Property Management Sect 2 Mod 2 Parts 4-22 V2.7 PDF

PROPERTY MANAGEMENT REGISTRATION
LEARNING MATERIALS MODULE 2
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SECTION 2 - Learning Materials Module 2 PART 4: Promote agency property management services
Learning Outcomes
This part of the learning materials aims to help you: Evaluate promotional activities. Understand the market. Maximise potential new managements using networks and existing client base. Identify other sources of new managements. Operate within agency and legislative constraints.
Elements and performance criteria covered:
Elements:
CPPDSM4011A/1 Promote agencys property management services.
Performance Criteria
1.1 Promotional activities for gaining new agency listings are evaluated and implemented in line with agency practice and legislative requirements. Promotional activities aimed at existing agency clients to attract new listings are planned and implemented in line with agency practice and legislative requirements. Business and personal referral networks are established and maintained in order to attract property listings. Communication with agency sales department is maintained to identify potential new listings and provide sales staff with rental appraisals. Enquiries from potential clients regarding property listings are handled promptly to enable high quality service delivery according to agency practice. Listing opportunities are identified and assessed in the context of legislative requirements and agency practice.
1.2
1.3
1.4
CPPDSM4011A/2 Establish client requirements. CPPDSM4007AA/02 Develop knowledge of property management process.
2.1
2.2
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4.1
Evaluate and implement promotional activities for gaining new managements

The task of generating new business for the agencys property management department is a key part of any property managers work and contributes greatly to the profitability of the agency. The starting point for successfully promoting the agencys services and prospecting for new managements is an in depth knowledge of: The local real estate market what is going on in the local area, where is the market going and where has it been? The key factors that influence the property market and owners interest rates, government subsidies, taxes and trends. Local amenities and who they appeal to/ planned development of new local amenities. How current market/ vacancy rates are likely to impact on owners.
Methods need to be developed to keep abreast of these influences. This knowledge is enormously helpful in equipping you to evaluate different promotional opportunities and in knowing how to approach the market. To evaluate different promotional ways of gaining new listings you also need to understand: What promotional methods have worked best in the past in gaining listings i.e. what the response rate is for internet, print, signage etc and what methods gain the best quality enquiries? Any legal constraints e.g. requirements of Door to Door Act* not being allowed to encourage owners to break another contract. Your target market i.e. types of owners with a need for management services currently in the market, or about to be (e.g. are they investors, developers or owners transferring for work).
4.2
Prospecting for New Management Listings

When evaluating options the policies and practices of the agency must be considered including any legal/compliance issues. One issue to consider is the requirements of the REBA Code of Conduct. Section 5 (1) of the Code precludes agents inducing, or attempting to induce any person to breach a contract. Section 5 (2) precludes placing an owner in the position of paying two fees. To avoid breaching the Code Property Managers should not directly solicit a new management currently managed exclusively by another real estate agent. They may however contact owners and make it clear that they are offering their services after the expiration of the current contract.
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Should an owner approach you while still contracted to another agency, take care to advise that they should check the ramifications of breaking their current agreement. PMs can seek advice from the agency principal.
4.3
Business and personal referral networks

Best New Management Sources Successful Property Managers interviewed for this course suggest that a combination of personal prospecting and agency promotion regularly proves successful in gaining new managements. There is no strong current statistical evidence as to where most new managements come from - it varies from agency to agency. Some agencies use the internet almost exclusively, some still place print advertising, and many who employ experienced property managers rely heavily on the PMs personal networking skills. Some agencies justify high rents in shop front space because that is a key promotional method for them. Anecdotal evidence suggests that all of these methods and general agency image and branding are important and effective and that a combination of them is best. Whatever methods you use, be sure to note where enquiries come from so that you know over any given year where most of your own new managements have come from. Many agencies specify the prospecting methods they prefer their property managers to use, so ensure that you work within those boundaries. That said, there are some principles that will help you to prospect effectively. Be personable and make contacts wherever you go. People like to deal with people they know and feel comfortable with. A key method of prospecting is to build a network of personal contacts, who may later become prospective clients or recommend others to you. Sources include: Telephone enquiries The greatest volume of people you speak to each week will be callers responding to specific advertising in relation to advertised properties. These people will either become applicants for a tenancy in which case a relationship can form, or move on if the property does not seem suitable. Renters are unlikely to become owners so in the short term they may not seem to have much potential as prospective clients, but each of these contacts can be an opportunity for possible future business. If you are helpful they will remember you if they own property in the longer term. In the short term they may recommend friends to the agency. The other kind of telephone enquiry you will receive is from people calling to enquire about the agencys services. If they own a property and are looking for someone to manage it they are hot prospects and must be treated accordingly.
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Ensure that all staff understand that each call coming into the department is a marketing opportunity. Some of the traits that will help them to capitalise on these enquiries include: Courtesy and empathy. Prompt follow up. Accurate answers to questions. Showing the agency is sensitive to customer needs. Skilful negotiation. Diplomacy e.g. Im sorry, that property is gone already, but we would love to be able to help you can I take your number and have someone call you back? rather than Sorry its gone! and hanging up.
Home opens When a home is opened for letting purposes neighbours and investors who have property in the area may call in for a look, comparing it with their property and getting a feel for changes in value. Be alert and ensure you take the opportunity to give these people a card and/ get their number so that your sales team can follow up, you should put their details on a database as future prospects as well. Prospective tenants may also bring along friends or family who may have a rental property or may be looking to buy or sell. Advertisements and Signs If signs and advertisements are done effectively they will draw the attention of owners to the agencys property management services. You may generate enquiries from these forms of marketing. Ensure that the agency website address is always included so they can check out the companys profile easily. Never place a sign on a vacant rental property without getting owner permission first as there may be security issues. If the property is still tenanted when you start marketing, as a matter of courtesy always advise the existing tenant prior to a sign going up. Sales representatives and property managers Property managers should work in conjunction with sales representatives and ensure the sales team understand s the services you offer. Whenever a property is sold to an investor, the sales team should refer buyers to the property management team for a rental appraisal. Property Managers who provide referrals for sales listings to the sales team tend to get more reciprocal listings for Property Management coming back. All referrals should be followed up immediately with the view of obtaining a property management listing immediately after contract settlement.
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Online enquiries This is sometimes a neglected area. If handled promptly and with skill, online enquiries may provide opportunities for building the agencys profile and their database and can be a long-term source of referrals. Many agencies have protocols in place for following up online enquiries. Make sure this is an area where you respond quickly. Surveys show that slow responses are resented by owners and applicants. Private leasing (for rent by owner) Some property managers scan newspapers or online listings for privately placed real estate For Rent' advertisements. This may be a source of new managements, provided advertisements do not state no agents. Before making a call to a private advertiser, ensure the number is not listed on the Do Not Call Register. When making such a call, respect the owners rights and offer services carefully and tactfully. If possible, make a time to visit the home and offer to do an appraisal. Ask if the owner would be interested in receiving your companys newsletter to keep them up to date with changes in the real estate market including rentals. If they agree, add them to your database and make sure you send out regular information. Private For Rent signs Contacting owners if you see a private For Rent sign in the area is an option you can note the address and phone number and telephone them later or call in if they are at the premises. Again be respectful of their wishes if they do not want to discuss the property with you. Networking Effective property managers are great networkers. Here are some common networking activities: Attending events where other successful real estate people meet. They can be a valuable source of information, particularly re emerging opportunities and managing the challenges of different markets at different stages of the economic cycle. Attending get-togethers with friends, family, neighbours etc. Networking events including local community functions, sporting clubs, Lions, Rotary, a businessmens or veterans club. Attending information nights held by the agency for people to find out how to invest in property. Any acquaintances met in general day-to-day activities. Past contacts from previous places of work, school, and university. Attending events where you meet developers. Past contacts, suppliers.
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The main objective in networking is to make as many people as possible aware of your involvement in property management and your willingness to assist them (or their contacts). For those just entering the industry, informing everyone in your sphere of influence that you are now working as a property manager is a good way of beginning to establish a profile. Referrals A key reason for making personal contacts is to gain referrals. During every interaction be attentive to opportunities for this. For instance, if a contact mentions that they know someone who is considering renting or buying an investment property, suggest that they pass on your details or ask for the prospects contact details and get in touch with them directly. You can also ask contacts if they know anyone who is considering renting or buying an investment property, but be sensitive and try to choose situations where there is some reciprocal benefit (e.g. if you give work to a gardener or handyman at rental properties you manage it is reasonable to ask them for referrals). The best referrals are generated from a reputation for quality service. Ensure that you conduct each interaction with the utmost professionalism: Always arriving on time or phone ahead if running late. Giving potential prospects full attention. Asking relevant questions and remembering key details. Being well presented at all times. Focusing on client needs. Seeking owner input on key decisions. Keeping owners well informed.
4.4
Promotional/Marketing
Creating promotions is normally an agency initiative. The type of promotional activity that is possible is often determined by budget, agency strategies and business goals. You may not control the budget, but you can ensure that you and your staff take an active interest in developing creative initiatives to promote property management services. Even the most junior staff member has a network. A key factor in promotional activities is consistency, to maintain a particular image. Try also to ensure that owners and tenants feel as though you are genuinely interested in them by incorporating a personal element such as: Personalised letters/emails to owners Provide updates on market information such as: Changes in local town planning rules that may affect property values. Councils altering by laws and building regulations.
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Rental value trends in the area. Potential large developments being built in the proximity. Advice on changes to laws they may need to respond to e.g. smoke alarms, safety switches, pool fencing.
Personalised letters/emails to tenants Provide local information to help them: Council information e.g. bin nights, recycling, libraries and pools. General information about local amenities e.g. pools, ovals. Expectations for property inspections e.g. standards re house and garden, cleaning tips. Suggestions to save water. A small gift like a coffee mug with the agency logo to new tenants.
Advertising for new managements Look at a prospective tenants requirements and advertise in the local newspaper to seek a suitable property. This shows the community that new managements are actively being sought. Only do this if prospective tenants are genuine and qualified. It is unethical to mislead. Special offers and value adding Some agencies may offer special introductory rates, a free management period to begin with, membership of a discount club through a partnership with other local businesses or free added services such as tax documentation to owners, as a promotional exercise. Customer Relationship Management programs Some agencies create a CRM plan and publicise it to clients who are part of a club receiving newsletters, discounts and special offers. Staff incentives Financial incentives or small in-house promotions e.g. offering movie tickets or a bottle of wine each time a staff member brings in a referral, can help to raise awareness and keep staff motivated to grow the property management side of the business. Tenant incentives Some agencies offer gift vouchers to tenants who refer others to become tenants or refer owners leading to a new management. Owner incentives Many agencies offer current owners a bonus such as a bottle of wine or a months free management, if they refer another owner to the agency and this results in a new management.
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4.5
Additional methods of prospecting

In addition to personal contact and promotions, there are a number of other methods of prospecting. Each of these relies on careful attention to market intelligence and include: Buildings under construction Watch for houses, blocks of units or commercial or industrial buildings under construction. The name and address of the owner can usually be obtained from the site supervisor or council records. Contact the owners and attempt to establish a relationship. If the properties are to be leased then it is a potential management opportunity for the agency Establish a relationship with the owner for this and any future project that they may be involved in to hopefully acquire either sales listings for the sales department or new managements. Local government building applications Many enterprising property managers make it a practice to obtain copies of the minutes of the local council meetings for details of building or development applications and approvals. This is a good source for potential new managements. Letters to absentee owners People who own investment properties often do not live in the area and may not know the local property managers. Some agencies find it worthwhile to source the names and addresses of absentee owners and write to them to promote the agency and ask to manage their property. This is not a common strategy because the information (sourced from local councils) is expensive, but may be worthwhile if for instance you are building a rent roll from scratch or if the data has already been purchased for another purpose e.g. a sales listing campaign.
4.6
Evaluation of promotional activities

There is a cost either financial or in time and effort to all these strategies, so they should be measured to establish whether they work well enough to justify that cost. Techniques used to solicit new managements are measured by the results they bring. To analyse the methods used for soliciting new managements you need to keep good records. A system needs to be set up so you can see how many responses you get from promotional activities that cost money. It is also useful to record where each new management comes from. If it is from a referral, check back to see how you made contact originally with the person who referred the new owner. If it is not from a direct referral, ask not only where the prospective client found you, but also where they first heard of you.
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Some agencies will also ask what it was about the agency that made the prospective client decide to do business with them it may have been their image, the number of signs and ads they have in the area, a recommendation, or the way the Property Management staff responded to the owners initial contact. Always assess: The success rate of each promotional method. Its cost effectiveness. The amount of time it takes to implement. Any other barriers e.g. requiring photography, typesetting.
Take into account the long term effects as well as immediate results. An email campaign may have little immediate result, but 3 months later the responses may have made it well worthwhile and 12 months later those responses may have created further referrals. This is because an agencys existing client base should always be a major source of repeat business, referrals and growth through prospective clients evolving and needing different services. (e.g. A satisfied customer who has rented as a tenant through the agency then buys through them and later becomes a property management client when they own rental property). In order to achieve this, owners and tenants alike need to be nurtured through properly targeted services. Feedback from your existing tenant and owner base should feed into continuous improvement strategies so that current services can be altered to adjust to changing needs and new initiatives introduced. The agency will ultimately assess your success in terms of benchmarks: Number of properties managed. Achievement of growth targets. Minimisation of bad debts. Profits made in the property management area. Customer retention. New business. Tenant retention. Staff retention. Number of staff required to manage the properties listed.
You will find some strategies of your own but it is also important to learn from the experience of others in the agency. Your personal network and reputation are also invaluable these can be built in many ways, including involvement in local activities and in community groups.
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Activity 15
Prospecting for new Managements
You take up the role of property manager in an area where you have no contacts. The property management portfolio is not well developed. a) What are some different networking and promotional methods you might use to build a local profile as a property manager?
b) Describe two strategies you will use with the sales team in your agency to encourage potential new managements.
c) How would you measure the success of these strategies?
Compare your response by visiting the Model Answers
4.7
Continuous Improvement
The whole point of evaluating performance is to improve it over time. You must give strategies a go to be able to assess them fairly as there is no instant quick fix in property management, but once you have ascertained that a strategy isnt working well over a fair length of time, you must be willing to make changes. Reading property management publications and talking with other property management professionals can help you to develop ideas and to know whether the result you got from a strategy was a fair one considering the time or money it cost. Dont forget that strategies to improve relationships lead indirectly to improved business levels. Advertising is necessary and should bring some instant responses, but good practices such as treating tenants well, and being sensitive to owners needs, will build relationships over time that lead to referrals and to long term growth.
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Successful property managers also work to maintain relationships after they are first established, particularly with owners of several properties. This may involve a letter or calling several times a year and keeping personal records as a point of reference. Sales people in your own agency are also worthwhile cultivating as the stronger the relationship, the more they are likely to think of you when a buyer is also an investor.
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In summary
The starting point of all successful soliciting for new managements is an in depth knowledge of: o The local real estate market. o The key factors that influence the direction of the property market.
A combination of personal prospecting and agency promotion regularly proves successful when soliciting for new managements with key sources being personal and promotional/marketing. The REBA Code of Conduct does not allow property managers or their employees to induce a breach of an agreement or for them to place an owner in the position of paying fees to two agencies for one service (e.g. the letting of a property). Property managers must not solicit a new management that is managed solely or exclusively with another property manager. Except on the basis of commencing to manage the property after the current agreement expires. Networking and relationship building underpins the success of many successful property managers. Evaluate performance to improve it over time and be willing to make changes.
Self-check questions 1. What are the key sources of obtaining new managements? 2. How would you commence a discussion with a potential owner to whom you have been referred? 3. What legislation will you need to consider when contacting owners for new managements?
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PART 5: Establish client requirements using interpersonal skills

Learning Outcomes
This part of the learning materials aims to help you: Handling client enquiries effectively. Identify appropriate interpersonal skills to form business relationships. Use negotiation techniques to gain a win-win situation. Develop rapport with potential clients. Establish client motivation and expectations using interpersonal techniques. Work within agency and legislative requirements.
Elements:
CPPDSM4011A/2 Establish client requirements
2.1 Enquiries from potential clients regarding property listings are handled promptly to enable high quality service delivery according to agency practice. Appropriate rapport is established with potential client. Client requirements regarding property are clarified and accurately assessed using appropriate interpersonal communication techniques. Appointment is made with client to discuss property listing in line with agency practice. Need for demonstrating effective communication strategies in establishing rapport with clients, determining client needs, providing accurate advice, addressing client concerns and dealing with conflict is identified in line with agency practice.
2.2 2.3
2.4
CPPDSM4007AA/2 Develop knowledge of property management process
2.1
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5.1
Enquiries
Appropriate rapport must be established with tenants and owners from the first time you communicate with them and then maintained throughout the time you manage their lease and/or property. This means being personable and getting personal tenants and owners should never feel like they are nothing more than a number on your bottom line. The first step in your relationship is the first time a tenant or owner deals with you or your agency, so make staff aware of how important first impressions are. Your aim and that of your staff should be to build a relationship that leads to securing a management. This means that every walk-in, telephone and email enquiry must be handled promptly, by a trained person who understands the importance to the agency of gaining new business and who will impress the person making the enquiry right from the start. This requires certain attitudes, skills and knowledge. You should try to handle as many of these enquiries as possible, as you are trained in ascertaining owners needs and motives, you know the state of the market and you can provide advice on marketing options. Realistically you will not be able to take every enquiry personally, so make sure all staff know the agencys policies on how much assistance they can give and display a helpful approach. Do not leave people in customer contact positions if they clearly are not skilled at handling customers and do not want to help them this can damage customer relationships and the business. Staff should always leave potential clients feeling the agency values them and wants their business. This process starts on the phone, at the counter or possibly in an email if responding to an online enquiry. This first response will create what can be a lasting first impression of you (or the staff member) and of the agency. If the person making the enquiry gets the information they want quickly and professionally and gains a positive first impression, this can be built on when you meet to inspect the property. It is hard to turn around a poor impression so care needs to be taken with initial contact. After an enquiry has been received courteously and recorded immediately, and the owners needs have been clarified, the next step is to assess the enquiry so that the correct response can be set in motion if the matter was not able to be handled on the spot. This involves assessing the: Degree of urgency. Ability of the agency to provide the service and/or the information. Most appropriate person to effectively deal with the enquiry. Possible time frame for an effective response. Type of follow-up required.
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How the property manager responds is also guided by the agencys predetermined policies and procedures related to owner services. These systems are likely to cover areas such as: The types of enquiries normally received. The owner service strategy. Recording and documentation of enquiries. Each staff members level of authority to act on different enquiries. Criteria for effective referral. Expected time frames for follow-up action. Processes for the making of appointments, preparation required for appointments and any appropriate research needed.
Once contact is made with a prospective client, you should begin to build rapport as you ask questions to identify their needs and expectations concerning their property. A checklist or template can be helpful at this stage to ensure that you (or whoever takes the call) do not forget to ask the right questions and really listen to the responses. The information gathered at this stage is important when preparing the property management presentation, and can influence what kind of promotional material will be given to the prospective client and how you structure the management presentation. It is best practice to have a promotional folder delivered as soon as possible to allow the prospective client time to get to learn more about the property manager and the agency before attending the property to meet with the owner.
5.2
People skills and business relationships

