [owners or tenants] would do is write to what they call the officer in effective control of the practice and complain,” advises managing director of Australian Property Buyers, Karin Mackay, a buyer’s agent who also offers property management to her clients.

“I’d be working out what that cost me and going back and saying, ‘Well, I expect you to pay me X amount of dollars’.”

“Real estate agents are required to have a complaints handling procedure in place, and are obliged to advise the landlord about this procedure before they sign a leasing and managing authority,” says Consumer Affairs spokesperson Heather Abbott.

If the complaint can’t be handled this way, the next step is the Estate Agents Resolution Service (EARS).

EARS, within Consumer Affairs Victoria, offers advice and information, as well as handling complaints, conciliation and dispute resolution on real estate matters.

As well as dealing with property mismanagement disputes, it also covers disputes about buying or selling property involving the conduct of an estate agent. It is not, however, a court or tribunal, meaning conciliation and settlement proposals are voluntary.

“Consumer Affairs Victoria answered more than 532,000 calls last financial year, of which just over 10,800 calls were about real estate matters. Approximately a third of the real estate calls were about property management,” Ms Abbott says.

Their statistics show that they finalised 661 disputes about real estate matters generally, which led to settlements totalling $223,284.

If settlements cannot be reached through this process, then landlords can take the matter to the Victorian Civil and Administrative Tribunal (VCAT) or seek civil remedies in the courts.

However, the most common way landlords deal with problematic property managers is to do what the Perry family did and simply take their business elsewhere.

Ms Mackay has several investment properties of her own. When a property manager in Queensland spent an unauthorised $1300 on lawn mowing for one of her properties, she met with a similar response to the Perry family.

“We’d complained to officer of effective controls I can’t tell you how many times, and it was, ‘My imagination’. So I thought, ‘Right, you’re not willing to do anything for me’, so I took 20 properties off him.”

“They weren’t just mine, they were clients of mine. My son had an investment property, and ourselves, we had 13 and the rest were clients.”

Carolyn Wright from Your Property Manager estimates 30-40 per cent of her business comes to her this way. One thing many landlords don’t realise, she says, is how easy changing property managers can be.

In Victoria, the managing authority only holds the landlord to the agent they appointed until the property is leased. Once the property has been leased, the landlord can take their property to any other agent, at any time and this should be without any penalty.

“Agents rarely advise a new landlord that this is the case,” she says. “They often try to make the landlord think they have signed for the duration of the tenancy.”

“Any agent worth their salt should be confidently telling their client that they are not bound by the authority. Any landlord who has done their homework should not sign an authority for more than 30 days or, at the absolute maximum, 60 days.”

Landlords don’t even have to make the phone call. “Once they sign a new authority with the new agent, we do all the work for them,” she says. “As the new agent, we do often find many little surprises and things that have not been done correctly, but we can usually work around it and get things back on track”.

Links

EARS can be reached on 1300 737 030.

consumer.vic.gov.au

Dealing with ineffective property managers

The Tenants Union directly assists about 20,000 tenants and has 200,000 active user sessions on its website every year. “So we get a lot of business,” says policy and liaison worker Toby Archer.

Most of the calls are about property managers.

“It really does range from low-level bullying, intimidation and harassment right through to instances of what really constitutes unlawful discriminatory behaviour,” Mr Archer says.

“We continue to be quite disturbed by reports of discrimination of things like people’s marital status, their religion, their race, disabilities.”

Also common are property managers threatening tenants with blacklisting on the tenancy register.

Options for tenants to take further action include making an application to VCAT or consumer affairs or both, if there has been a breach of the Residential Tenancies Act.

In instances of discrimination, there is a course of action under the Equal Opportunity Law. Tenants can also talk to the Estate Agent Resolution Service about the conduct of a property manager, or Consumer Affairs Victoria on 1300 558 181.

Tenants Union of Victoria, tuv.org.au, 9416 2577.

How to snag a good agent

• Speak to at least two local agents, comparing their fees and services.
• Ask how much rent they would expect tenants to pay for your property, based on their knowledge of properties in the area.
• Be clear on what you want your property manager to do, and list these on the leasing and managing authority.
• Agree on how and when the agent will notify you if a tenant has caused damage, is not paying rent on time or has abandoned the property.
• Take out landlord insurance.
• Know the costs involved of engaging a property manager, and agree on what expenses the agent can and can’t deduct from the rent on your behalf. All the agent’s fees and expenses must be recorded on the authority.

Costs involved with engaging a property manager:

• All the agent’s fees and expenses must be recorded on the authority.
• Expect to pay a leasing fee for vetting and placing tenants in your property; it is negotiable and usually charged at the start of each tenancy agreement.
• You may have to pay a re-leasing fee for a new agreement with an existing tenant, and a marketing fee if the property is advertised.
• The management fee is a regular charge taken from the tenant’s rent payments.
• Be clear on what other costs an agent can deduct from the rent on your behalf.
• If you want the agent to organise repairs on your behalf, state this clearly in the authority or on the instruction form.