Rental Guide for Landlords and Tenants 26041058 v1 National 09 09 14 Commercial in confidence 1
Rental Guide for Landlords and Tenants General Whether a landlord or tenant, it is essential to obtain competent advice before entering into a residential Tenancy Agreement. Step 1 At the Start of the Tenancy The Residential Tenancy Agreement A landlord (also known as a lessor) and tenant must enter into an agreement (a legally binding contract) before beginning a tenancy. It is advisable that this agreement be in writing to avoid confusion and disputes. The agreement must include the Residential Tenancies Act standard terms and conditions found in Schedule 5 of the Act at: www.legislation.act.gov.au/a/1997-84/default.asp. For an excellent template Agreement see: www.courts.act.gov.au/magistrates/tribunals/rtt/rtt.html. It is advisable that a tenant read through any Residential Tenancy Agreement thoroughly before signing. In particular, the following should be noted: the length of the tenancy, the rent, the bond, services included in rent (eg. electricity) and any special conditions. If the landlord or agent offers to do anything (e.g. paint a wall) you should get that undertaking in writing before you sign the Agreement. Note that unless both parties agree, a tenant or landlord cannot change a Residential Tenancy Agreement after both parties have signed it. A tenant must also be provided with a copy of The Renting Book produced by the ACT Office of Fair Trading found at: www.fairtrading.act.gov.au/rentbook/renting%20book%202006.pdf which sets out comprehensively the rights and obligations of a Landlord and Tenant. After an agreement on terms and conditions has been reached, at least two copies of the Agreement should be signed and one copy kept with each of the landlord and tenant. Condition of Premises Report A landlord and tenant must fill out a Condition of Premises Report at the start of a tenancy. The landlord must complete, sign and provide two copies of this report to the tenants not later than 1 day after they move in. The tenant must sign both copies and return 1 copy to the landlord within 2 weeks after receiving the Report. The tenant has the option of adding their own comments if they do not agree with the statements of the landlord. This form can be found at: www.rgo.act.gov.au/rentalbonds_forms.shtml. It is advisable for the tenant to take photographs of any damage existing the start of the tenancy to avoid later dispute. Bond Money A landlord is not legally required to take a bond. If a bond is taken it cannot exceed four weeks rent and must be lodged with the Office of Rental Bonds (ORB). Bond money cannot be kept personally with the landlord (penalties apply if this is not complied with). A landlord must lodge the bond with ORB within 2 weeks of receiving the bond money (4 weeks for a managing agent). A landlord must provide the tenant with a receipt from ORB for proof of payment of bond. A Bond Lodgement Form is found at: www.rgo.act.gov.au/rentalbonds_forms.shtml. Reading of Metered Services The landlord should obtain a metered reading of services (eg. electricity and gas) at the start of the tenancy and verify these readings with the other party. This should also be done at the end of the tenancy. 26041058 v1 National 09 09 14 Commercial in confidence 2
Step 2 Throughout the Tenancy Inspections and Access to Property A Landlord can inspect the property following the commencement of the tenancy during the first and last months of the tenancy. In addition, a landlord can inspect the property twice within a 12 month period. The landlord must give the tenant 1 week s notice in advance of any inspection and such inspection should be at a time agreed to by both parties. A landlord cannot otherwise access the property in any manner during the tenancy without the prior consent of the tenant, except in the case of emergencies. Payment of Rent A tenant must pay the amount of rent as set out in the Agreement and in the periods specified (eg. fortnightly). The landlord can request up to one calendar month s rent in advance for a rent payment. The landlord cannot change the way in which rent is to be paid unless both parties agree. Rent cannot be increased in the first 12 months of a tenancy. Thereafter, a landlord can only increase rent once each year and must give the tenant 8 weeks notice in writing of any increase. A landlord must keep a record of all rental payments made for a period of 12 months after the end of the tenancy. Payment for Services (eg. Electricity/Gas/Water) A Landlord is responsible for the cost of rates, taxes, the annual supply charge for sewerage and water, body corporate fees, any services that are not separately metered and any other services for which the landlord agrees to be responsible. The landlord should pay for the cost of installation of essential services. The tenant is responsible for the cost of services such as electricity, gas, water and telephone but only where these services are separately metered (unless the landlord agrees to pay for these services). The tenant should not pay for services provided outside the tenancy period. Property Maintenance and/or Damage A tenant must maintain the property in a reasonable condition through the tenancy. A tenant must inform the landlord of any damage as soon as practicable. At the end of the tenancy agreement, the tenant should leave the property in substantially the same condition as it was at the beginning of the tenancy, subject to fair wear and tear. The tenant should not make any alteration to the property without consent (it is advisable to get any such consent in writing and signed by both parties). The tenant must notify the landlord if there is damage to the property or repairs needed. The landlord must arrange a suitable time with the tenant for repairs and make these repairs within 4 weeks unless otherwise agreed. A tenant should notify the landlord as soon as possible if urgent repairs needed (eg. burst water service). A landlord should carry out any repairs as soon as possible. The landlord is responsible for the cost of these repairs unless damage to the property is caused by the tenant s intent or negligence. Change of Tenants If there is the likelihood of a change to the tenants of a property (eg. 1 tenant leaving and being replaced in a share house) the tenant should notify the landlord as soon as possible. A Transfer of Tenants form must be completed: www.rgo.act.gov.au/rentalbonds_forms.shtml. This is important as the ORB can only refund bond money to the people listed on the Bond Lodgement Form and does not release bond individually to one occupant in a share house arrangement. The usual practice in a share house arrangement would be for the new tenant to pay the outgoing occupant s share of the bond money to the outgoing tenant and complete a Transfer of Tenant form (to entitle the new tenant to their share of the bond held with ORB). It is good idea for any new tenant to ask the landlord to do an inspection, and create a new condition report, just before or soon after moving in (as the new tenant should not be held responsible for any pre-existing damage at the end of the lease). The outgoing tenant should attempt to fix any obvious damage that they have caused. 26041058 v1 National 09 09 14 Commercial in confidence 3