You must have excellent interpersonal skills to succeed in property management and these have been a focus throughout all parts of the Property Management Registration course. Your own skills will be further practised during this unit. If you manage a Property Management department, another important step in ensuring relationships with tenants and owners are constantly being nurtured, is to hire people with good interpersonal skills and service orientation. Ask questions when interviewing to find out what people enjoy most at work. Look for people who take pleasure in helping others as well as having the ability to pay attention to detail, which is critical in property management staff. Develop a statement of what you are about, to remind yourself and other property management staff of what their priorities should be. Remember people skills must be supported by strong service ethics and effective service delivery.
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One very successful property management business had a statement like this which hung on the wall as a reminder to staff of what they should be delivering. It was copied to all owners: You are important to us. We care about your property and the success of your investment. Our commitments to you are: We will do a thorough property evaluation initially to help you set rental levels correctly and maximise profit long term. We will screen tenant applications effectively to find quality tenants. We will give you timely feedback to minimise risks and keep you informed. We will collect rent on time wherever possible and remit it to you without delay. If a problem arises we will communicate with you and the tenant promptly to find a solution. Bonds and trust monies will be handled with care according to WA Law. We will provide regular reports on income and expenses on your property We will inspect the property at agreed intervals and report any deterioration or potential liability. We will engage reliable and well priced service people if work is needed We will do our best for you. If you are dissatisfied at any time, please tell us so we can improve. Tenants Tenant relationships are such an important part of managing property successfully that some large international firms hire a specialist with high level interpersonal skills as their Tenant Relationship Manager. In smaller firms that is you! What makes you effective as a property manager is often your eye for detail and your methodical, disciplined approach to risks, following up debts, etc. You must also cultivate the people side of your persona. It is easy to seem hard-nosed to tenants when you are looking after your owners interests and this can damage relationships. Skilled property managers offset this all-business image by showing concern for tenants well-being and giving positive feedback when tenants do the right thing e.g. improve the garden. Some agencies offer referral bonuses for tenants who recommend friends for a vacant property and some even award tenant of the month to those who maintain their properties best. They make sure that there is plenty of positive contact with tenants as a result tenants are more likely to communicate honestly with them and to behave responsibly. Good tenant relationships will improve tenant retention, bring referred business in the short term, and may bring sales business in the long term. They will also stand you in good stead if a serious problem arises. It is much easier to
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negotiate with someone in stressful circumstances if there is a basis of trust and respect. Your tenants are your customers set the tone in the office by always treating them that way, even when there is a difficulty. Owners Relationships with owners are of course even more crucial. Without owners who stay with you, add properties to their portfolio and recommend others to you, you do not have a property management business. They too begin from the first contact, which should be prompt, polite, and responsive to whatever the caller/writer is seeking. Owners can fall into many categories first time investors to highly sophisticated people who own a portfolio of properties. The greatest skill once you have responded promptly and courteously, is to ascertain what the caller/writer needs, and give it to them. The sophisticated investor may want to cut to the chase and want fees and service details right up front. The first time owner may need more relationship building, coaching, and basic information about the legal and industry based protocols of property management. Judging how much information is required is not hard if you ask open and closed questions and listen closely to what owners tell you. Some owners know more than you expect. When it is clear that you are dealing with experienced people, treat them accordingly with due respect.
5.3
Developing rapport
When dealing with prospective clients to gain new managements, it is important to focus on developing rapport. Rapport is a state of emotional affinity between people. Effective rapport building results in: The client feeling comfortable with the property manager. The property manager responding to the client effectively. The client feeling the property manager is interested in their needs.
Establishing rapport is the first step in building trust. Most successful property managers have the ability to create rapport and to convey to tenants and owners that they are valued by the agency. These skills and a high standard of courtesy and service can also be the foundation for longer term business relationships, if shown consistently. Some quick ways to establish rapport and show empathy include: Put yourself in their shoes imagine how it must be for them. Acknowledge their viewpoint e.g. I hear what you are saying. Use open questions tell me a bit about your plans. Find something in common.
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If the prospect trusts you they will also be more likely to confide in you this information gives you the opportunity to provide solutions to meet their needs. You are asking property owners to let you manage what could be their most significant investment, so trust is necessary. One skill that helps to build rapport is to show empathy and that you care about the potential client and their issues. You can demonstrate this through asking probing questions and listening actively to their responses. Another valuable technique is to use words and phrases that mirror what the prospective client has said to you and show that you are on the same wavelength. Conversely rapport is sometimes undermined by the negative behaviours of one of the parties, which destroy the basis for respect. Some habits that you can control that can hinder rapport include: Dressing inappropriately for the occasion. Being late without calling to explain when meeting people. Talking over people/ being condescending. Not taking each party seriously e.g. ignoring their partner. Not knowing the answers to important questions. Bluffing or lying to the person. Being overly-familiar in your manner. Bagging competitors and/or gossiping about other customers. Using bad language. Showing a lack of ethics in your approach.
Any of these things, especially early in a relationship, can create a negative impression that you then need to recover from. Each of the following is an element of the rapport building process. Use a positive and enthusiastic greeting. Dont treat people as an interruption. Greet every person, and greet them properly. Introduce yourself and ask for their name. When people are treated as an individual and with respect, they are more likely to co-operate. Link Interests - People like people who are like them, so look for common acquaintances, and similar interests. Ask their opinion - This can create a sense of openness and shows respect. It might be their opinion of the property, what they are finding the market like, or who they think the property will be attracted to, what they like most about the market! Use compliments and appreciation Dont be phoney but do notice positive things people do or say e.g. if a prospective tenant takes the trouble to call if they are running late, compliment their courtesy.
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Show respect treat each prospective tenant as an equal. Dont talk over them. Try to convey to them that they are important to the agency. Listening skills use active listening to show you are interested lean in, make eye contact, acknowledge what they say and summarise it back. Try to use some of the same words they use. Equity treat the other person as your equal. Interest use active listening to show you are involved with their story. Trust do what you say you will and expect the same from them. Acknowledging values as you listen to the other person, notice their values and beliefs. Dont argue with what these and if there any shared values, identify them and demonstrate that this is something in common. Professionalism and service maintain agency/industry standards and attend to small courtesies like letting them finish speaking, standing back so they can walk through a door first, etc. Cultural understanding build acceptance of other cultures into your responses and learn about cultures represented in your area. Service maintain service standards at all times. Matching and Mirroring Observe and match the other persons body language to help create rapport. This can extend to tone of voice and the speed at which you speak. We all like people who are like us. Energy Communicate with enthusiasm and exude positive energy smile, even when you are on the phone. When building rapport be sensitive to how people respond to you. There are no set moves that work with everyone, as the people you deal with are all individuals. The greatest skill to cultivate is the ability to listen and observe, and to modify your approach if what you are doing isn't working. This ability to show flexibility is crucial. Ways to monitor whether rapport exists include:
Observing whether the prospective client or customer seems at ease (body language, facial expression). Listening to their tone is it upbeat and relaxed? Checking whether they have understood what you have said.
5.4
Communication strategies and skills

Listening Skills Effective listening enables you to identify a prospective clients goals and needs as well as building rapport. It involves not only hearing the words being spoken, but hearing the meaning and feelings behind the words.
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This involves trying to see the other persons point of view and checking that you have understood them by paraphrasing back to clarify what you have heard. Effective questioning and effective listening go together. Both are important in trying to ascertain what the prospective client wants and expects. Effective communication skills and strategies achieve: rapport/ interpersonal harmony with clients clarity about client needs ability to provide accurate advice and follow-up positive owner and tenant relationships.
Poor communication results in: confusion/ mistakes/ possible legal risks (e.g. misleading conduct) loss of trust and time poor owner and tenant relationships.
To avoid confusion, all major decisions must be negotiated to the owners satisfaction. When instructions are received by telephone, or face-to-face communication they should be confirmed by email, letter, or fax to ensure there is no misunderstanding. If communication is clear, unambiguous and happens in a way that suits the owners needs, then good relationships are much more likely to grow. Of course this should be accurately recorded and filed for future reference should misunderstandings or disputes arise. The following techniques will help you to ascertain prospective client requirements:
Technique
Active listening
Key points Non-verbal signs of paying attention e.g. leaning in, eye
contact, focused attitude, encouraging speaker by nodding, and making encouraging sounds.
Verbal encouragement e.g. asking questions or saying 'go

on'.
Paraphrasing meanings to check for understanding. Taking notes and confirming key issues later in writing.
Empathy
Showing interest by listening and giving the speaker your

time.
Reinforcing interest with questions e.g. when will that be? Identifying with their experience e.g. That sounds difficult. Indicating ongoing interest Let me know how it goes.
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Questions
Using open questions to encourage people to open up

allows them to show their motives and values.
Using closed questions to follow up helps to focus the

speaker and get a short and specific answer.
Using probing or follow up questions clarifies important

points. Non-verbal language
Using posture to show interest, or to be non-threatening. Using tone of voice to convey warmth or sincerity. Dropping the level of the voice can gain attention. Paying attention to the speaker to show respect.
Avoid non-verbal negatives that convey disrespect
Coldness, sarcasm, overbearing posture. Checking your mobile while someone is speaking. Walking away, or looking away while they are speaking.
Questioning techniques Asking questions effectively is important if you want to get quality information. Questions should focus on the information required. There are a number of different types of questions which can be used. These include: Open questions are important to draw out information and get people talking openly. They usually start with What, Where, When, Why, How or 'Tell me about' e.g. "How do you think your property compares with others in the area at this price?" or "Tell me about your plans?" Closed questions can be answered by a yes/no or one word response e.g. Can I advertise your property this week? A closed question like this is assertive and asks for a commitment. Closed questions can also be used to clarify key information - e.g. "I think the property can probably rent for $400 per week - is that acceptable?" Closed questions are normally used after rapport has been built by asking open questions. Probing questions get the speaker to expand on answers already given. For example, if a prospective client has answered "This place is better than the other properties I've seen advertised locally at a similar price." questions can be used to probe further by asking them, "What is it about your property that makes it better?" Probing questions encourage people to reveal their interests, intentions and values. Examples of open questions followed by closed questions to clarify are: "Tell me about your priorities?" How do you feel about pets? "When will you be ready to move?"
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"Where do you want to go from here?" "What do you think about brochures?" "Why are you concerned about having a sign?" These questions allow the speaker to answer in a variety of ways. Structured questions prepared ahead of time and used consistently are helpful if different staff handle enquiries day to day, to ensure that all prospective clients are asked for the same information. These can be in a template. You will always need to know: The address of the property and its legal description. The names of all owners. Copy of Certificate of Title. Strata information if applicable e.g. by-laws, exclusive use details. Contact details of those authorised to make decisions. Key 'selling' points that will appeal to prospective tenants. The reason for: a) renting the property (if this is the first time it will be rented) or b) changing property managers. Unstructured questions these are general questions used during an interview as needed. Questions used at the early stage of a business relationship are important to distinguish how best to proceed to maximise the value of that relationship while also prioritising your time. This is done with owners by ascertaining: Their stage in the investment cycle i.e. whether they are just beginning to investigate the market, have made an offer on a property, or are somewhere in between. How likely they are to refer others to your service, e.g. family or friends. Their present involvement in the property market they may be an investor, a tenant or an owner occupier who may have been transferred.
The way questions are asked is important. If owners/prospective tenants feel interrogated it is unlikely you will build rapport, so try to ask open questions first followed by closed questions to define answers and to employ empathy cushions before your questions e.g. Do you mind if I ask Can you tell me Tell me about
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Clients refusal to give information If a prospective client is reluctant to give you information which is necessary for you to do your job, you must clearly explain the reasons for needing it. The Privacy Act requires this when you obtain personal information. You can reassure the prospective client that you will treat the information as confidential, except in relation to any necessary disclosures. Explain the relevant section of the REBA Code of Conduct, which states 10. (1) Prior to the execution by the agent's principal of any contract relating to the sale or lease of any real estate or business the agent must make all reasonable efforts to ascertain or verify the facts which are material to that transaction which a prudent agent would have ascertained. (2) If an agent ascertains a fact which is material to a transaction in which the agent's principal is involved the agent must promptly communicate that fact to any person who may be affected by it unless it is clear that person was already aware of that fact. You and the agent you work for may ultimately be responsible for misrepresentation if you go ahead with letting a property without finding out all 'material' facts and without appropriate disclosure. If you are in possession of information regarding a person who is no longer a prospective client of the agency, that information must be treated in the same fashion as a prospective client's information would be, i.e., kept confidential and only disclosed to that person or to a third party on that person's authority. The use of email, as a major communication tool, has grown significantly in the personal and business world. This tool is extremely useful for communicating with both owners and tenants and is a good way to enhance professional relationships. It can be used for recording written communications with both parties and is considered legal as an audit trail for information and issues that arise. Emails may be held in a database but it may be useful to print them and hold them in the hard copy file as well. It is well worth noting however, that any document requiring the owners signature, e.g. the Management Authority must be completed in full, an e-mail saying you can manage an owners property is not sufficient. Ensure that all correspondence is acknowledged and answered as this also helps the relationship and protects the agency if problems arise. There is nothing more frustrating than unanswered mail.
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In summary, strategies to help PM staff to develop effective communication skills include: Make staff aware of how important prompt responses are. Encourage rapport building with tenants as well as owners. Train staff to ask questions to ensure calls are properly allocated. Encourage every contact with tenants and owners to be positive and respectful.
Activity 16
Client motivation and expectations
List some open questions you could ask the prospective client in regard to their motivation and expectations for leasing.
Think about communication skills you will use with prospective clients. Practice your listening and questioning skills with a colleague or friend and ask them for feedback. Take on board what they tell you. Compare your response by visiting the Model Answers.
5.5
Negotiation and dispute resolution

There are some aspects of Property Management that will call on your negotiating skills and at times you may be drawn into resolving disputes, either between third parties (e.g. neighbours or tenants and owners) or between the agency and the tenant or owner. Your interpersonal skills are very important at these times, as is your knowledge of protocol and your risk management skills.
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In all negotiations win/win is the most favourable outcome for all parties and is generally achieved through joint decision making and discussion. The key to a win/win outcome is identifying the needs behind the positions people take. If you understand the underlying need you may be able to satisfy it in a flexible way and arrive at a mutually acceptable agreement. Emotion Displays of frustration or annoyance on your part are inappropriate. They undermine the business relationship and diminish your credibility. While you should not show or discuss your emotions in a negotiation; you can deal with the underlying business issue in a neutral way. For example when dealing with an unreasonable tight-fisted owner, instead of sighing, and saying, We just cant do it that cheaply and no one who is any good will either This may be true, but it is best to acknowledge their position and address their issue (without sighing, eye rolling or in any way revealing frustration, even when you are on the phone, as your emotions show in your voice). I understand that you want value for money. The rate I am offering you is the best any of our clients receive - testimonials show that we deliver a great service and our clients feel they get value. Many cheaper firms cant offer the same service we give. Being emotionally reactive is a sign of inexperience and lack of control effective negotiators only show feelings in a measured way to assist negotiations. They may show enthusiasm for the property and warmth towards owners who appear open to relationship building, but never anger or impatience. In all negotiations win/win is the most favourable outcome for all parties and is generally achieved through joint decision making and discussion. The key to win/win outcome is identifying the needs behind the positions people take. If you understand the underlying need you may be able to satisfy it in a flexible way and arrive at a mutually acceptable agreement. Trust If trust exists between the parties, negotiations will be easier. Establish trust with the other party by: Maintaining eye contact. Using questions to clarify issues and summarise points. Using listening techniques. Using the same type of language as the other party to tune into their personality type and make them feel comfortable. Matching the message given verbally with your body language. Mirroring the other partys stance, tone and mannerisms.
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Once trust has been established and a favourable environment created, you can more easily establish rapport which will allow negotiations to progress towards a win/win result. Build on existing trust by telling owners that you value their business. Creating a negotiating environment While few formal negotiations take place in property management situations, you may at times want to bring two parties together on neutral ground to resolve an issue. If you do this the physical environment can influence the outcome. When setting the environment consider: Comfort of venue for all parties. Lighting and ventilation. Seating arrangements. Minimising interruptions.
Preparation Before commencing negotiations with prospective clients, you should have already started to build a relationship with them and identified their goals. If you were re-negotiating a lease between a residential owner and a tenant already in residence you would still need to be prepared but there would be less complexity, fewer issues to discuss and therefore less preparation time and work involved. You would typically prepare by: Preparing a CMA. Looking at the file to see what issues had arisen during the course of the tenancy and whether any are unresolved or significant. Informing the owner of the state of the market and what rent increase if any they would be likely to achieve on the open market. Calculating and outlining to owners the cost difference of renewal versus finding new tenants. Consulting the owner to see what rent level they will accept and what term of lease they will allow. Notifying the tenants in advance so they can let you know their intentions and any requests. Informing the owner of the existing tenants intentions.
Solutions Always look for creative solutions to differences between the parties. If you have excellent tenants who love the property they are in but object to an extreme rent rise, look for a solution that lets both parties feel that they have won.
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Some options might be: The tenants accept the increase but are given a longer lease with no rent review for at least 12 months. Negotiate between the owner and the tenant to perhaps increase the rent part way for the first 6 months, then increase to the full rent for the second 6 months. Give the tenant details of similar properties for rent showing them that the rent increase is not extreme but in accordance with market conditions.
If you are trying to resolve a negotiation where an owner wants fees lower than you can go, look for options such as giving a small discount but spreading inspections further apart or giving a lesser level of reporting. Offer to add more value if they pay the full fee. Always look for what is behind the request sometimes owners just feel they have to have a win or want to be sure they are not being done down or given a deal than is less than others are getting. Documenting results Records of discussions should be maintained and verbal agreements confirmed in writing, with copies provided to all parties. If any adjustments are required to the conditions of an agreement e.g. the lease as a result of discussions these should be formally drawn up and signed by the parties. A common form of dispute is one that arises from misunderstandings and differing interpretations of negotiation results so all communications must be backed up in writing. Remember that if a dispute has the potential to turn into an insured event e.g. a claim against the agency for negligence, then you must not attempt to negotiate no matter how skilled you are. Tactfully ask the complainant to put their complaint in writing and advise your employer immediately of what has happened so they can consult their insurer. If you attempt to negotiate in this type of matter you may void your employers insurance. Resolving residential tenancy disputes Residential tenancies can become a source of disagreement if either party fails to meet the terms of the tenancy agreement. Once a breach or conflict has developed into a dispute; (i.e. is no longer able to be resolved within the agency office) then the aggrieved party can apply to the court for assistance to resolve the dispute. The Tenants Advice Service provides free information and advice to tenants on most matters relating to tenancy law. It is a not-for-profit, community legal centre funded to assist residential tenants and remains the main specialist legal service for tenants in Western Australia. Tenants
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can also seek an appointment with a Tenant Advocate from the WA Tenancy Network who can help with such things as writing letters and going to court. These advocates work in Community Legal Centres. Interpersonal dispute resolution technique When communicating with a party who is in dispute with you personally or with the agency, it is important to keep these points in mind: Talk with the other party as soon as you sense there is a problem. Listen to what the other person has to say. Try to understand their point of view, even if you don't agree. Express your views clearly and ensure they understand your position. If the problem seems overwhelming, try breaking it down into smaller more manageable issues and work through them one at a time. Try to focus on what is working and what you do agree on. Explore a range of options to best resolve the matter. Persevere and give yourself every chance to resolve the matter. Investigate creative ideas and look for areas for compromise. Dont let it get personal.
While it is good to have a positive constructive approach you must also protect yourself and anyone you represent (e.g. owners or the agency). Know what your legal position is. Take notes, confirm conversations and diarise agreements made. Know your bottom line that is the point where you walk away. Understand the costs of not reaching agreement (e.g. legal costs). Do not admit liability. Dont trap yourself - any offers need conditions and time frames. Have a clear alternative to reaching agreement and state it e.g. 'if we can't agree on a figure the owner is happy to let the court decide.
The property manager is a conduit between the parties in a property management negotiation. They may avoid a concession by saying I will speak with the owner about that but I cant guarantee they will agree to it but shouldnt get so carried away that they risk losing good tenants or moving a dispute to the point where a court case becomes necessary, by saying no without asking. If the dispute is about rent levels this is especially true if the property is about to become vacant and the market is quiet e.g. seasonally or in for the type of property e g luxury apartments. Remember that an agreed outcome is always best as the rent can be increased immediately without a second notice period. Likewise it is sometimes practical to make concessions, with the owners agreement, in bond disputes, to save the cost and delay of a hearing.
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Activity 17
Dispute resolution skills
The following activity can be conducted as a role play. (Remote learners can either role-play with a friend or make notes of what they would do). A tenant is upset and threatening to go to the regulator because you allowed a tradesperson into her home without proper notice. Her things have been disturbed and she feels threatened. You did leave a message on her phone but you are still in the wrong. 1. How would you prepare for this meeting. Who would you consult?
2. The tenant has been dealing with you for some time and there is a level of trust. Describe or role play how you will approach the discussion.
3. Explain how it might be resolved. What could satisfy someone with this type of emotionally based compalint? Is money usually the issue?
4. How can you ensure that whatever is agreed is the end of the matter?
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In summary
Handle enquiries promptly and use effective questioning and listening skills to explore the prospective clients motivation for leasing. Start building rapport with potential clients from the beginning. Use interpersonal skills to establish o A good relationship with the client. o An understanding of their needs. o Credibility. o An understanding of their plans. o Expectations concerning property rental price.
Set appointments in line with agency requirements.
Self-check questions 1. Why is it beneficial that you have good interpersonal skills when dealing with potential clients? 2. How would you deal with unrealistic expectations?
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PART 6: Plan Property Management Presentation

Learning Outcomes
This part of the learning materials aims to help you: Develop a strategy to list new managements. Develop a management presentation kit.
Elements:
CPPDSM4011A/1 Promote agencys property management services.
1.2 Promotional activities aimed at existing agency clients to attract new listings are planned and implemented in line with agency practice and legislative requirements. Preparations are made for property listing presentation in line with agency practice. Promotional material and listing kit are prepared to highlight benefits of agent and agency in line with agency practice, ethical standards and legislative requirements.
CPPDSM4011A/3 Plan property listing presentation
3.1 3.2
6.1
Prepare for Property Management Presentation

The purpose of the property presentation is to secure the property management on terms that will bring about the best result for both the prospective client and the agency. As discussed earlier there may be a format for preparing and presenting a property management presentation in use within the agency. If so you should make use of this, although of course you should also try to contribute to improving on this over time as you gain experience. The circumstances of each presentation are unique, so there is no set number of discussions needed to develop rapport with owners. Owners who are letting property through a property manager for the first time may be very cautious - you may need to work hard to develop trust and understanding before they will agree to you managing their property. You may also deal with some owners who contact you by email or telephone, ask few questions and sign an agreement with very little interaction. If potential clients contact you as a result of a referral, then many barriers have already been broken down. There is some level of trust because you have
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been recommended. Referral business is always the best source of new managements as you often do not have to compete with others for the management. You should however attend an appraisal with enough market information and documentation to present professionally and secure the management, even if you feel that you have a 'walk up start'. Some property managers become complacent with referrals and lose managements because they don't prepare well. Successful property managers prepare thoroughly and deliver a professional management presentation for all owners, with all the information needed to make an educated decision for whom they wish to manage their investment (it is not just about leasing the property, the relationship between the owner and the Property Manager is about a more long term relationship than just renting the property). These steps will assist the development of an effective new management presentation strategy. Pre-management presentation strategy Before meeting the prospective client there are a number of stages to ensure readiness for a presentation appointment: 1. Talk with the prospective client by telephone and collate as much information as possible about the property from this conversation and data available online, i.e. its recent history, the owner's intentions and their expectations. 2. Enter particulars about the prospective client and the property into the office database. This data helps the agency to monitor the volume of enquiries, their source, and to track the percentage of enquiries converted. It can also help the agency to tailor marketing activities. 3. Drive past the property if its location is unfamiliar, to assess the property location in relation to neighbourhood amenities. 4. Do some preliminary research to appraise market value and prepare the 'first cut' of your Comparative Market Analysis, based on the telephone conversation, the size, style, described condition and location of the property and current rent if it is let.
6.2
Prepare promotional material and a presentation kit

In some situations where owners are referred to you there may be no need for a property management presentation the owners may contact you, ask for a rundown of your fees by phone or email, give you agreement to go ahead and only ask you to view the property when they have already committed to do business. In this case you may not bother with a full personalised presentation kit. You may just prepare an appraisal and give a copy of a generic presentation kit as a PR gesture.
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(Be wary of assuming the client does not require a full personalised presentation due to them being referred to you). In other cases where prospective clients have approached the agency in response to marketing, you should assume they may also approach other agencies for an appraisal and to assess their services. In this situation, preparing a customised presentation kit becomes more of a priority, as it is your opportunity to present your services professionally and competitively. Different agencies have different standards in relation to what is included in this report or presentation kit which is often taken to the first meeting with the prospective client and left behind with them. A generic version should be kept up to date so it can be used to promote your services in various ways to prospective clients. They can also be quickly customised as needed. Depending on the profile of properties in the area you may find it worthwhile to have several generic versions e.g. one for houses, one for units and one for townhouses and villas. Some initial research will always be required for a customised kit or report. Once you have gathered the necessary information and entered it into the agencys standard format, you will normally add your own personal touches to enhance and support the approach you plan to use during your property management presentation. Elements included in a professional listing / presentation kit A property management presentation kit is best presented to the prospective client immediately after research to ensure that the information is current. Contents will include items about the potential client, the property and the agency, such as: Business Card Cover page (summary client and property details including legal description). Letter thanking the client for the opportunity to provide an appraisal. Agency information o Profiles / photos of Property Management team/ agency office. o Description of department and Agency Services/history. o Competitive benefits and supporting data e.g. Awards, Mission statement, Testimonials. o Contact / address details for the agency, department, website.
Local market information including up-to-date news articles, rental value trends and any new legal requirements affecting owners. CMA: photo/description, general comments, estimated rental value. Samples of marketing and proposed program.
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Copies of standard forms used - these might include: o o o o o o o REIWA Form 301 Exclusive Authority to Act as Managing Agent for Residential Premises REIWA Form 303 Standard Residential Property Lease REIWA Form 310 Information for Tenant (so the owner is aware of their legal rights and those of the tenants) REIWA Form 302 Application for Tenancy REIWA Form 298 Property Condition Report REIWA Form 341 Owner Checklist Monthly statement.
Most of these forms appear in the Appendices. Statement of relevant policies that impact on owners e.g. o o o o o o o o o property management fee structure home open guidelines requirements of Residential Tenancies Act need to comply with anti-discrimination laws owners need to disclose all relevant information truthfully agency policy re owners carrying insurance owner and tenant obligations and rights agency commitment to owner timing of payments to owners.
Summary page.
The kit should be dated and updated every month and a hardcopy version should be taken to the presentation even if you usually use a laptop. This covers you if you have a technical hitch and of course you need something to leave behind. The Exclusive Management Authority for Residential Premises form (REIWA Form 301 or an equivalent) is included in the presentation kit to allow you to confirm the management on the day. Do not leave this with the client with the expectation they will sign and return it, you will need to follow them up. Your listing kit is the presence you leave behind if another party is unable to attend the meeting and makes a statement about your professionalism and that of the agency.
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Activity 18
Management presentation materials
a) What would you include in your management kit/presentation folder/laptop presentation? Why would you select that particular material?
b) What would you include in what you leave behind for owners and why?
c) Why should you always have a presentation folder when presenting to gain a listing?
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6.3
Conducting an appraisal to rent a property

Before listing a property for lease you should: Inspect the property so that you can advise the client realistically. Verify who owns the property. Consider how to meet owners needs. Consider market influences and discuss with the owners. Consider whether improvements are desirable to maximise rent.
You must give an opinion to the owners of its rental value. This involves preparing a CMA based on what other similar properties have recently been let for (or are currently advertised for.) You will also include data from industry sources such as REIWA and realestate.com in the presentation kit these will show trends within the area if the property is in Perth. If it is in a regional area you may have to write something yourself, based on local experience and agency data or at least across the state. Some people find graphs easiest to read so include these if they are available. Conduct a comparative market analysis (CMA) A market analysis is an essential part of your presentation kit and must be prepared in line with agency practice. It should reflect compliance with ethical and legal standards. You will research as much information about the prospective clients and the property as time permits before visiting the property and of course be prepared to adjust this preliminary analysis when you view the property. It is better not to speculate about rental value over the telephone. A CMA takes into account current market conditions (which will be dealt with in more detail later) and does a comparison with other available rental properties of the same or similar size, style and condition in the same area. Similar properties which have been rented recently in the area are also used to ascertain the rental price. To make your appraisal as accurate as possible, price in the variations between properties available for comparison and the subject property. Two properties may not be identical but are probably still competing for the same pool of tenants. If one has three bedrooms and the other has four, you need to know how to adjust for this, and how to add a premium as appropriate for factors that lift the property above the average.
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Points to consider in direct comparison method of appraisal Direct Comparison is the best and most popular method of determining market rental value. It involves comparing the subject property with similar properties that have been rented or are available for rent. When determining if a property is suitable for comparison, consider: Recency of letting / advertising- recently let or currently advertised properties are the most relevant. If nothing has let for the last 2 to 3 months, use older r values and adjust to reflect trends since then. Vacancy rates Use historical data to determine how much difference seasonal downturns in numbers of properties let make to the actual letting price. A property may be worth more if offered in the peak season or less in a down time (or it may just take longer to find a tenant). Location - Properties close to one another are usually best for comparison, however a neighbouring suburb may provide a valid comparison if values are very similar e.g. if there is an identical property in a very similar street in the next suburb while the only property in the same suburb is a very different type of property. Size and type of property / Physical characteristics and Improvements Where possible properties compared should be fairly similar in regard to: o o o o o Type (e.g. villa, townhouse, unit.) Number of bedrooms and living space. Age and condition. Quality of position. Features such as gardens, garages and pools.
Amenities should be similar e.g.: schools, shopping centres, parks, transport, access to beach or river, services i.e. electricity and water. Lease conditions - e.g. too short a lease may depress value.
Comparing rental properties Comparing similar properties rented in the area is useful both to ascertain likely rental value and to show the owner how their property rates with others in the market. If you find comparisons that match closely, you can demonstrate what potential tenants are prepared to pay for similar properties. If you only have comparison properties that are either better or worse, then you can establish a bracket i.e. the subject property is worth more than a worse property and less than a better property. The table of comparable properties can include properties:
currently for rent and only listed very recently let in the past three months advertised but still not let after 3-4 weeks.
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The selection of properties for the CMA is important. Rental prices vary within each geographic area and local factors impact on how much a particular feature is valued. For example, in a suburb where most tenants are families, a house in a quiet street near a park will attract a premium over a similar house on a main road. In a suburb where most tenants are students and singles it may make no difference as prospective tenants are likely to value access to public transport as much as access to a park. This is where local knowledge comes in. The formatting of the CMA is important. It should be easy to read and have a summary page as well as more detailed sections. Using a comparison table of properties has the advantage of showing the owner underlying evidence supporting your appraisal of rental value in a format they can read at a glance. It demonstrates that the appraisal is well founded and makes it easy to follow. It also provides these benefits: Demonstrates graphically that up-to-date information has been used. Illustrates what you say about current market trends in the area. Helps to educate potential clients whose expectations are unrealistic. Provides proof you have exercised skill, care and diligence.
Because the appraisal is based on current information it should be presented on the basis that it is only current for a particular period e.g. 14 days. The market can change quite quickly and a few cheaper properties coming onto the market (or some better properties coming on at the same price) can change the potential letting price of the subject property.
Issues when selecting properties for comparison

Date leased/ advertised Location Physical characteristics Improvements/features Local amenities and services Conditions of lease Market price The more recent the better. The closer the better same or neighbouring suburb / town, and same type of street. Same number of bedrooms, bathrooms, and living areas, similar age and type of building (e.g. unit, house.) Similar condition, as many features in common as possible e.g. pool, air conditioning/heating, patio, garage, study, renovated kitchen, patio. Similar access a property within walking distance of shops, transport, schools or the beach will attract a premium over one which requires tenants to drive to amenities, even if it is in the same suburb. It is best (but not essential) to compare properties available for similar lengths of time under similar conditions e.g. pets or no pets. Try not to include anything that was let for well over or well below market rates because of unusual circumstances. If using properties that were let in a different season make an adjustment to compensate for this.
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Rental information for comparisons can be drawn from: REIWA, realestate.com and other industry websites. Agency records for historical data on a variety of local properties. Competitor websites may provide additional rental evidence. Networking with other Property Managers and calling private owners who have recently let property can be helpful in difficult cases, particularly in regional areas where online data is less plentiful.
Compliance issues Consumer legislation makes it illegal to falsely overstate or understate the estimated rental price of a property. For this reason you must be able to substantiate any statements you make about the rental price and justify the process used. Your appraisal must be based on sound data, be free of mathematical errors and a record must be kept of it in case of any query later on. You must also encourage disclosure by the owner of all material facts which may influence a tenant in their decision to rent the property and in their assessment of how much the property is worth. Many agencies have a clause covering this in the agency agreement this is a good idea, and should be pointed out and explained to owners. Certificate of Title Property Managers must verify ownership before listing a property. There are several ways to approach this. Many agencies believe it is best to obtain a current Certificate of Title as this not only shows ownership, but also reveals any encumbrances which may impact on tenants or on the rental value of the property (e.g. easements). Agents who do this feel that this ensures that they satisfy 10.1 of the REBA Code, which states: 10. (1) Prior to the execution by the agent's principal of any contract relating to the sale or lease of any real estate or business the agent must make all reasonable efforts to ascertain or verify the facts which are material to that transaction which a prudent agent would have ascertained. A full title search provides information such as: Full name of owners (registered proprietors). The type of ownership applicable e.g. joint tenancy, tenants in common, sole proprietor, company and if applicable, the proportions in which the property is owned. Whether the property is subject to any encumbrances such as easements, caveats or covenants.
Other agencies may do an ownership search via a database such as REIWA or RP Data.
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The title or ownership search ensures that the person claiming to have authority to let the property is entitled to do so. Whatever method is used a copy of the ownership verification should be put on the property file. If there are multiple owners, all of them should be involved in the management process, unless one person has been legally authorised to represent others. If a Power of Attorney is used to authorise someone to act for others, a copy should be kept on file.
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In Summary
A property management presentation strategy should be developed to ensure a systematic process is used to secure the management. Prior to physical inspection of the property research should be carried out to assist in arriving at the rental value. A property management presentation kit should be created to assist in the property management presentation and to be left behind with owners. A CMA should be prepared as part of the kit using the best comparable properties available. It should be kept on file in case of any later query. A listing file is formed at the agency where all documentation, records and correspondence are kept.
Self-check questions 1. What materials would you include in a presentation kit? 2. What compliance issues would you consider?
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PART 7: Deliver property appraisal

Learning Outcomes
This part of the learning materials aims to help you: Conduct an effective property appraisal. Deal with key decision makers in the context of a property management presentation. Present a realistic appraisal that reflects market influences. Use a presentation kit effectively. Discuss property improvements, marketing activities, fees, services. Maintain and/or improve rental value. Understand the importance of presentation of rental property.
Elements:
CPPDSM4011A/2 Establish client requirements CPPDSM4011A/4 Deliver property listing presentation
2.4 Appointment is made with client to discuss property listing in line with agency practice. Visual inspection of property is conducted to provide client with a realistic range of marketing and leasing options. Key decision makers are identified to ensure that their needs and concerns are met in the listing presentation. Market influences likely to affect the property listing are discussed with the client. Recommended property improvements, estimated costs and likely influence on leasing of property and rental return are discussed with the client. Property appraisal is provided that includes realistic estimate of likely rental return. Promotional materials, agency listing kit and relevant legal and financial information are used to support the listing presentation. Appropriate marketing activities are discussed with client. Agency services, fees and charges are discussed with the client. Client is given time and space to evaluate agency services while time is used to maximum advantage to promote agency. Client questions are answered fully and honestly. Effective interpersonal communication skills are used to respond to client questions and concerns.
4.1 4.2 4.3 4.4
4.5 4.6 4.7 4.8 4.9 4.10 4.11
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7.1
The property appraisal

A physical inspection must be conducted to arrive at a rental value. All the distinguishing features of the property and its condition will need to be taken into consideration, including: Number of bedrooms, bathrooms and living spaces. The size of the property (floor space, whenever possible and to a lesser extent land size). Condition of paintwork, floor coverings, window treatments, kitchen, bathrooms, lights, gardens and exterior paintwork. Age and quality of appliances such as stove, and dishwasher. Whether there is effective heating and cooling. Whether it is an appealing floor plan with added features such as formal dining, study or theatre room. Additional features that add value e.g. landscaping, outdoor entertaining, pool, garage, fencing, built in cupboards and other storage. Location/ desirability of street (quiet residential, busy semi-commercial). Lifestyle attractions e.g. view, walk to beach, park/ lake/river nearby. Amenities i.e. schools, transport, shops, cafes.
Some features are considered to add universal value for tenants e.g. a sea view while others are an asset to certain tenants and neutral; or negative to others. For instance a large yard has value to families and pet owners but may be a negative to busy executive couples. It is important to note the character of the neighbourhood to see whether the property is typical and has features that commonly suit people looking in the area. If the home is a family home surrounded by others similar it will be easier to let than say a modern warehouse style home on a very small block sandwiched amongst others with big gardens. The property inspection at this stage is purely to determine rental value. A more thorough inspection will be completed when a tenant has been secured and an initial Property Condition Report is completed. The Property Information page of the Exclusive Authority to Manage can be used to detail a brief description of the property at the appraisal. The positive aspects of what is noted are used in the property management presentation. Negatives may be noted for discussion but may not be a focus at this stage unless owners have unrealistic rental expectations. Information given by owners over the phone is physically checked during the appraisal inspection.
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Activity 19
Inspection and Property Appraisal
a) Imagine doing an inspection and appraisal prior to carrying out a management presentation. Use your own home as the subject property. Note at least three positives you would mention in the presentation to the owner. Also note one negative thing that might devalue it as rental proposition. Explain how you would handle this negative without giving offence.
b) Make a list of practices that will encourage good rapport with a property owner on your first visit to appraise a property.
7.2
Key decision makers and their concerns