Going on Holidays (Absence of Tenants from the Rental Property) If the tenant is absent from the property for more than one month and the property is vacant the landlord must be informed. Ending the Residential Tenancy Agreement During the Period of Tenancy A tenant can give the landlord a written Notice to Remedy giving 2 weeks to remedy any breach by the landlord of the terms and conditions of the Agreement. If the landlord remedies the breach within the 2 week period the tenancy continues. If the breach is not remedied in those 2 weeks, the tenant can give the landlord a Notice of Intention to Vacate the property within 2 weeks (after which they can vacate or choose to continue the tenancy). In exceptional circumstances where the property is not fit for habitation or unavailable due to government action the tenant can terminate the Agreement by giving 2 days notice. A tenant cannot end a tenancy by simply giving the landlord four weeks notice. Sample notices to Remedy/Vacate are found at: www.tenantsact.org.au. A landlord can also give the tenant a written Notice to Remedy giving 2 weeks to remedy any breach by the tenant of the terms and conditions of the Agreement. Where the tenant has not paid rent for at least 1 week, the landlord can issue a Notice to Remedy on or after the 8th day after rent was due giving the tenant 1 week to pay the rent. If the breach is not remedied or the rent remains unpaid after the Notice to Remedy period has expired, a landlord can give the tenant a Notice to Vacate the property within 2 weeks. In exceptional circumstances where the property is not fit for habitation or unavailable due to government action the landlord can terminate the Agreement by giving 1 week s notice. A landlord and tenant can mutually end a tenancy agreement if they both agree in writing to do so. A landlord can end a fixed term tenancy for no reason provided that 26 weeks notice is given (the 26 weeks cannot expire during the fixed term period). A landlord can terminate a periodic tenancy by giving 4 weeks notice if the landlord genuinely intends to live in the property, 8 weeks notice if the landlord genuinely intends to sell the property and 12 weeks notice if the landlord wishes to reconstruct, renovate or make major repairs to the property. Selling the Property If the landlord intends to sell the property, the tenants should be informed in writing as soon as possible. Any Residential Tenancy Agreement continues in force despite a change in ownership. The tenant must allow reasonable access to the property on 24 hours notice to allow for an inspection by prospective purchasers. If the property is sold, a Change of Lessor/Managing Agent form must be lodged with the ORB. A solicitor will usually arrange for the new owners to sign this form as part of the sale process. However, a purchaser of a property with existing tenants should ensure that this form has been lodged. Step 3 At the End of the Tenancy Notice to End a Fixed-Term or Periodic Tenancy A tenant should end a tenancy by giving at least 3 weeks written notice to the landlord prior to end a fixed term Agreement (eg. a 12 month tenancy). If a tenant does not terminate the fixed term Agreement, the tenancy automatically becomes a periodic tenancy (eg. a month to month tenancy). A tenant can terminate a periodic tenancy at any time by giving 3 weeks written notice. Landlord Allowing Potential New Tenants to Inspect If a tenant is vacating the property, he or she must allow reasonable access to the property in the last 3 weeks of the tenancy to prospective tenants. The landlord must give the tenant 24 hours notice of any inspection. Release of Bond Either party can lodge a Refund of Bond form to ORB to release the bond. This form can be found at: www.rgo.act.gov.au/rentalbonds_forms.shtml. The bond is normally distributed in equal shares to each party unless ORB 26041058 v1 National 09 09 14 Commercial in confidence 4
is provided with a statement signed by all parties to the bond stating otherwise. The usual deductions a landlord is entitled to take from the bond are: the reasonable cost of repairs to the property to restore it to substantially the same condition as it was when the tenant moved in, subject to fair wear and tear (the original condition as evidenced by the Condition of Premises Report); and any outstanding rent owed. The tenant cannot use the rental bond to pay for the rent for the last weeks of the tenancy. It is advisable to arrange a joint inspection of the property prior to the end of the tenancy for both parties to come to identify what requires repair prior to the final inspection. This gives the tenant a reasonable opportunity to rectify any damage they are responsible for. Reading of Metered Services A reading of metered services should be obtained at the end of the tenancy. If these services are in the name of the tenant, a good practice is to ring ActewAGL (13 14 93) or other service provider on the last day of the tenancy to obtain a metered reading and to disconnect those services. The service provider then sends the bill to the tenant s new or nominated address for the cost of services up to that date of reading. The service provider usually keeps the services such as electricity and gas connected for 48 hours from the time of disconnection to enable to the new owner or tenant to reconnect those services under their name at the beginning of a new tenancy. What We Can Do For landlords we can draft rental agreements tailored to your specific needs in a timely manner. For tenants we can provide you with competent advice in relation to your rights and responsibilities under a rental agreement, as well as negotiating relevant terms to suit your requirements. 26041058 v1 National 09 09 14 Commercial in confidence 5
For more information, please contact: Ben Gulan Partner D +61 2 6201 7211 E ben.gulan@dibbsbarker.com John Buxton Partner D +61 2 6201 7260 M +61 417 211 329 E john.buxton@dibbsbarker.com 26041058 v1 National 09 09 14 Commercial in confidence 6
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