Once an appraisal of the property is complete you will normally deliver the management presentation provided the key decision makers are there. In most cases where a couple own the property you should address both as being equal in the decision you cannot know who is the more influential and you risk alienating one if you treat the other as being more important. If owners open up about any particular concerns at this stage, ask probing questions to clarify their concerns and endeavour to answer them on the spot. Owners may be concerned about a variety of issues: Type of tenant/ finding reliable tenants. How well the property will be maintained (particularly if it is their primary residence). Process for authorising expenditure for maintenance. Communication processes generally i.e. having one point of contact. Maximising rent and avoiding delays in its payment. Maintaining the propertys capital value.
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Be prepared for these concerns with copies of agency policies and testimonials. Be familiar with the clauses in your agency agreement that protect owners by clarifying their rights. If your agency allows for some flexibility, be willing to negotiate slightly different terms if it will reassure an owner on a particular point. Questions you may ask to find out what a prospective client expects and needs include: What would you like to happen? (e.g. type of tenant, length of lease). What do you need to happen? (e.g. rental return, timing of lease).
Uncover what is underlying the potential client needs and wants so you will be better able to address them. Dont bluntly ask "why do you want that?", instead ask: Do you mind me asking why you want a single, female tenant? How would you feel about a longer lease, if a tenant wanted that? Would you accept a lower rental return if tenants did the garden?
When owners respond to questions: Listen carefully to the responses. Treat them with respect and consideration. Think of how you can meet their underlying needs, perhaps in a different way (e.g. when they have a discriminatory requirement).
After understanding the potential clients expectations and needs, explain the options for meeting them.
7.3
Discussing market influences with client

Owners may want to know what is happening in the market place so you need to understand the forces impacting on the property market. Questions they may ask include: Are rental values increasing, decreasing or stable? If rental values are changing, how will this affect our property? Is it the right time to lease seasonally? Are rental enquiries frequent for this type of property at the moment? Is there anything we can do to improve the propertys marketability? How long is it likely to take to find a tenant? How much marketing will we need to do and what will it cost?
You will have included data from industry sources such as REIWA or realestate.com in the presentation kit, showing trends within the area if the property is in Perth or some other local information on rental trends if working in a regional area.
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Use this information to answer some of these questions and to educate the owner as to what is happening in the market. If their property falls into a category that is performing contrary to statistics, explain why in simple terms (e.g. when hard times hit high end properties may drop because fewer people can afford them while cheaper properties rise because more people are looking at that end of the market). If the property you are preparing to rent falls into a category that is not in high demand and it will be difficult to let, consider strategies to overcome this but avoid sounding negative the property may surprise you. Rental market conditions are affected by social, economic and political conditions which in turn affect the rental value of property. For example: Social forces that impact on the real estate rental market include: Population growth or decline. Demographic changes (e.g. white collar influx in inner suburbs). Changes in lifestyles (e.g. tree changing). Changes in family size (e.g. average family size in WA now < 2.6). Changes in what is popular (e.g. shift towards eco-friendly homes).
Economic factors that affect the real estate rental market include: Unemployment levels. Factors influencing purchasing power such as: o o o o o wages growth tax levels interest rates availability of finance to buy rising CPI (consumer price index).
Industry trends (e.g. fewer building approvals can mean an increase in rental prices). Consumer confidence (e.g. people delay purchase of a home because of job insecurity).
Political factors that affect the real estate rental market include: Government policy e.g. o o o o o o o o o
zoning / density decisions approval of major projects that bring population to an area immigration policies allowing granny flats to be built like in the Subiaco area creating more public housing allowing more temporary housing e.g. dongas in mining areas infrastructure decisions like the Mandurah railway government housing loans First Home Buyer grants.
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Legislation e.g. o new rules about smoke alarms and RCD switches. Housing industry policy.
Unrealistic expectations A prospective client may have unrealistic expectations even though you have explained the market conditions and trends. These can include expecting: An unrealistic rental figure. An unrealistically short time vacancy period between tenants. Tenants will accept unpalatable conditions e.g. a very short lease. To avoid outlays on maintenance between tenants.
Dealing with unrealistic expectations Dealing with these expectations is easier if you have factual information to back up your advice. If you can show owners what the actual tenants have paid for properties like theirs in the recent past it can bring them to a more realistic mindset. When the rental appraisal is presented to the owner, you should discuss properties let and managed by your agency first - you are most familiar with these and can make strong comparisons. Then discuss the data on properties let or advertised by other agencies. Qualify the data by: Explaining the source. Highlighting properties that have been well priced and let quickly. Highlighting properties which have taken longer to lease and been more costly in terms of extended marketing and vacancy periods.
Draw out these comparisons to show owners how properties that are wrongly priced can take much longer to let and the losses this causes. Explain that this time lag increases marketing costs, and extends periods of no rental income. After a period of vacancy a property can become stale and owners may end up accepting a lower figure anyway. It is also worth pointing out that while properties can achieve above market prices at times, tenants often move out of over-priced properties at the end of their lease. Properties priced just a touch below market rates often attract and keep excellent tenants leading to savings in the long run in: Reletting costs. Periods of vacancy between tenants. need for upgrades to attract new tenants. Wear and tear caused by tenants moving furniture in and out.
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Owners usually want to know what the bottom line impact of market conditions rather than the complex causes, so unless they ask specifically, do not go into all of these factors in detail. Rental prices are affected by supply and demand like the sales market. Your presentation kit should give owners an indication of demand for the type of property they are hoping to rent, and an accurate estimate of the current rental value of the property.
7.4
Recommended property improvements

During the presentation owners may ask you to comment on how they could improve the marketability of the property. There are many ways that this can be done, but the question of whether any expenditure is necessary should be addressed first. Be cautious in answering this question as you do not want to appear to be pushing owners into unnecessary expense. Unless the property is in quite poor condition, many property managers believe in testing the market first to avoid unnecessary spending. If the property is very run down, the market is difficult, or owners explain that they have decided to make improvements without delay to achieve a better rental (or for other reasons) then of course appropriate advice can be given as to what changes are likely to work best to achieve the owners objectives, whether they be increased rental income, long term capital gain, or both. Repairs or maintenance relating to the period a property was let (e.g. repairing damage done by a previous tenant) are usually tax deductible. Improvements such as a bathroom refurbishment are regarded as capital works. Do not make the mistake of recommending capital work and saying 'you can claim it on your tax'. You should not give tax advice anyway, but you should have enough of an understanding of the tax rules that you are aware of the distinction between these two types of expenditure. If owners appear to be motivated to do improvements based on their tax situation, suggest they talk with their accountant before proceeding. Some improvements are very expensive, others relatively inexpensive. The table following is based on some research published by Australian Property Investor which recommends the strategies shown to boost rents. These strategies may also reduce vacancy times in a slow market. The items in bold are estimated to be the least expensive options in each bracket. While some of the less expensive options can immediately boost rental value for a moderate outlay, some of the more expensive options may boost rents and add more long term value to the property for resale. It is not up to you to advise owners on the impact the improvements might have on resale value however - suggest they talk to a sales agent or valuer.
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STRATEGY/RENOVATION Paint Add a bedroom Change window treatments Clean and de-clutter Polish floors/new carpet Heating and cooling Fencing and gates Bathroom renovation Kitchen renovation Convert garage to living area Add a deck Repair faults Redecorate interior Render walls Open up front veranda Create a courtyard/patio Go open plan Install a pool Add a bathroom Adapted from: www.apimagazine.com.au
RATING ***** ***** **** **** **** **** **** **** **** **** **** *** *** *** *** *** *** *** ***
Guide to ratings: ***** Extreme boost to rents **** High boost to rents
*** Moderate boost to rents
7.5
Providing property appraisal

In the process of researching the CMA you will have reached an opinion on a rental range into which the property is likely to fall, even before viewing it. You will fine tune the appraised rental when you go to view the property it may be markedly better or worse than expected or have an unusual feature that impacts strongly on value. Make sure that the document you leave behind with the owner shows the true value only for this reason many property managers will not complete actual dollar value until they have seen the property. Some agencies believe that offering to achieve the best leasing price is the key to securing a management. This may be true, but it is also legally and ethically necessary to give an accurate estimate of rent achievable. You cannot buy the management with an inflated appraisal and count on negotiating owners down later this is a breach of consumer law. Below are some examples of how discussions on price can be managed during the management presentation (in italics) and how you use information to support your recommendations.
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This house in your street rented for $320 per week last month. Your home is very similar in size, however is in better condition. Refer to the comparison data as you talk through the report. This shows the prospective client how you decided on the price. Try to point out properties that the owner may be familiar with to help explain your price. The house next door is larger than yours, in similar condition and has a pool. It achieved $450 per week recently. Based on these two examples, I would expect yours to rent for somewhere between $350 and $450. If the prospective client knows that another property has less to offer than their own, they will expect their home to be worth more. Likewise they will usually accept that they cannot hope to match prices achieved by properties with many more desirable features or in far better locations. If you have clear examples of properties that are better and worse, you can create a bottom end and a top end for your discussions. You then need to close the gap by using the balance of your rental evidence combined with your knowledge of the market. We rented a home not unlike yours for $370 last week. Another similar property in the next street is advertised for $410 per week - its been on for the last 2 weeks. That suggests it is priced a little high for the market. This narrows the range further. It is also worth discussing any other aspects of the situation that impact on the pricing strategy such as which way the market is heading, how soon the owners need to find tenants and whether there are particular types of tenant they are targeting. There is a strong demand for properties in your area at the moment and you are not moving for another three weeks. We could try for $400 per week with a view to coming down if necessary. OR The market is starting to slow and next month is a traditionally difficult time to let property. I would like you to know that the house is let well before that quiet period. Id suggest we ask for $375 with a view to letting it quickly. When presenting your estimate of likely return be responsible and explain that the figure achieved can also be influenced by marketing, and by the level of competition for properties at the time of presentation if every house is being snapped up within a week, tenants are more likely to pay full asking price. If there are few people looking then tenants will feel more able to negotiate.
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Dealing with price objections When pricing a rental, there may be occasions where owners disagree with the appraisal you have prepared. If the owner is not happy with the price you suggest, they are at liberty to place the property on the market at whatever price they choose. You have fulfilled your legal obligation by informing them of the price you believe is a fair market price. You must follow their instructions from that point. It is an offence to deliberately mislead anyone in relation to the appraised rental value of their property. You cannot use advertisements you know are misleading e.g. advertising a property that is already let, or a rental range when you know the lower end would not be acceptable to owners.
7.6
Using the property management presentation kit in your presentation

Prior to meeting the owner, think about what is in the appraisal and how you will present the information. If there are any sensitive issues, consider how you will handle them. You will normally either make the presentation at the prospective clients home or at the office. Either way, try to ensure a comfortable environment and arrange the seating arrangements so you can display materials to the best advantage. To maximise your chance of gaining the management, the presentation is your best opportunity to build confidence and agreement on small points, so that you move smoothly towards signing an agreement. The work you have put into the CMA and the presentation kit can be used to the fullest during the presentation if you are comfortable using it to illustrate and support the points you want to make. Be sensitive to how the owner responds. If they seem edgy try a more relaxed approach, and present in a very conversational way, only dipping into the presentation kit to answer questions. Some people absorb information best by reading it themselves, so always have a hard copy to leave behind. If you are comfortable presenting on laptop this is another option some owners will appreciate, as it is interesting, visual and allows you to refer to materials on the internet if you have roaming wireless access. Prior to presenting the appraisal to the owners, show the kit to other colleagues to gain their feedback on the materials practice the presentation on a colleague to ensure that: o o o the information is appropriate the procedure for presentation of information is sequenced correctly the materials are relevant.
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The presentation It is best to make the presentation at the prospective clients home. Prior to meeting with them, thought must be given to how you will present the information. You may use a folder or a laptop (in some agencies there may be a policy that you should do so). Some property managers take a more conversational approach, only using such materials as needed, e.g. to answer a question or to illustrate a point. Plan how the appraisal will be presented and consider what seating arrangements will enable you to display the materials to the best advantage and maintain eye contact with the owners. You should take control of the situation by using: Effective verbal and non-verbal communication skills. A firm, professional and non-threatening manner. Trust and rapport building skills. Appropriate language, matching that of the owners (avoid jargon). Appropriate personal presentation (may differ from area to area).
You should have: A presentation folder with the information enclosed (even if using a laptop have a hard copy as back up). An Exclusive Authority to Act as Managing Agent form for signing if prospective clients make a decision on the spot. Your diary or PDA. A file containing additional data for reference, if required. A leave behind version of the presentation for the owners.
Materials provided to the owners should be: Grammatically correct, factually accurate, free of spelling mistakes. Written in clear language and formatted so it is easy to understand. Relevant to arriving at a current rental value of the subject property. Sequenced in order that the information is to be presented. Visually interesting with clear, sharp photos/graphics.
Presenting the market information Try to establish whether the prospective client already has specific expectations concerning the property lease price before this meeting. This indicates whether or not they have a realistic understanding of current market conditions. If they have overly optimistic expectations, explore how they arrived at this price and prepare carefully with facts and figures to help them to adjust their ideas.
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Try to always have all owners present when you present the appraisal. The information should be discussed as follows: Present the information on other similar properties rented. Explain the direct comparison method. Highlight any key points e.g. the state of the market, or its current trend. Relate the information to the prospective clients property. Qualify the data: o Explain how it was obtained. o Highlight properties presently for rent that are comparable and will compete with their property. o Point out any limitations of the appraisal e.g. no properties of the same size let recently. o Explain which comparisons are most useful and valid in terms of: property type, condition and age property size (land and building) property's special features (position, pool etc) how recently the property was let or advertised.
Be prepared to justify or provide further details on any of the items in your appraisal, if asked. Some property managers prefer to show the owners the price visually using the comparison rather than telling them verbally. This is a matter of personal preference. The method of explanation will depend on the type of potential client. An accountant may be interested in the process, including facts, figures and percentages. A busy investor may only be interested the bottom line and owners who are letting their own home for the first time may be hungry for detail and quite focused on the level of service you offer. Leasing options While discussing the optimal rental figure with owners, ask them if they have any particular options in mind which may affect the desirability of the property to tenants and indirectly affect price. This might include: The length of the lease. The terms of the lease - fixed term or periodic lease. The type of tenants (be aware of discrimination). Whether pets are allowed. Whether the owner wants the option of a rent increase in 6 months. Special conditions e.g. no use of the shed, gardening service provided, or standard clauses being omitted from lease. Extra services e.g. gardening and/or lawn mowing.
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7.7
The marketing plan

A marketing plan is a document proposing how the property will be promoted for rent. It should reflect: Your experience of what marketing approach works best for the type of property and the area/target market. A sufficient budget to promote the property adequately (within the agency's budget if you are likely to carry the cost of advertising). Owner preferences picked up on in preliminary conversations.
If an owner believes that one marketing method is likely to produce a result more quickly than another, you should either reflect their preferences in the plan if they are workable, or be able to use market evidence to encourage another approach. When you are signing the management, preferences will be clarified, and costs associated with using different marketing activities will be discussed if an owner paid campaign is being put forward. A system to enable the budget to be monitored must be put in place - this is vital if the owner is paying and good practice even if the agency is paying. In the management presentation you should explain that a record of all relevant advertising and detailed invoices and receipts for payment of marketing costs will be retained, and that owners who are paying for marketing will only pay for what is actually spent. These records are necessary by law if you ask owners for reimbursement and knowing this often reassures people. Most property managers would show samples of marketing materials for other properties during their presentation if the owner was a new client, to show them what to expect. This might be done on laptop or hard copy. It is also important to explain any statistics you have on where most enquiries come from and where most of your existing tenants first looked for and found the property they are renting. This may differ from area to area. Agencies now use the internet to advertise rental properties almost universally, but some property managers in shop front premises also gain significant enquiries from their window cards and by handing out vacancy lists to walk in prospects, while others use weekly or local newspapers more. Discussing the options, why they work in the area and their costs with the owners will help to fine tune the marketing plan. Most marketing plans are designed to allow advertising to run for a little longer than the average number of days it is taking to let a property at the time e.g. if it is taking 10 days you might allow for 14 days in the proposal. In the presentation you would explain that the figure agreed on for marketing may not all be expended if the property lets quickly, in which case the owners will not be charged. You may want to explain the possibility of needing more marketing later if you feel the property could be slow to move.
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Once the owner's contribution has been agreed it must be included in writing in the agency agreement. You should also clarify their level of involvement e.g. in choosing photos and vetting copy. Unrealistic client expectations If after being advised on the recommended program of marketing, owners remain unrealistic in their expectations in relation to costs; this is easier to deal with than in the past. You can agree to try a simple combination such as internet and window cards initially, which may succeed without great cost to owners or agency. If this does not succeed, then owners will be likely to accept the need for further costs after testing the market.
7.8
Discuss services, fees, terms and conditions of the management authority

Legislation requires you to explain certain issues to owners, such as the fact that fees are negotiable. Owners cannot be told that a fee is a 'standard charge' or given the impression that fees are non-negotiable. You must explain the Terms and Conditions attached to the Exclusive Management Authority for Residential Premises Schedule and ensure that owners understand the agency's services and what they will pay for them. Issues for discussion can include: Appointment of the agent and what this means. Termination of the Agreement by the agent or the owner. The owners obligations and acknowledgements. Agents obligations. Agents fees and expenses. Goods and Services Tax (GST). Information on the Privacy Act 1988. The implications of The Equal Opportunity Act. Disputes and how the owner can access help with this if needed. Any unusual conditions including those relating to contracting out. General information.
Negotiating the management fee When the time comes for the management fee to be discussed, it is common for owners to want to negotiate. When negotiating the management fee property managers need to be conscious that this is what the value of the rent role is based on.
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You would always initially discuss services offered by the agency and the ways you and the agency add value for owners. Obviously you must do your best to secure the fee preferred by the agency. Some property managers make it their business to know how competitors in the area price their services, so that if owners mention that competitors are cheaper, they know whether this is true overall. Often the combination of all fees over a period of a year works out much the same - a lower management fee might be offset by other charges being higher. Do not quote exact costs for competitors though, as they may have changed since you checked them out. All decisions concerning costs to be borne by the prospective client (i.e. management fee and reimbursement of fees, charges and expenses, advertising) must be documented as part of the written agency agreement, otherwise they cannot be charged. Once the fees, reimbursable charges, and terms and conditions are fully discussed and agreed to, you can proceed to complete the management authority to confirm appointment. Activity 20 Explain fees and charges / terms and conditions
1. Explain the main property management fees and charges from an agency either one where you have worked or a hypothetical one.
2. Read the Exclusive Management Authority for Residential Premises Schedule and explain two conditions under Agents Obligations that you believe are important.
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7.9
Using time to maximum advantage

Owners should never feel they have not been given enough time to consider their options. It is good for you if they are willing and able to sign the management authority on the day, but there should not be a sense of pressure to do so. Agreement should be built in positive ways. It is illegal to bully a consumer into signing an agreement or take advantage of a weakness such as inexperience or a language barrier. Doing this can lead to the contract being invalid. Many owners will want time to consider and perhaps seek advice on your proposal, so they should always be given a written copy that allows them to review what has been discussed. While it is not acceptable to bully them into signing, it is quite proper to ask whether there are any questions or concerns which if answered would allow them to sign the agreement that day. You can make good use of the time while they are considering their decision. Check your database and let them know how many potential tenants you already have listed in the relevant price bracket their property will fall into. This may help them to make a decision. Try also using the time to do follow-up marketing e.g. providing testimonials and statistics that may not have been given initially. Be ready to advertise the property as soon as the owners give the go ahead.
7.10 Owner questions are answered

Many questions are based on fears and uncertainties on the part of the owner that can be overcome with more information. Owners may want to check out the detail of the service and contract to ensure they are getting a good deal or want to know more about you and the agency to be sure that they can trust you. Dont react negatively if owners question what you are saying or react negatively to an aspect of your presentation. This is actually a good thing - they are being open about their concerns and giving you the opportunity to respond to whatever is stopping them from accepting your proposal. They may be seeking information, reassurance or a better deal, but at least you know what obstacle you need to overcome. Answer questions honestly and accurately. Use your skills to choose positive words and a tone that is reassuring. This part of the presentation is partly information giving and partly about building trust, so dont exaggerate, or gloss over things that are concerning owners. Acknowledge each question. Dont attempt to gloss over queries - this may just irritate the prospective client.
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If asked questions that you cannot answer completely, offer to get back to them with answers, unless it is something completely outside your expertise, in which case it is best to refer owners to a specialist or government department for advice. It is still worth offering to complete the paper work with them so that the only thing left to do is sign it once their questions are resolved.
7.11 Effective interpersonal skills used to overcome concerns

Progress may stall when prospective clients raise concerns or objections. The best way to 'overcome objections' is to realise that most are actually questions that need clarifying and then answering. One useful technique is to restate each concern in your own words e.g. So you think that current market conditions suit a six month lease rather than 12 months? to be sure that you have understood. Before answering it is worth analysing the nature of the objection. Is it based on a misunderstanding? Is it a result of scepticism? Is the owner trying to delay the decision to shop around? Are they objecting to something that genuinely concerns them?
The non-objection is harder to deal with - this is where owners are resisting making a commitment, but are reluctant to state their concerns. By asking open questions you can draw them out. Some open questions you might use include: What key things do you want in a property manager? Tell me where you would like to go from here? Why not fill this in now, then we can start finding you some tenants?
Some closed questions include: Are there any questions I can answer for you so we can move forward? Is there anything else you would like me to do before we finalise this? Is the fee a big issue for you or are you more concerned about getting a good tenant quickly?
Identifying the nature of the objection provides deeper understanding of the owners expectations and needs. Using this knowledge, you can modify your proposal and bargaining accordingly. You will also face complaints at times and some owners who have had a bad experience and have become quite cynical. These situations have to be handled sensitively and you must make sure that whatever you do to placate unhappy clients is: a/ Within your authority and b/ Followed up on and done.
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There is nothing worse for a client agency relationship than broken promises on top of an existing complaint. Activity 21 Handling client concerns using effective communication skills
This scenario is a real case taken from an investor chat room a) You are doing a management presentation to an existing client who has just bought a new property and has other properties under management with your agency. The client is upset about the service they have had. The owner has a Council notice warning him that the grass on one of his properties is over a metre high he faces fines of over $1000 if it is not rectified. The notice is dated the same week that the former property manager allegedly did an inspection and reported the property was in good condition. The owner is angry and wants you to make up for this situation and assure him of better service in the future. How will you address the concerns of the owner and retain his business?
Compare your response by visiting the Model Answers Identifying client motivation It is important to understand the owner's motives obviously they want to lease the property, but what are their hot-buttons? Some owners may be highly geared and need to meet repayments - they may have an urgent need to rent immediately, and need tight controls on costs. For others renting quickly may be less important than finding good tenants who will maintain the property well. They may be inexperienced and want advice from you or want a long lease so they can set and forget. You need to listen for clues as to motivation and present yourself as being responsive and able to deliver on those needs.
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Activity 22
Management presentation
1. An investor intends to ask you and another property manager to a find a tenant for a rental unit and give the management agreement to the property manager who finds him a tenant first. How do you convince him to list the property exclusively with your agency?
2. You will now make a formal appraisal presentation to the owner. What will you include in this?
3. You gain the management and need to create a rental property file. What items would you keep in it.
7.12 Continuous improvement of presentation kit.

As discussed earlier it is normal to present the information and to have a version of this in a folder which can be left with the owner and which contains a covering letter thanking them for the opportunity to provide the appraisal. We have already discussed the detailed information that can be used to convince the owner to list the property for rent with the agent. At the end of the presentation you may want to conduct an evaluation of how you think the presentation went by asking the following questions: What went well? What were the owner's concerns? Were they covered? How much did I talk? Did the owner talk enough? Did I stay on track during the presentation? What steps do I need to take to improve the presentation? What did the owner get most excited about? Was the outcome what I wanted? (If not what can be done to save the deal?)
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Self evaluation can help you to continuously improve your presentations. Obviously any comments and questions that could not be answered using the materials you had may indicate areas for improvement.
7.13 Rental value

The rental value of a property depends on the number of people in the market looking for that type of property and the supply of comparative properties available. If there are more prospective tenants than properties for lease, then rental values will be higher and the condition of properties may be less without it impacting on rentability. If there is an oversupply of rental listings in the market, and a reduced volume of prospective tenants, the rental price of property falls and presentation becomes more important. The rental value of a property depends on the current market. When a property manager appraises a property, the appraisal price is the amount of rent that they expect would be paid if the property was let on that days market. Property managers need to be sure they insert a date on any written market analysis report for a prospective client. The sale value of property may affect the rental value, but there is not an exact formula for calculating this. For example, if a $300,000 house renting for $300 per week, doesn't mean that a $3,000,000 will rent for $3,000 per week. Anyone who has a spare $3,000 per week would probably prefer to buy their own home, so this causes a decrease in demand for very expensive rental homes. Land values are often not reflected as strongly in rental prices as the value of the building e.g. a new 3 bedroom house with two bathrooms on a small block may rent for more than an old 4 bedroom house with one bathroom on a large, high maintenance block. The exception might be an area with high demand for student accommodation. Develop a checklist of parameters for your appraisals, for example: o o o o o o o o o o Property type / Construction type. Year built. No of Bedrooms. No of Bathrooms. No of living areas. Extra rooms e.g. study, home theatre. Outdoor entertaining. Air-conditioning / heating. Garage / Parking (1/2/3). Swimming pool.
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7.14 Presentation of property

First impressions are very important when maximising rental return so rental properties should be well prepared for the appropriate market. There are now professional home stagers who understand interior design and are playing an increasing role in enhancing the presentation of properties for sale. There are also home detailers who will clean and touch up a home to make it look its best. Gardening contractors can also be employed to help present the exterior in an appealing way. The services of such specialists may be useful to owners of rental properties in some circumstances as they are experts on what motivates customers when selecting property. Rental properties are particularly presentation sensitive because a prospective tenant knows they cannot redecorate or change a property to any significant degree. The following table identifies aspects of how a property is presented worth discussing with the prospective client:
Positive and Negative factors

Positive appeal

Well lit airy residences, clean windows. Neutral colours on walls, clean new looking floor coverings. Well-landscaped gardens with outdoor living space. Pleasant fragrances. Tidy, clean interiors. Everything in working order. Poorly lit rooms with little air. Oppressive or too bright paint colours e.g. purple. Untended gardens with no sitting/entertaining space. Unpleasant odours e.g. cigarettes, pets, drains, stale cooking. Dirt and clutter. Faulty or broken fittings. Open windows, blinds and curtains, put strong light globes in darker rooms. Repaint in light, clean looking colours. Tidy garden, prune, mulch, plant annuals, create outdoor area. Steam clean and deodorise carpets and curtains and attend to plumbing problems causing odours. Clean all surfaces benches, walls, ceilings, floors, sills, skirting boards, cupboards and windows. Fix all obvious faults.
Negative appeal
Strategies
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7.15 Building defects

When inspecting a property you should identify obvious building defects but not make an in-depth building inspection. Inspect all areas of the property, both internal and external, to assess for issues that need fixing. Building defects have an impact on the property's rental value. Regular maintenance during and after each tenancy helps avoid a property looking uncared for and/or deteriorating further. Defects in rental properties can include: Wear and tear e.g. worn sections/staining on carpets, flyscreens coming away from frames or having holes, taps leaking. Weather e.g. plaster walls may crack due to the ground drying out, strong sun can cause rubber window seals to perish. Inherent problems with materials/construction old timber/iron homes can get timber pests/rust. Brick homes can be damp. Vegetation e.g. tree roots invading drains or causing cracks in paths. General neglect e.g. garden dead, bathroom mouldy, pool green.
It is essential to have these things rectified so that good tenants will be willing to take on the property and motivated to care for it. The alternative of letting a rundown property as is, makes the marketing job harder and increases the agencys risks due to health and safety hazards. Timber Rotting wood (e.g. where wood touches the ground or is exposed to water e.g. from a leaky pipe or gutter the smell and honeycombed appearance are signs). Timber pest activity (brown trails and mud shelter tubes). Dampness (blistered paintwork, peeling or stained wallpaper, watermarked walls and /or salt deposit or efflorescence on walls). A damp proof course can be seen from outside the house.
Concrete paths built directly against a wall and above the damp proof course will encourage moisture to permeate the inside of the house. Plumbing Leaking taps can be easily seen. Leaks under the sink may be caused by something simple e.g. a loose washer or a cracked fixture. Drains - bad smells, standing water that doesnt drain. Defective septic systems - bad odours, slowly flushing toilet, or an overly green lawn in the area of the leeching field.
Roofing White powdery trails of mineral salt deposits may indicate leaks. Brown stains on timber can indicate holes or rust in metal roofs.
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A noticeably saggy roof may mean a serious framing problem exists. Problem gutters - bubbling paint or rust on the underside of the gutters, stains on the underside of eaves, on walls and around windows, or on the ceilings.
Property managers should be able to identify obvious building defects but should never give advice on how to remedy structural problems unless appropriately qualified. You can of course make suggestions on matters such as paint colours or the benefits of new carpet. If there are structural problems it is best to refer owners to specific trades people for advice and help. Note defects in the Property Condition Report and present the information so it is easy for owners to follow.
7.16 Information sources when appraising property

The examination of the agencys own portfolio may provide sound evidence of current viable rental prices in the area, but this is not a sufficient basis for an appraisal. You must also look to other industry sources such as the REIWA website, Australian Property Monitors, rent.com or realestate.com so that there can be no question that you have been diligent in your appraisal. Sometimes other property managers in the area can help. Bear in mind that how thoroughly you carry out this process has a great bearing on how accurately you appraise the property. By law the owners are entitled to an accurate appraisal carried out with care and diligence. Accuracy will also determine how easy the property will be to market. The appraisal process is strongly linked to the listing process. Some owners are influenced by the price you advise can be achieved when deciding who to appoint to manage their property. Remember you must not over or under state values under the Code of Conduct and consumer laws. If you are misleading or deceptive about values you risk prosecution. If a property is hard to appraise because there are few comparable properties, consulting other Property managers in the area may be helpful. Note these conversations in the file or diary if you use them as a basis for your appraisal. The REIWA website allows a search to be made of the median rental prices of homes in any suburb in Perth. This search will provide the results in a quarter. Go to http://reiwa.com.au REIWAs newsletter also provides regional data on rental values. In country areas it is necessary to make full use of your network.
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Activity 23
Rental values
1. Think of a rented property you are familiar with (it may be your own or a friends) and consider what you think the factors are that are affecting current rental price for the property. What could be done to make it present better if it were to be re-let at this time?
2. You have looked at the property and suspect that water is leaking in through rusty gutters as there are brown watermarks on the walls inside. Write a paragraph for an appraisal letter to the owner explaining the problem without giving building advice.
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In summary
A physical inspection of the property should be carried out to assist in arriving at the rental value. Building rapport with the prospective client is very important to maintain quality interactions during the appraisal/management process. The appraisal should be presented and explained. Leasing options and the marketing plan should also be discussed at the presentation. Objections should be treated as questions and answered in full. Observe the owners style and communication preferences and respond to them. Avoid conflict by only offering what you can deliver. The rental value of property depends on supply and demand when there is more demand than properties available, the condition of the property matters less. The presentation of property can be vital - if a home is appealing to prospective tenants it will rent more quickly and for a higher figure. Problems not fixed can be off-putting to prospective tenants and may devalue the property in the long run by causing further deterioration. Information sources for appraisal can include the agencys own rental portfolio or the REIWA website where a search can be made for median rental prices of homes in any suburbs.
Self-check questions 1. Describe the steps in a management presentation. 2. What marketing activities would you discuss with the owner? 3. What impact does the presentation of a property have on its rental value? 4. Why is it necessary to conduct an appraisal to estimate the likely rental return?
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PART 8: Finalise management appointment

Learning Outcomes
This part of the learning materials aims to help you: Confirm the agreement to manage the property. Complete agency and statutory documentation. Finalise fees and terms and conditions. Record details accurately. Complete documentation correctly. Record client instructions to meet agency and compliance needs. Maintain records that reflect and justify the advice you give. Keep clients informed.
Elements:
CPPDSM4011A/5 Finalise property listing
5.1 5.2 Client agreement to list property with agency is confirmed. Statutory and agency listing documentation is explained to client in line with agency practice and legislative requirements. Agency fees and conditions are negotiated and agreed with client. Effective communication skills and negotiation techniques are used to respond to client questions and concerns. Property details are recorded accurately and correctly. Listing documentation is completed in line with agency practice and legislative requirements. Client instructions are recorded to meet legislative requirements and agency record-keeping requirements. Business documents are produced to reflect advice to relevant parties involved in the listing transaction. Information to clients is provided to reflect progress made within the terms of the agreement.
5.3 5.4
5.5 5.6
CPPDSM4011A/6 Record and act on instructions
6.1
6.2
6.3
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CPPDSM4007AA/1 Apply knowledge of property management CPPDSM4007AA/2 Develop knowledge of property management process
1.3
Legislation regulating the lease and management of properties is identified in the context of agency practice.
2.2
Listing opportunities are identified and assessed in the context of legislative requirements and agency practice. Authority documents and other agency documents for property management are identified in line with legislative requirements and agency practice. Statutory and agency leasing documents are identified, completed and stored in line with legislative requirements and agency practice. Effective communication strategies for managing conflicts involving clients are identified and evaluated in line with legislative requirements and agency practice.
2.3
2.6
CPPDSM4007AA/4 Identify roles and responsibilities of agency personnel in property management
4.4
8.1
Client agreement to manage property is confirmed

Once agreement has been reached for you to manage the property the REIWA Form 301 Exclusive Management Authority for Residential Premises must be completed and signed by all registered owners. This appears in Appendix 4 and is the commonly used form, however there are other options which may be used provided they are compliant. The process of completing this form allows for details to be confirmed as you go through it. It should be explained to the signatories so there is no question of their not understanding what they are signing, as sometimes this can invalidate a contract.
8.2
Statutory and agency management documentation is explained to client

Many statutory requirements are covered when explaining each clause of the Management Authority form in detail to owners. This is covered below. It is also a good idea to give owners the WA government publication published under The Residential Tenancies Act 1987 REIWA Form 310 Information for Tenants (A Statement of your Rights and Duties) (Schedule 2). It explains tenants rights and owners obligations clearly and lets the owner know what the tenant will be told. This form appears at Appendix 12.
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The management authority Be mindful of the importance of this written agreement between the Agent and the owner in relation to the management of the property. REIWA Form 301 is recommended in its most recent version. This form (or an equivalent legal agreement) becomes the contract for management of the property and must be completed with accuracy and carefully record the owner's specific instructions. Management of the property is not permissible without such an agreement as Section 60(1) of the Real Estate and Business Agents Act (1978) states: 'Before becoming involved in the property management process the agent must be appointed to act.' Section 6 (3) of The Code of Conduct for Agents and Sales Representatives states that an agent cannot offer a property or business for sale or lease without the written authority of the owner/s. It is also a requirement that all fees are negotiated and initialled by the owners. Failing to have a fee initialled on the authority form means you cannot charge that fee. A copy of the document must be given to all owners at the time of signing and must be prepared in duplicate. Failure to provide all parties to the contract with a true copy will render the contract invalid. Once a binding agreement is completed and signed by all parties, the property manager then has the authority to act on the owner's behalf to: find tenants enter into leases or tenancy agreements manage the property.
If a written authority/contract with an owner is not signed and initialled or is improperly executed there may be negative consequences, for example: the agency is not entitled to fees/ commissions from owner if contract is not signed/initialled. risk of prosecution for trespassing or other unauthorised actions if no authority signed. complaint to regulator / disciplinary action, fines, suspension or deregistration for either. If instructions not carried out owner may seek compensation and/ or rescind contract. contracts are sometimes rescinded on technicalities like incorrect property details.
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The property manager and the owner The appointment to meet with the owner may be the first time you have met them, but you will have gained some knowledge through earlier telephone or email communications. Form 301 Exclusive Management Authority For Residential Premises requires detailed information. You may have pencilled some of this in based on earlier contact, but every item should be clarified with the owner to ensure accuracy and a clear understanding this helps to avoid conflict later and to ensure that the contract is binding. The meeting should allow enough time to ascertain all necessary details about the property and the owners requirements, and to explain the terms of the agreement fully. On completion of the form, the property manager should know exactly how the owner would like the property to be managed and have recorded the owner's instructions on the form. The owner must understand exactly what they can expect from the property manager and the duties that will be performed during the management of the property on their behalf. The property manager and owner must have reached agreement as to the fees payable for the service to be provided. This document is a contract and must be completed with care. If a contract is breached by the agency an owner may seek compensation or rescind the contract and decline to pay fees, so ensure that what you commit to can be delivered.
Completing the document

Section 1 Schedule Initials - Each page must be initialled at the bottom. Item 1 - Owner(s) This section details owner(s). All name(s) must be written in full - initials are not sufficient. Confirm correct spelling of name(s) given and underline surname(s). Some Asian cultures list surname before given name - clarify if unsure. If there are several owners, list details for all. The form provides for 3 owners in this section and more in the annexure schedule. Where married couples are joint owners both names must be shown in full (i.e. Bill Smith and Mary Smith not Bill and Mary Smith). Contact details List home and business telephone numbers, email addresses, facsimile numbers and mobile telephone numbers so that all contact options are available if required, mark which is their preferred method of contact. Emergency contact If possible obtain the phone number of someone the owner trusts to make a decision in an emergency. They must be easily contactable. If this person has power of attorney get a copy, if not, clarify and note the extent of their ability to make decisions.
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Item 2 Agent The agency details appear here including the licensees name the Triennial number and all contact details. Item 3- Premises Details the full address of the property, the relevant council, whether it is strata titled and the Volume/Folio numbers if it is a strata property. If it is a unit the name of the apartment block is shown, if known. If a lot number is given, it may be necessary to identify the nearest cross-street. Item 4 Strata If it is a strata property the contact details of the strata manager are recorded and the existence of any by-laws is noted (the by-laws, if available should be attached to the agreement and then to the lease). It is important to obtain a copy of the Strata Company By-Laws and House Rules from the Strata Company or Owner. Item 5 Rental This section details the range within which the property can be let, the minimum and maximum term of the lease acceptable to the owner(s) and refers to the Terms and Conditions in Clause 5.1. Obtain the owner(s) permission to negotiate on the rental price and insert the two amounts on the Authority form i.e. $_______to $_______per week/ fortnight/ calendar month.
Advising on rental value You are the owners best source of advice as to what rental can be realistically achieved. The REBA Code requires you to advise owners on what you believe is achievable, and to have a reasonable basis for this advice e.g. using a comparative market appraisal. Discuss supply and demand factors with owner(s).There can be significant seasonal differences i.e. busy December to March, quiet in September. The use of the Term Market Rate will invalidate your contract. You must be able to justify your appraisal and use realistic figures. Advising on term of lease The pros and cons of short/long leases vary according to location and the owner's plans/needs. Explain to owner(s) that: Short-term tenancies cause more wear and tear to properties. They also give maximum flexibility to owner(s) e.g. to raise rent, or to renovate or sell the property untenanted. They allow owners to assess tenants before giving a long lease. Long term tenancies attract quality tenants a family doesnt mean a quality tenant, reduce vacancy periods, keep cash- flow up and re-letting costs down. A long-term lease can make it harder to sell or renovate a property. If costs/rents go up a long lease makes it more difficult to increase rent.
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Item 6 Term of Management Agreement This field shows the period the agency has authority to manage the property for, with an option for an automatic extension if 28 days notice to terminate has not been given by either party. Always set a fixed term. Try to obtain at least a 12 month term (or longer) to limit administrative costs and opportunities for termination. Have a proactive system in the office for renewal of management authorities due to expire or you may find yourself losing properties unexpectedly. Owner(s) may need to give 28 days notice of termination of the contract, depending on how Item 6 was used originally. Owner(s) sometimes decide they no longer require Management services simply because everything is going so well they feel they can do it themselves. Dont be complacent contact them and give them reasons to stay loyal to the agency, e.g. loyalty and/or referral bonuses. Item 7 Fees for Services (GST inclusive unless otherwise stated) This section must be completed and initialed. Owner(s) must initial each fee for each specific charge agreed on, or the fee cannot be charged (unless a separate written authority is completed later e.g. a letter varying the original agreement). Where services are not being used they should be marked N/A and initialed by the owner.
Be familiar with agency fees and services and understand the implications of charging a fee inclusive or exclusive of GST. Explain to the owner(s) that fees charged by real estate agents are not fixed by law and are negotiated and agreed in writing between the owner(s) and the agency. If an hourly rate you must note a maximum number of hours that will be charged for, so there is no chance of a dispute. 7.1 Costs of identification of agents in advertisements Owner(s) have an option to pay (or not) for the agency to be compliant in this area. If they do not want to pay for the extra lines used to identify the agency, the agency must pay the difference. 7.2 Marketing and Advertising Expenses This field details what level of marketing the owner(s) agree to pay for and how this is split between internet, print and other media. The Agency is authorised to advertise up to the agreed maximum amounts (inclusive of GST) as necessary until the property is let at the owners expense. The Agent must disclose what advertising charges cover. It is advisable to attach a schedule detailing what items are to be paid for by the owner and include any that the agency covers the cost of, to avoid misunderstandings. If money is not spent it cant be charged.
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7.3 The following Agent's Fees have been agreed: Details the following fees, with space for them to be initialed: Leasing Fee. Management Fee. Property Condition Report Fee. Final Bond Inspection / Inventory Report Fees. Routine Inspection Reports Fee. Lease Renewal / Negotiation Fee. Annual Financial Summary fee (if required). Court / Tribunal Preparation and Attendance. Administration Fee / postage, petties, etc. Meeting Attendance Fee. Title Search Fee / All Bank Fees. Tenant Enquiry Fees. Leasing fees The property manager may charge an owner a leasing fee by negotiation. This can be based on: A percentage of the annual rental (e.g. 9.35% inclusive GST) the past is irrelevant, fees should be quotes GST inclusive where possible. A number of weeks rent e.g. two weeks rent plus GST. A flat fee based on the estimated hours of work involved in the letting process (e.g. $200 per new tenant).
Any examples of leasing fees on the Management Authority must be realistic and calculated at the maximum annual rent. No part of the cost of letting can be passed on to the tenant as either a letting fee or under any other name Leasing Fee negotiation examples listed below. Example 1 Client to continue with previous rate of 9.35%inclusive GST of the annual gross rent of the tenancy. For a property of $300 per week for a 12 month tenancy, the calculation would be: $300 x 52 weeks. $ 15,600 9.35% including GST. $ 1458.60 Owner(s) fee -. $ 1458.60 Example 2 Property rented at $300 per week for twelve months. It may be mutually agreed by the owner(s) and the property manager that 2 weeks rent be charged to the owner(s) as a leasing fee, plus GST. $300 x 2 = $600 + 10% = $ 660 Owner(s) fee (including GST) - $ 660
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Example 3 Agency charges a monthly flat rate per new tenant, say $200 per property for all leasing, management and inspection procedures. It must be made clear in the written agreement whether GST is included and what is covered by this rate OR Agency charges a flat fee of $160 per month for all services excluding leasing procedure. A separate fee is then charged for leasing the property. This overcomes the problem of some properties being re-let more often than others. Fees may be very flexible if the agencys policy is to assess each property and situation on an individual basis, depending on how keen the agency is to win the business and the client (e.g. you may offer a better rate for a prospective client with a number of properties under management). Management fees Management fees are negotiable by law and can be calculated as a percentage or at a fixed amount agreed upon by the owner(s) and the agency. If there are multiple owners all must initial each fee. A realistic per annum figure for Management Fees must be provided on the Management Authority. If you are charging a % Management Fee this must be calculated on an annual basis on the highest expected rent. Property Condition Report Fee This is for preparing the ingoing report on the condition of the property. The agency may choose to offer the owner(s) a fixed charge for the report, charge by the hour or include the report in an overall flat fee. If you intend to charge an hourly rate for the Property Condition Report you must have a maximum amount stated on the Management Authority. Final Bond Inspection Fee The initial property condition report is the basis for assessing whether a tenant needs to pay for damage, cleaning or repairs as a result of deterioration during a tenancy (beyond fair wear and tear). The final inspection at the end of a tenancy determines how much bond is returned to a tenant. The agency may charge a flat fee or hourly rate for this service. Once again if you intend to charge an hourly rate you must include a maximum fee on the Management Authority. Inventory Report Fee Preparing an Inventory Report for detailing chattels and furnishings at the premises can be charged for by flat fee, hourly rate or as an inclusion. Hourly rates must include a maximum amount on the Management Authority. This report is used for a furnished property to list all items belonging to the owner(s). If items are missing, broken or in poor condition when the tenancy ends, a claim is made against the bond. Lease Renewal / Negotiation Fee The agency may charge a % of annual gross rental or a fixed fee for this.
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Routine Inspections Report Fee A routine inspection should be carried out 6 weeks after the tenant moves in and then every 3 months. Again you may negotiate a fixed fee, charge by the hour or include the service in a flat fee if one is negotiated. Again a maximum amount must be clearly stated on the Management Authority if you intend to charge an hourly rate. Annual Financial Summary Fee The agency may provide an income and expenditure statement or annual summary to owner(s).If this is not included in the other fees the property manager should agree on a fee for this that is GST inclusive. Court/Tribunal Preparation and Attendance A flat fee or hourly rate is charged if court attendance is required for preparation and attendance time. Administration Fee This may be a monthly or hourly fee. Some property managers prefer to use this fee rather than postage and petties as the latter infers the charge is mainly for posting of items. Meeting Attendance Fee It may be a requirement from the owner(s) that the property manager attends strata company or other meetings on their behalf. The property manager and the owner(s) must agree on a fee for this service. Title Search Fee This fee is inclusive of disbursements. Property managers can recoup costs for obtaining a copy of the certificate of title used to verify ownership. If the property is Strata Titled that you may choose to also search the Strata Plan and should check by-laws, exclusive use etc. Bank Fees These are reimbursable if agreed to. Tenant enquiry fees This is charged if the owner(s) requires access to a tenancy database and should match the fee that is charged to the agent by the database company. All Postage and petties Recoups monies per month spent by the property manager for which owner(s) will be responsible e.g. postage, telephone, facsimile. Other fees payable There could be additional services the agency is charging for, such as: extraordinary refurbishment's or calling of tenders photographs re-inspection fee. The property manager must agree on these fees with the owner(s) and have them initialled on the management authority form.
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Fixed charge If the Agency charges a monthly flat fee to include all or some of the abovementioned duties note the list of services to be provided for that flat fee under Other on the management authority form and have the owner(s) initial it. If owner(s) dispute a fee payable to the property manager on the grounds that it is unjust, the owner(s) may refer the dispute to the Department of Commerce (DOC) for adjudication. 7.4 States that if Item 7 is not applicable and an Annexure is attached to this Authority, fees set out in that Annexure will apply. Ensure annexures are correctly and clearly written so that they are not open to interpretation; owners should initial each fee on the annexure. 7.5 Allows for an agreement as to when fees will be reviewed. The Annual Review of Fees is also referred to in clause 6.6 of the Terms and Conditions. It can include a fixed annual percentage increase in fees or, if no percentage is stated, clause 6.6 will apply (an automatic increase the same percentage as the Consumer Price Index (Perth) All Groups ("CPI") will apply). This means that the property manager's fee will become the percentage of the gross rent plus the CPI percentage increase of that figure. If the CPI decreases the owner might expect a decrease in fees so make sure that it is clear what will happen in that circumstance. Be aware that for long term authorities, the review increase each year compounds. An initial 8% fee that increases by 5% per annum will go to 8.4%, 8.82% and then 9.26% over a four year authority. Unjust fees can be reviewed by the regulator. Item 8 Outgoings In this section the owner indicates what expenses he wishes to have paid by the agency on his behalf. Council Rates and Water Rates (see clause 4.1). Strata Levies (these may include gas/electricity) / Land Tax. Building and Contents or Repairs/Maintenance. Insurance / Landlord's Insurance. Water Consumption /Gas /Electricity. Gardening/Lawn Mowing. RCD and Smoke Alarm maintenance. Other. Once it has been established what payments are to be made on the owner(s) behalf, the appropriate authorities must be advised that all future accounts will be forwarded to the agency. The property manager usually writes to authorities e.g. the Local Authority/Council, Water Corporation, Office of State Revenue, etc. (see sample letter below).
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ABC Realty 123 Mem Street Perth Tel: 9555 5555 Water Corporation P.O. BOX 100 LEEDERVILLE WA 6007 Dear Sir/Madam Re: Unit 1, 26 Boblake Street, Como
DD/MM/YY
We wish to advise that we have been appointed Managing Agent on behalf of Mr Joseph Henry Bloggs, the owner of the above-mentioned property. Please forward all notices and accounts to: ABC Realty 123 Mem Street, PERTH WA 6000 Should you have any questions, please do not hesitate to contact the writer. Yours faithfully -----------------------------Property Manager Item 9 Maintenance This field shows an agreed maximum amount of expenditure on maintenance which can be authorised without specific permission from the owner(s). The maximum amount nominated should be inclusive of GST. You should also explain to owner(s) that the management authority allows the agency to attend to emergency repairs at the property manager's discretion, and that this is necessary to comply with the Residential Tenancies Act as tenants are entitled to have certain types of repairs done immediately. Owner(s) must pay for such repairs even if they have not given approval for them prior to the expenditure. Explain that although every effort will be made to contact them, this clause will be exercised if necessary. An attachment may be needed for a list of contractors if the owner(s) have more than two or three preferred trades people.
If an owner requests quotes for major work on a property and then asks you to proceed with the quotes, try to obtain an advance prior to commencement of the work. Trades people appreciate work being paid for in a timely manner and become reluctant to do further work for the agency if payments are not forthcoming promptly after work has been completed.
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Item 10 Water Consumption This section details the owner(s) responsibility in relation to water costs with the option for them to pay part of the water usage. If a property has a big garden it will be easier to let if owners contribute to water costs. Item 11 Payment to owner(s) This section gives an overview of how funds are paid to owner(s). Always check if the owners are Tenants in Common as the shareholding may affect how the funds are to be paid. Owner(s) should be advised when the agency will disburse funds, so that they can plan their cash flow. Let them know when statements are sent (generally on the last working day of the month) and whether monies will be transferred electronically or sent by cheque. Timing may be important if owners are relying on the rent to make repayments. If monies are to be paid into a bank account record the branch, BSB and account number exactly as supplied by the owner(s). Explain that if there are insufficient funds available to meet outgoings as a result of payments for maintenance, rates, etc that owner(s) will be advised and asked to forward funds to cover any shortfall. If you need to expend a large sum without specific approval from owners due to an emergency, out of courtesy you should notify owners before the date when moneys are expected so they can plan for the shortfall. Similarly if a tenant is behind in their rent and is unlikely to pay before the end of the month the owner should be notified. Item 12 Insurance Cover It is the owner(s) responsibility to adequately insure the property and any contents they own throughout the period of the agency. Proof of insurance needs to be completed and preferably copies of policies sighted. This should be copied and kept on file.
Your agency may have a policy that a management cannot be accepted unless proof of insurance is provided because if the owner is uninsured or inadequately insured, the agency can end up with a claim against them. Building and Contents Ask whether the building insurance cover is effective if the property is 1. 2. rented not owner occupied ? vacant for a period of time?
Owners should ask their insurer whether curtains, carpets and light fittings are covered by the building policy or whether they need to insure these as contents and whether the reticulation timers, pool equipment etc are covered for fusion or theft.
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Public liability insurance Public liability cover protects the owner(s) if claims arise due to accidents at the property. Ask owner(s) to check cover is adequate. For strata titled property owner(s) cannot rely solely on the strata companys cover. Worker's compensation You should check that contractors are covered by their own insurance. Self employed contractors are unable to insure themselves under the WorkSafe Act. Some owners sometimes want to bring their own trades people in to do work and/or do work themselves, so they may need cover for this. Landlords protection insurance Landlord protection insurance covers specific risks involved in renting and depending on the actual policy, this can protect against: Loss, theft or damage caused by a tenant (malicious or accidental). Buildings &/or Contents. Public Liability. Workers Compensation. Loss of rent if a tenant defaults. Legal costs.
It is important to understand insurance, you may recommend a policy, however cannot discuss any details about the policy, you must also avoid giving any advice relating to the policy. Giving advice without the appropriate qualification is an offense and can expose you to a claim if you get it wrong. Item 13 Principal place of residence Owner(s) declaration as to whether they have resided in the property within the 3 months prior to it being let. This affects the level of bond that can be charged. Item 14 Additional conditions Note additional conditions here in detail if they are brief, or crossreference to an annexure on page 11 if more room is needed. You may need to seek advice before drafting special clauses as poorly drafted clauses are a major source of disputes and complaints. Clauses need to reflect what exactly is expected to happen, who is to carry it out, who is to pay for it etc, be clear as to what is required by the owner. Residential Management Agreement Terms and Conditions These terms and conditions have been designed to protect both agents and consumers. 1. Appointment this formalizes the exclusivity of the agreement. 2. Definitions property managers must be familiar with these in case of questions.
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3. Termination this sets out how and when the agreement can be ended if either party fails to fulfill their obligations (this clause must be initialed). 4. Owner(s) obligations This section includes 18 obligations and acknowledgements which clarify what the owner acknowledges as their obligations. SUMMARY of Owner(s) Obligations Supply of water is the responsibility of the Owner(s). Owner(s) warrant that: they are the proprietor(s) or have authority to enter into the Agreement all information is correct and they will promptly advise of any changes the whole of the premises are to be used for residential accommodation; they have insurance and will provide evidence of this within 7 days; there is no other management agreement relating to the Premises; the Agent will be informed in writing of any changes to ownership the information referred to in Item 13 is true Owner(s) acknowledge obligation to comply with building, health and safety laws. Indemnities Owner(s) indemnify the Agent against liability/loss caused by: any breach of the agreement by the Owner(s) Owner(s) failing to provide adequate instructions or monies to Agent loss/damage to premises, goods, chattels, or injury to any person on the Premises; except if due to the negligence or fault of the Agent. Owner(s) Acknowledgments The Owner(s) acknowledge that: Agent may assign rights under the Agreement to a 3rd party without owner(s) consent (if allowed by law) e.g. sell rent roll (Agencies need to act with care and seek advice when buying and selling rent rolls) and may wish to seek legal advice when buying a rent roll. Agent may receive a fee from another party for their duties if Owner(s) consent to the Agent receiving fees as notified by Agent in writing. Agent's obligations are limited to this Agreement or as agreed in writing. Agent gives no warranty as to the credit worthiness of any tenant. Agent is authorised by the Owner(s) to carry out their duties pursuant to this Agreement including authority to carry out activities outlined in Clause 5. Agent is authorised to deduct from their Trust Account any monies due and payable by the Owner(s) to the Agent pursuant to this Agreement. Agent is not responsible for any damage caused by any tenant. Owner(s) are responsible for payment to service providers of repairs and maintenance that Agent has issued instructions to on Owner(s) behalf.
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5. Agents Obligations - This section is expanded and states the property managers obligations. Summary of Agents Obligations Property Letting Unless otherwise specified in the Schedule, the Agent will: try to let or re-let the Premises when it becomes vacant, at the Rental range and for preferred term specified, unless Owner(s) agree otherwise at the Owner(s) expense, advertise the Premises to let appropriately interview prospective tenants and conduct necessary checks negotiate the terms and conditions of tenancy with prospective tenants prepare a residential tenancy agreement, and execute it and any other documents required under the Act on behalf of the Owner(s) if certain obligations are agreed the corresponding sub clause will not apply. Property Management Unless specified otherwise in the Schedule, the Agent will: collect the Gross Rental and any other monies from tenants pay Outgoings upon receiving accounts (subject to holding sufficient funds to pay Agent's Fees, Expenses and Outgoings listed) give Owner(s) written statements of monies received, paid or taken pay all remaining monies due to the Owner(s) as specified in Item 11 inspect Premises as necessary and if requested by the Owner(s) report in writing to the Owner(s) on the condition of the Premises advise Owner(s) of any damage/accident at Premises ASAP effect maintenance/repairs needed without notice to the Owner(s), provided the cost does not exceed the amount specified in Item 9 effect emergency maintenance/repairs at the Owner(s) expense (no $ limit) at their discretion but try to gain approval prior to expenditure arrange for keys to Premises at the owner(s) expense assist Owner(s) in relation to insurance matters as far as is legal advise Owner(s) if Premises are vacant or will become vacant, ASAP advise Owner(s) when tenancies become due for renewal and/or expiry negotiate terms of extensions/renewals with tenants assess and determine any application for assignment or subletting advise Owner(s) of any breach of a residential tenancy agreement ASAP complete and serve forms and notices required on behalf of Owner(s) appear before Magistrates Court or other authority on behalf of Owner(s) complete and serve documentation at the premises, as required receive, lodge and disburse Bond in accordance with lease and the Act make Tenant Enquiries before any letting.
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The Agent agrees to act with due care and diligence. The managing agent must have procedures to ensure the duties above happen in a timely way and manage related activities not specified in the lease but needed for effective, compliant management of the property, e.g.: assessing the rent managing enquiries and complaints opening the property for inspection taking applications and reporting on applications to the owner(s) providing the tenant with copies of the relevant documentation like the tenancy agreement keeping all appropriate records. Discuss this section in detail with the owner(s) at the time of signing the authority and if more detail or special provisions are required add them in Item 14 or as an annexure to the schedule. As well as the agents obligations in Item 5 there are also implied obligations above and beyond the specific duties set out there as well as acting with care and diligence the agent must always act in the owner(s) interests and observe all related laws and regulations. Any conduct which is misleading, deceptive, not in the owner(s) best interest, or any failure to disclose a conflict of interest is a breach of the implied terms of the contract. 6. Agents Fees and expenses - gives more detail relating to the payment of fees and expenses, review of property managers fees and fee disputes. 7. GST agreement relating to reimbursement of GST. 8. Privacy Act 1988 Protects agencies against privacy complaints by explaining the legitimate uses the agency may make of personal information. It fulfils a requirement of current privacy legislation that owner(s) be aware of their right to see the information contained in their records and to have errors corrected. 9. Disputes clarifies the owner(s) right to refer disputes to regulators or take action against the property manager. 10. Additional conditions- refers to item 14 in the main contract where additional conditions are noted. 11. General explains that the agreement is governed by the laws operating at the time (State and Federal) e.g. Australian Consumer Law. Annexure to schedule Use this area if there is not enough space in the main document. Insert the relevant corresponding item number and heading. Property Information This section documents the date of handover, whether the property is vacant or tenanted and the type of lease and its expiration date if tenanted.
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The current agents details and all the details of the propertys features are listed here (number of rooms, special features and facilities, security etc).The existence of items under warranty, instruction manuals, and instructions regarding pets and smokers are also recorded here. Make sure you clarify these two issues and complete this section in detail. Executed as an agreement This is the area where the parties sign and date the document. Each owner or his or her power of attorney must sign the document. A copy of the document should immediately be given to all parties and the owner(s) must sign acknowledging receipt of their copy.
This page can be used in conjunction with the property appraisal sheet. Completing the property information section of the form provides information to assist in the successful letting and management of the property. If more room is required an annexure may be used. As well as documenting items provided for on the form, check the following: Any items in the home still under warranty. Do any items require specific care e.g., polished floorboards, tinted windows, quarry tile floors, cork floors, etc. If there is cooling or heating who installed it / who services it? Are pets / smoking permitted? If there is reticulation, is there a plan of the layout showing solenoid valves, stations and or instructions as to the method of operation, especially if there is a timer, how is this set? Is there a vacu-duct system? If so, who services it? Is there a security system? If so services it, what is the master code and is it monitored, if so by who? Do they agree to gutters being cleared each year prior to winter? If there is a pool o Who services it? o Is it a salt or chlorine pool? o Is there an itemised list of pool equipment and supplies? o Is there a regular monthly pool service carried out? o Where is the backwash overflow directed? o Can tenant be given a professional handover on pool care?
General information Keep the following information in mind when signing an Exclusive Management Authority for Residential Premises Form.
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Security Bond The Residential Tenancies Act (1987), Section 29, does not allow agents to collect more than 4 weeks rent as bond unless the property was the owner(s) own home in the 3 months immediately prior to letting or the rent exceeds a prescribed amount (*$1200 per week). A pet bond of a prescribed amount (*$260) may be charged in addition to the main bond. If owner(s) request bond of more than 4 weeks rent and this is possible under the above rules, specify the agreed bond amount in Item 14 as an additional condition. (Refer to Section 29 (1) & (2) of the Residential Tenancies Act 1987.) * Applies to tenancies entered into after June 1 2011 Option to Renew Many experienced Property Managers advise owners against Options to Renew, as they are usually more advantageous for tenants than for owners. That said, options are requested at times by tenants and agreed to at times by owners, so you should know how to deal with them. There is a REIWA Options to Renew form designed to avoid the pitfalls of poorly written special conditions which can cause disputes especially if they do not specify: what rental increase will apply to the extended period (either a set dollar amount, an agreed percentage, or an agreed mechanism, e.g. a market increase based on quarterly REIWA data) conditions under which owner(s) can cancel the option (e.g. if the tenants have proven to be unsatisfactory) a set procedure to exercise the option e.g. to lodge it with the agent no later than a set date. The Option to Renew Form 188 and Notice of Exercise of Option to Renew Form 189 appear at Appendix 24. Their use clarifies these issues. Availability The anticipated period of availability is important. A new lease cannot be negotiated if it will exceed the term for which the property will be available. This should be clarified with owner(s). Power of Attorney Owner(s) may give Power of Attorney (POA) to another person or you may be dealing with someone acting under Power of Attorney. If owner(s) say they have granted a POA, or if the person you are dealing with is acting under a POA, ask for a copy and keep it on file. Read it carefully, as it may limit the extent of the persons power to act (e.g. it may give authority to manage a property but not to sell it) and it may have an expiry date. The signature on an ordinary power of attorney can be witnessed by any independent adult witness using the normal attestation clause: "signed by me ..( name).. in the presence of .. (name of the witness)" The witnesss full name, address and occupation should be printed.
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Ordinary Power of Attorney ceases if the person represented ceases to have the mental capacity to make financial decisions as the person holding the POA is meant to be carrying out their instructions and of course acting in their interests. An Enduring Power of Attorney (EPA) is drawn up while someone is able to make decisions, so that another person can act on their behalf if they lose the capacity to manage their affairs. If someone presents an EPA as authority to act and it does not show a start date, there should also be documentation from the Guardianship and Administration Board, ruling that owner(s) are unable to manage their affairs. An EPA must be witnessed by 2 persons able to witness statutory declarations. Open Authority to Lease Residential Premises The Open Authority to Lease Residential Premises is a form created for leasing only instructions and is used when the agent is appointed to lease the property and not manage the property. Searching a Certificate of Title It is recommended that all new managements be searched to ensure: the land or property is correctly identified the identity of the owners is verified if you are dealing through one person and there are multiple owners then it enables you to ensure that they have proper authority from all owners you are aware of encumbrances (e.g. a caveat lodged by the Family Court) - these may impact on how rent is disbursed, and may need to be disclosed to potential tenants how ownership is divided if multiple owners are involved this also affects disbursement of rent proceeds.
8.3
Agency Fees and Conditions are negotiated

After the Authority is completed it can be useful to go through the REIWA Form 341 Owner Checklist with Owners to ensure that all the necessary matters have been covered. This can be modified but whatever format it takes to ensure that nothing is forgotten and that the Agencys policies and conditions are explained. A copy appears in Appendix 5. As already explained fees charged by real estate agents are not fixed, and are to be agreed between the owner and the property manager or their representative. By law you must make the owner aware of this. Owners who have owned rental properties before (but not recently) may expect tenants to be charged a letting fee. You may need to explain to them that under Section 27 of the Residential Tenancies Act 1987 a tenant can only be charged rent and a security bond when entering, renewing, extending or continuing a tenancy agreement.
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Activity 24
Negotiating fees
An owner has a property with you and two with another agency. He pays a management fee of 7% to the other agency. Your fee is 8.5%. He isnt happy and wants you to match their fee. You are keen to grow the rent roll. How would you approach this situation? Note the answers to the following: How will you prepare? How will you approach the situation? What might motivate the owner besides the money involved? What can you use to sell the agency's image and service? What can you personally offer that is likely to appeal to the owner? How can you ensure that the matter is not reopened afterwards?
Negotiate the fee using your negotiation and communication skills. This activity should be conducted as a role play but if not possible describe what you would do. If role playing note the outcome agreed to.
Compare your response with Model Answers.
8.4
Property details are recorded accurately

Once the management authority has been signed, it is important to record the details of the property accurately. This is for the purpose of accurately comparing the property with other similar properties to appraise its rental value, to ensure that there is no risk of false and misleading advertising, for statutory reasons and for commercial reasons e.g. evaluating growth, effectiveness of marketing etc. Property management records often involve more than one system; e.g. a record of individual properties, a record of all owners, tenant records, tax records, trust accounting records and sales and marketing records.
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An individual property database can include: details of the property manager\date the property was listed the rental figure a detailed description of the property a photo of the property any special conditions. It is most important that all records and systems including websites and databases are kept up-to-date so that they provide an accurate, current record of what is happening with properties and clients.
8.5
Management documentation is completed in line with agency practice and legislative requirements
As already covered the management documentation must be explained and completed in line with legislative and agency requirements. Some compliance issues you must be aware of are: The contract must be explained so that the owners understand their obligations to the agency and the tenant. The relevant fields must all be completed properly. Owners should understand the rights of tenants and be familiar with the standard conditions that the lease document entails. Owners should receive a copy of the documents tenants receive including the statutory form Information for Tenant (A Statement of your Rights and Responsibilities) Schedule 2 (REIWA Form 310). If necessary, explain to owners that tenancy agreements cannot provide for penalties or damages if the tenant fails to keep to the agreement. Only a magistrate can make this type of order. Names, dates and signatures are important an agreement that is not properly completed signed and initialled can be invalidated. If relevant explain to owners that clauses can be included in a Tenancy Agreement to change some tenancy rights as set out in the Residential Tenancies Act (1987). The Act states:
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Contracting out
(2) Except as permitted by subsection (3) or by or under any other provision of this Act, no person shall enter into any agreement or arrangement with intent either directly or indirectly to defeat, evade or prevent the operation of this Act.... (3) A residential tenancy agreement may contain a provision by which section 38, 39, 40, 41, 42, 43, 45, 46, 47, 48, 49, 50, 55 or 56 is excluded, modified or restricted if the residential tenancy agreement is in writing and is signed by the owner and the tenant.
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A 'contracting out clause may say something like "Sections 42 and 43 of The Residential Tenancies Act (1987)do not apply to this contract" or "Sections 40 and 45 of The Residential Tenancies Act (1987) may have been modified, excluded or restricted". Owners should understand what is being contracted out and the implications this has on their rights and those of the tenant. Apart from the specific clauses the Act allows to be contracted out, it is an offence to make an agreement that attempts to override the Act. The sections of the Act permitted to be contracted out at the time of writing cover: 38. 39. 40. 41. 42. 43. 45. 46. 47. 48. 49. 50. 55. 56. Tenants responsibility for cleanliness and damage. Tenants conduct on premises. Vacant possession. Legal impediments to occupation as residence. Owners responsibility for cleanliness and repairs. Compensation where tenant sees to repairs. Locks. Owners right of entry. Right of tenant to affix and remove fixtures etc. Owner to bear outgoings in respect of premises. Right of tenant to assign or sub-let. Vicarious responsibility of tenant for breach by another person. Cost of written agreement to be borne by owner. Discrimination against tenants with children.
There are changes proposed to this list so keep up to date as these will probably be introduced in the near future. The Department of Commerce advises against 'Contracting Out' unless there is a good reason and suggests you highlight any special conditions (such as sub-letting) and ensure both parties understand the agreement. If a tenant is not told the significance of a contracting out clause they may have grounds to argue that the 'contracting out' clause should not apply. Especially when dealing with inexperienced renters, be careful to explain such matters to avoid being accused of unconscionable conduct. Department of Commerce (DOC) view on Property Condition Reports The DOC also strongly advises Property Managers to prepare a property condition report in the first week of every tenancy, showing the contents of the premises and their condition. This is given to tenants at the beginning of a tenancy for them to check, sign if they agree with it, and return within a week.
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The Department of Commerce provides a standard Property Condition Report a very comprehensive form showing the contents of the premises and their condition, which can be used as a template. If it is a furnished property there should also be a list or inventory of chattels. The use of detailed descriptions and/or dated photographs makes this much more effective. Tenants must have the opportunity to note any pre-existing damage that may have been missed in the inspection. This document can only be used as evidence of condition if tenants have agreed to it. Activity 25 Exclusive Management Authority
1. Conduct an interview with a view to gaining management of a home for rent (roleplay with a classmate or a friend if working remotely). Complete Form 301 Exclusive Management Authority for Residential Premise accurately and completely using details you create. Use the form at Appendix 4. Note any questions arising from this exercise. Discuss this with your colleague or trainer.
No Model Answer
8.6
Record and act on instructions

The instructions you receive from the owners of a property should be incorporated into the Management Authority form as far as possible. This protects you because it is formally signed, they receive a copy (and acknowledge receiving a copy) so there can be no misunderstanding. The original is then filed in the office property file used to keep all the vital and relevant information collected on the management of a property under management. The minimum requirements of the property file should encompass: Copy of completed Form 301 Exclusive Management Authority for Residential Premises. The results of the title search/database check verifying ownership and clarifying encumbrances that may impact tenancy.
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Property appraisal report presented to owners recommending rental value and supporting documents e.g. CMA and supporting research. Collection of Personal Information Privacy Statement. Correspondence with the owners (this may be saved electronically as well as in hard copy). After the Management Authority has been completed, additional instructions may be received. These requirements should always be confirmed in writing and added to the file. If owners have made any requests that are not in the Management Authority Form you should have some system to ensure staff will be aware of these requirements, as well as recording them in writing. Confirming the expectations in writing A letter should be sent to the prospective client, thanking them for the appointment to manage and confirming all of the key terms of the Exclusive Management Authority. In addition to a formal agreement to manage the premises, a letter to the client confirming and outlining the results of the discussion is useful. Some clients will not read over every detail in the full form but will read the letter. Records can be hard copy and on a database. They should be easily accessible to agency staff if their job requires they have access, but be kept secure from staff who do not need access, for privacy reasons. Record keeping is important in property management because of: Audit requirements under Real Estate and Business Agents Act. Tax department requirements. The need to act quickly in some situations requires easy retrieval, and that information stored is detailed and accurate. The need to report to owners on a regular basis. The need to manage the asset requires correct history of property condition, maintenance and improvements. To resolve disputes or defend claims at a later time e.g. Insurance, Equal Opportunity or negligence claims.
Some cases of disputes later need documentation e.g. An instruction to arrange for work on a property may be needed if the owner later disputes authorizing the work. A copy of an email where the owner agrees or disagrees with the applicant you have proposed can also be important if the applicant proves unsatisfactory.
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8.7
Documents reflect advice to relevant parties

A key responsibility of every property manager is to keep accurate and complete records for each property managed. The records of an agency should always be protected from inappropriate access or accidental loss. It is important to understand the reasons behind the need for detailed records being kept, particularly in relation to advice that you give. This section emphasises appraisals because they are a form of advice that is given as part of every property management presentation and they have direct financial consequences for owners. As a result some owners will pursue a claim for damages if they feel wrong advice has been given that has caused them to suffer a loss. You also need to keep a copy of all documents you present to owners, particularly if there is scope for advice to have financial consequences. The scenario below illustrates why it is important to keep records of the whole of your analysis and calculations supporting each appraisal. Risk Scenario You appraise the rental value of an apartment, using Comparative Market Analysis You gain the management, get signed authority and advertise and let the property at that agreed value. An almost identical property in the same complex becomes vacant soon afterwards. Your owners become aware that it is let for substantially more. They complain that your appraisal was negligent and want the agency to compensate them for the difference. You need to be able to show in your defence that: a legitimate appraisal process was used it was based on accepted industry practice calculations were mathematically correct all the relevant information available at the time was considered. If you can show all of the above using your original worksheets (not just the report to the owner) you are well defended, even if your appraisal proved with hindsight to be imperfect. This is because the records prove that your original appraisal was done with due diligence and care by normal industry standards. To avoid a scenario like this turning into a court case where damages are awarded, every appraisal should be kept as a hard copy, so it is clear it has not been altered since being presented. The file should also include any calculations done on paper, notes, the initial property appraisal form, CMA, cover letter, photographs of the property and comparable properties, and any other relevant information e.g. articles or statistics. Other records that should be kept include the following:
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Rental statistics These can be kept as hard copy but are usually kept on the Property Management system used in the agency. They may include Vacancy Reports, statistics on median prices of houses/apartments for rent, quarterly Property Indicators, agency rental records, graphs of properties rented and trends in relation to rental prices achieved and days vacant. Databases Most agencies have electronic databases of properties available to rent, for the use of property managers and other agency staff. These underpin the agencys CMAs and again provide evidence of proper research as a basis for advice. A simple database may look like this:Address
1 2 3 4 Tappa Crescent 17 Alva Way 3 Pompano Court
Suburb
Blue Ridge Blue Ridge Blue Ridge
Rental
$450 $300 $250
Description
4 BR 2 bath 3 BR, 1 bath 2 BR 1 bath
Additional
Very attractive Large garden New kitchen
Property managers should comply with legislation relating to the collection, storage and use of information on individuals. Confidentiality and privacy of the prospective clients details must be maintained and the information should not be used for any purpose other than that for which it was obtained (unless that other purpose is closely related). Other areas of advice Other types of advice that Property Managers may be asked for can also cause complaints against them and the agency if answered carelessly or inaccurately. For example advice on: how to renovate to increase rental value future values of properties in the area what the market is likely to do how much to insure the building and/or contents for what values to allocate on depreciation schedules. It is best to avoid giving advice where possible, never to give advice you are not qualified to give, and to keep a copy of exactly what you said if you must give advice. Other records Agencies keep many other records that help you to protect yourself in relation to advice you give. These include letters, emails, notes of verbal discussions and agreements, quotes, invoices, notes of maintenance requests and complaints from tenants, ongoing condition reports, etc. Notes should be made of all conversations and filed immediately.
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Property management computer packages provide space for keeping notes. Dated and timed notes can be put on the owner, tenant and property cards if a manual system is in use. These records are invaluable if problems arise and help you to justify any advice you have given.
8.8
Information to clients reflects progress

A property manager appointed to manage property for a prospective client must keep the client informed of any significant development or issue in relation to the property. It is a professional requirement and important for the relationship that owners are kept informed. The plan as to how this will be done should be devised with the owners so that it meets their needs and they know what to expect. Working with the owners It is essential to recognise that there is a significant difference between having just another property and having a property that is highly marketable and likely to be keenly sought after. The attractiveness of a property will depend on how well priced and marketed it is. This in turn depends on how well you communicate with the owners and gain support for marketing and competitive rent. The following is a guide to keeping owners fully informed throughout the renting period: Performance reporting You have a commitment to undertake a certain number of tasks for owners. Communicate what you do and when so owners can see you are fulfilling this commitment. Method and timing of communication Find out what is convenient and acceptable for owners. Some may want a call every other day; others may prefer a weekly email. Set up a pattern of communication that meets their needs. Written reports These protect you and help to ensure clarity. Forward them at least weekly when a property is vacant or about to be vacated. Outline marketing and other activity on the property during the previous week and the results. Explain if no activity. The market - Keep owner aware of current market activity. If new comparable properties come on the market make them aware of this if it impacts on the appraisal or marketability of the property.
Partner with owners to work towards a common goal: - renting of the property to the best tenants at the desired price (or more) and on terms satisfactory to the owners. To ensure that you dont lose sight of the original agreement you need a system that ensures that you stick to the plan (e.g. for marketing), remain within budget and dont overlook commitments. If anything needs to be revisited (e.g. the marketing budget), get written approval from owners.
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Activity 26
Recording instructions
1. How are client instructions recorded when acquiring a new management of a property?
2. You have just gained a management from a first time property investor. Explain what you would keep a record of in relation to the advice you might give them and why you should do this.
3. How would you keep in touch and communicate that their instructions were being followed?
Compare your response with the Model Answers
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In summary
A physical inspection of the property should be carried out to assist in arriving at the rental value. At this stage building rapport with the prospective client is very important to maintain quality interactions during the management process. Leasing options and marketing plan should also be discussed at the presentation. An ongoing communication strategy is developed to ensure that the prospective client is fully informed of progress and developments. An agent must have a written authority to act as the property manager in the property management process. The written authority should encompass all client instructions where possible other subsequent instructions should also be recorded in writing. Confirm advice you give to owners in writing and keep a record of this for your own protection and theirs. Include research and calculations in this file. It is important that records are accurate and complete and relate to each property managed and that only the relevant people have access. Systems are needed to communicate with owners so they are kept apprised of the market and so they can see that their instructions are being followed.
Self-check questions 1. Describe the steps in a management presentation. 2. What marketing activities would you discuss with the owner? 3. Where would you obtain the details of the premises when completing the authority to management a property? 4. What are the fees a property manager can charge a client for managing their property? 5. Why is it important that records are kept of all properties managed?
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PART 9: Process of marketing

Learning Outcomes
This part of the learning materials aims to help you: Identify strategies to maximise property awareness in the marketplace. Describe the marketing mix. Elements and performance criteria covered:
Elements:
CPPDSM4013A/1 Develop marketing plan for property.
1.1 Potential tenant profile and benefits of effectively marketing property for lease are discussed with owner. Strategies and timeframe for marketing property, including possible marketing activities, are discussed with owner. Marketing plan, including marketing activities and budget, is agreed with owner. Marketing activities are implemented that comply with agency practice, ethical standards and legislative requirements. Feedback on outcomes of marketing activities is sought using reliable methods and verifiable data according to agency practice.
1.2
1.5
CPPDSM4013A/3. Implement marketing activities. CPPDSM4013A/4 Review and report on marketing activities and plan. CPPDSM4007AA/2 Develop knowledge of property management process.
3.4
4.2
2.4
Strategies for marketing property are identified and assessed in the context of legislative requirements and agency practice.
9.1
Introduction to marketing
When marketing properties for lease, your knowledge of marketing and advertising strategies can enhance the results you achieve for the owners you represent. A sound marketing process in property management normally looks something like this: Find out what outcomes the owner wants: e.g. o o What type of tenant do they want (bearing in mind EO laws)? When do they want the tenancy to start?
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o o o o o o
How long a lease will they offer? What rental return do they require? What issues are critical for them e.g. garden maintenance? What marketing costs they will authorise? Where/how they would prefer to advertise? How involved will they be e.g. vetting photos, copy etc?
Develop a strategy to satisfy the owners needs. Agree on the strategy and its costs. Implement the strategy as agreed. As the market does not stand still, a further stage is to re-evaluate this strategy and assess how effective it is, both for the sake of the owner of the subject property and to improve future marketing.
Implementation
Market plan
Owner
Analysis
Market strategy
Analysis e.g. owners needs, property condition, tenant profile, market conditions. Market strategy e.g. the best methods to promote the property. Marketing plan e.g. takes into account time frame, budget. Implementation e.g. carrying out the marketing plan.
Analysis Analysing the needs of owners may be done in a structured way or more informally. Your agency may have a questionnaire either in hard copy format or online that owners are asked to complete, or you may develop something yourself. An example appears in Appendix 6. Whether you ask some questions over the telephone and some when you meet the owners face-to-face, or place a questionnaire on your website and ask owners to complete it there, make sure that you get answers to the key questions and do not miss any crucial information. Owners will
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often give you the best information not only about their needs and the property itself but also to create a tenant profile which can help to target your marketing. Data about the market conditions can be found on industry websites such as REIWA.com, through subscribing to relevant newsletters and in country areas through your own network. It is important that you are up to date on this as you will need to advise owners on setting rents competitively and give them realistic expectations on how long the property may take to rent. Market strategy Setting a marketing strategy involves considering a number of factors. To begin thinking strategically about letting the property, think about who is likely to rent the property, why they will want it, and where you can market to attract them. Show your assumptions to others to test their strength and get another perspective. If it is the first time you have managed the property, ask the owner who has lived there in the past. If this information isnt available, look at who is coming and going from neighbouring properties. This will give you some idea of your potential tenant profile. A successful marketing strategy must achieve the following: Reflect your agreements with owners (cost and tenant profile targeted)Maximising awareness of the property in the right market. Be accurate and build a positive image of the property. Promoting benefits that meet customer needs. Stimulating genuine enquiries from qualified renters. Leasing the property quickly, for the best price, under owners terms.
Marketing Plan Marketing experts agree that a marketing program for a massmarketed consumer product should have a good promotional mix (i.e. use a mixture of different media including internet, print ads, brochures, handouts etc) so that the message reaches a wide audience.
9.2
Implementing the Plan

Successful real estate marketers understand the importance of matching properties to the correct target markets and devising marketing strategies that communicate cost effectively with the relevant groups of people. Designing and implementing a Marketing Plan will be covered later.
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Activity 27
Tenant Profiling Case Study
You have a listing for an immaculate new 1 bedroom + study unit in a low rise block with parking in an inner suburb overlooking a park and near transport. The area is popular with young city workers and close to bars and cafes. The rent is $400 pw. The unit is two levels up and has no lift. There is a gym at basement level and a tennis court. The owner needs a secure cash flow and has indicated a need to keep costs down as he is cash-poor until rent starts coming in. You inspect the property and notice from the name plates that there are couples and singles. The people all seem to be under 35. Discuss the profile of the tenant you think will want to rent this unit and will meet the owners needs. Discuss how you will market to get good tenants without expending too much on marketing. Profile
Owner needs
Marketing methods
See Model Answers
Activity 28
Tenant Profile Case Study:
You have a new property. The owners were not planning to rent the property when they redecorated recently and are concerned about the pale carpet, new kitchen and new paintwork. They do not want pets, and have said they will not accept young single males, or a family with very young children. They want you to advertise to this effect.
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What advice do you give the owner regarding their preferences and the marketing plan?
9.3
Copywriting for print

Copywriting skills are needed in property management and vary depending on the medium for which you are writing. A classified line ad which has no pictures to support it needs a good headline and concise well chosen wording to be effective. Some Property Managers prefer headlines that are all about feelings:
Cosy and secure LIVE THE HIGH LIFE Prestige and position
Some go for just the facts.
2 bedroom unit - quiet complex SUBI CENTRO TWO BEDS PLUS STUDY Rear home 2 beds, Pets OK
Some of the best headlines combine facts and feelings e.g.
GORGEOUS REAR TOWNHOUSE 3 BRs + 2 baths 2 Bedrooms + Study - OVERLOOKS SPARKLING POOL GLORIOUS RIVER VIEWS - NEW 4 BEDROOM
Writing copy for line ads requires as much skill as writing a longer ad. You need to include key facts that address basic needs (e.g. location, price, number of bedrooms, bathrooms, living areas and car parks). Strong inviting words that will create desire and make the property seem attractive (e.g. beautiful garden, top location, light-filled rooms, friendly street, trendy dcor, secure complex, sparkling pool) must be included. Too few key facts will result in nuisance calls from people who need more information and whose needs do not match the property. Too few words
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that trigger emotions will lessen the ads power to connect with the reader and may result in few enquiries. That has to be balanced against the need to be accurate and realistic dont use words like beautiful or stunning if the property is old and tired. Focus on other aspects like comfortable, centrally located or well priced. Two samples of typical classified advertisements appear below consider which you find most effective and what impression they give of the agency:
INNALOO New Apartment New 3 BR 2 bath apart. Dbl l/up garage, sec bldng, aircon. Loc cls to beach/shops/ bus. $450 pw Avail now - Fred Jones Realty 0412 321 444 or 9385 3000
I0 Beechwood Place INNALOO The perfect life, close to beach shops, transport and city This lovely, near new 3 bedroom 2 bathroom apartment features exceptional outdoor entertaining in a secure building, Jarrah floor boards throughout except for the bedrooms, reverse cycle air conditioning and double lockup garage. MUST BE SEEN! View by appointment $450 pw For more info see ad on reiwa.com.au or contact Fred Jones, Jones Realty 9385 3000 or 0412 321 444 fredj@jonesrealty.net.au
Generally abbreviations such as those used in the smaller version make the advertisement harder for the average person to read and understand. The property sounds like a good quality rental property with a lot going for it but the first advertisement does not do it justice. There are no power words to create desire and only one method of contact is given, so if the reader is looking at the paper after hours they have nowhere to go for more details. The second ad avoids abbreviations so it is easier to read. It offers several methods of contact and a way to access information after hours. The headline creates desire and there are many benefits covered. The cost to place this ad is higher but it is likely to generate multiple enquiries from quality applicants. Online copywriting Writing online copy is a different task it is easier in that you have room to say all that you want to say, and for photographs, maps, floor plans, agency logo etc. With this flexibility comes high expectations. Owners expect copy to be correct and make good use of language. Don't just transpose short copy written for classifieds. Convey less obvious benefits (e.g. to sell the area in case the ad is being read interstate or overseas).
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There is so much well written and well presented advertising online that poorly presented ads with spelling errors, bad photography and typographical errors just make your company look unprofessional. When using the internet to make contact with prospective tenants: Convey the best features of the property through photographs, a map link and a floor plan if one is available. Describe appealing details e.g. water features, outdoor areas, views, newly renovated kitchens or bathrooms and spacious bedrooms. Use copy to outline other benefits of the property (and the complex.) Sell location e.g. proximity to amenities, character of neighbourhood. Give prominence to the essential details, e.g. price, number of bedrooms/bathrooms, highly desirable features like air conditioning. Promote your agency ensure contact details and photo of the property manager and logo of the agency have appeal and impact. Provide a link to the agencys website.
Some samples of online rental advertisements follow. These are shorter than real online ads but convey some of the feel of the different styles adopted by different agencies.
SPACIOUS EXECUTIVE HOME
23 Princess Road, BELDON
3 bedrooms, 2 bathrooms, 2 car garage $460 Weekly

Near new, 2 storey home in sought after location. Beautifully presented with quality finishes, built-ins and polished floors in all bedrooms. Convenient location near schools, shops, parks and transport. Available now. Sorry, no pets allowed. Click Photos to View Slideshow (Assume this ad has 5
more photos that the viewer can click through to)
Contact Marian Smith
Virtual Realty
08 9287 6666 0417 340 090 msmith@virtualrealty.com.au Click below for
LOCATION MAP BROCHURE FLOORPLAN
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Unit 6, 80a Bayview Tce Claremont

3 BR, 1 bath townhouse. Front courtyard small rear garden, 2 car parks. Available now, long lease preferred. $450 per week. Call Mike Jones 9354 6789 ABC REALTY. Assume only one photo has been used in this ad.
Activity 29
Property marketing
1. What are three effective ways to promote rental property in your area? Explain why you believe these methods work.
2. Decide which of the internet advertisements above is better. List 3 strengths of the better ad and 3 weaknesses of the ad that is less effective.
3. a) Write new copy for the Bayview Tce townhouse. It has an appealing small garden. It was previously occupied by retirees who were there for 10 years. The interior is dated (80s). It is 10 minutes by car to the city and 23 blocks from shops, buses, and trains. There is a primary school, a bowls club and a riverside park within a block and private schools nearby. b) What tenant profile(s) will it appeal to and why?
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In summary
When marketing properties for lease, find out what the owner wants, profile the tenant, develop a strategy, agree on the plan and then implement it. Advise owners of what advertising works best and is most cost effective. A successful marketing strategy must achieve the following: o Maximise awareness of the property. o Build a positive image of the property by promoting benefits to meet customer needs. o Stimulate genuine enquiries. o Lease the property for the best price and under. o the best terms in the shortest time. Determine the tenant profile after discussion with the owner. The owner may need to be made aware of the Equal Opportunity Act (WA) 1984 when discussing type of tenant they prefer.
Self-check questions 1. Why is it important to establish a tenant profile with the owner?
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PART 10: The marketing plan

Learning Outcomes
This part of the learning materials aims to help you: Design a marketing plan. Calculate the marketing costs. Identify strategies to secure funds for marketing. Review the effectiveness of the marketing strategy.
Elements:
CPPDSM4013A/1 Develop marketing plan for property
1.3 1.4 1.5 Costs of different marketing strategies and activities are discussed with landlord. Marketing plan for property is prepared and presented to landlord in line with agency practice. Marketing plan, including marketing activities and budget, is agreed with landlord. Marketing activities are implemented in line with agreed marketing plan and budget. Responsibility is assigned for ongoing monitoring of marketing activities. Landlord is kept informed of progress of marketing activities according to agency practice and legislative requirements. Marketing activities and plan are reviewed against aims and objectives of marketing plan. Feedback on outcomes of marketing activities is sought using reliable methods and verifiable data according to agency practice. Need for alternative marketing activities and adjustments to marketing plan are assessed in consultation with relevant people if property proves difficult to lease. Effectiveness of planning and marketing processes is assessed to identify possible improvements in future activities. Costs and time lines are analysed to evaluate and improve future marketing initiatives. Conclusions are prepared from verifiable evidence and advice is provided on future marketing initiatives.
CPPDSM4013A/3 Implement marketing activities
3.2 3.3 3.5
CPPDSM4013A/4. Reviews and report on marketing activities and plan
4.1 4.2
4.3
4.4
4.5 4.6
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CPPDSM4007AA/1 Apply knowledge of property management CPPDSM4007AA/2 Develop knowledge of property management process
1.6
Ethical and conduct standards and key principles of consumer protection, equal employment opportunity and privacy legislation in relation to property management are identified in the context of legislative requirements and agency practice. Need for demonstrating effective communication strategies in establishing rapport with clients, determining client needs, providing accurate advice, addressing client concerns and dealing with conflict is identified in line with agency practice. Strategies for marketing property are identified and assessed in the context of legislative requirements and agency practice.
2.1
2.4
10.1 Creating an effective marketing strategy

Some major factors affecting success of a marketing campaign are: Effective target market/tenant profiling. Timing of promotion. Sufficient budget. Price. Property presentation.
When all these elements have been identified and dealt with individually by the property manager, usually during the management presentation, they can be gathered together to create a marketing strategy.
10.2 The marketing budget

Properties that have been well marketed should take less time to rent especially if they are priced correctly. The marketing budget is an investment in the end-leasing price. The amount of a marketing budget is guided by a number of factors: The type of marketing preferred by the owner and their $ limit. The tenant profile and how easy they are to target marketing to. Whether the property is in a low or high demand category. How competitive the market is at the time/ seasonal factors.
Consider the uniqueness of each property and how to reach the right applicant most effectively this can save marketing dollars. You may approach an organisation such as a university or hospital, or contact an existing applicant who recently missed another similar property. The owner must agree to the marketing budget and authorise the expenditure in writing.
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10.3 The marketing plan

The issue of marketing can be raised with the property owner During the initial listing presentation. As a separate issue after the management has been secured, although the budget will need to be determined at the time the management is secured. After it has been listed for a time (e.g. with another agency).
Property managers do not always prepare a full marketing plan outlining how they intend to structure the marketing campaign. They may produce a single page schedule that is a part of the management presentation or for an existing owner they may simply use an emailed format. It is however a legal requirement that you have written agreement as to what is to be done and how much it will cost. This also means there are fewer misunderstandings or disputes. Ask questions so that you understand the owners priorities and ensure they are reflected in the plan. Some owners may be willing to spend more if it will help the property to be let more quickly. Others may want strict budgets. Any written report prepared for an owner should include: Details of agreed media to be used and itemised costs. Strategy e.g. to commence with ads on three websites and to only move to print if response is not adequate after five days. Internet advertising details copy, photographs and sites to be used. Timing - i.e. commencement and completion dates for each medium. Type and size of advertisements, sample of format / proposed copy. Proposed signage, if any. Proposed times / dates to open property for inspection, if doing so. Number and style of brochures proposed. Details of direct marketing activities e.g. letter box drops.
When a marketing plan is agreed, it should be formally signed in writing. If the prospective client later verbally instructs the property manager to place an additional advertisement or to incur any other advertising expense, the instructions should be confirmed in writing with authorisation for the expense before placing the advertisement. Failure to do this may result in the property manager being unable to recover the costs. The regulator requires agents to be able to prove the actual costs they incurred and does not allow property managers to charge owners more than these actual costs. Because some costs (such as the internet subscription costs) can only be accurately calculated retrospectively, by dividing the total
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cost by the number of advertisers for the month, it is difficult to predict exact costs per owner when signing an agreement. Many agencies ask owners to agree to a figure on an up to basis. That way the property manager can calculate charges at the end of the month according to how many properties were advertised and charge accordingly, up to the agreed amount. If the agency does not estimate correctly the agency wears the difference (or credits it back if it is in the owners favour). When assessing the costs, the production costs should also be considered and possibly added to the item e.g. time taken to take the photo, write the copy and place the ad. Rebates and discounts from newspapers must also be passed on to owners you cannot make a profit on placing advertising by charging owners full rates and keeping the benefit of a discount or rebate. All monies paid in advance for marketing a property must be deposited into the agencys trust account. The property manager is required to subsequently provide a summary of expenditure to the prospective client and refund to the client all unspent money (if applicable). As the responsible person, you must ensure that any tasks delegated to be carried out by others are done effectively. To do this, ensure that other staff are kept fully informed of owner instructions and agency policies. A copy of the marketing plan should be copied to: The property owner. The administration assistant handling advertising in the agency office. The office listing file. The owner(s).
Sample marketing plans The following example of a marketing plan can be used as a master plan and adapted according to the style of property, target market and selected media mix. Where the West Australian is shown The Sunday Times or a local paper can be substituted if they are considered more effective in your local area (or added if budget allows). Some owners may not want newspaper or signage but may want professional photography, a virtual tour or slideshow on the internet, additional websites or more brochures, so the plan will change accordingly. Sometimes free options such as a card in a local community hub or on a university notice board can be effective. If advertising will involve production costs (e.g. display ad in local paper) these must be estimated and included in the plan.
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MARKETING PLAN Property Address: Owner Name: Item Websites: www.reiwa.com realestate.com.au

Vacancy date *Costs Up to $100.00* Publication date As needed 2 weeks initially commencing 5/9/09
domain.com agency website
* NB Fixed subscription costs for some sites are shared between a varying number of owners each month. Costs will not exceed the agreed limit and may be less. News-The West Australian or other paper 4 lines 100 Brochures (in-house quality) Basic Photography (Agency to provide) Email to data base prospects Window display Listing on agency vacancy sheet Your Investment In Marketing (inclusive of GST) Other options available Basic professional photography package Aperture 22 Photography package + Slide show / Virtual Tour 25 shots 100 full colour brochures Agency sign Maximum total Investment (including GST) Client (s) Property Manager 8 January 2009 8 January 2009
*Costs based on approximate retail rates at time of writing for study use only
$50.00 $50.00 $ 25.00 No Charge No charge No charge No charge $225.00 $150.00 $175.00 $100.00 $40.00
10/ 09/ 09 17/ 09 / 09
The marketing plan should indicate when the marketing strategies will be implemented. Keep the dates realistic. To satisfy an owner wanting the property advertised tomorrow and a tenant secured within a week, ensure you get the internet up as soon as possible it is surprising sometimes how quickly a property can be let on the internet particularly in a strong market. Allow time to produce the advertising materials and to clarify the facts about the property, to ensure advertising will be effective. If placing newsprint ads consider which are the most effective days to advertise in your area (Wednesdays, Saturdays or Sundays are usually best).
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If it is a renters market consider what extra personal marketing strategies may be worthwhile e.g. telephoning recent walk-in prospects, putting a brochure on the notice board at a local hospital or in shopping centre or sending a notice via email to local tertiary institutions. Once a schedule has been finalised and approved by the prospective client, it should then be implemented. Steps include the following: Review office database for suitable prospects, you may not even have to advertise the property at all. Take (or book) photographs (if owner wants to vet these allow time). Write copy for brochures, signs, print ads and internet as needed. (Owner may wish to check. Staff to check grammar, spelling and compliance issues first.) Place internet advertising and book newspaper advertisements. Check deadlines for submitting, amending and withdrawing material. Book sign if required with clear instructions for placement. Notify owners of open for inspection times, observing statutory notice periods with tenants if property is leased.
Ensure you are ready to manage enquiries coming in by email or phone. If this is delegated ensure it is to trained staff, who will capture details needed for response and for monitoring the effectiveness of advertising. During the marketing campaign The property manager should forward copies of all marketing material to the prospective clients for their records even if they do not want to authorise the layout/ copy matter. This can include links for web pages (or printouts if requested), copies of newspaper ads, brochures, window displays and other advertising media used. An updated ledger of outgoings /costs incurred must be kept. If a prospective client is paying in instalments, ensure that accounts are sent out and monies received by the due date. There should be a process in place to ensure that when the amount budgeted and agreed to by the owner has been spent, no more is spent without authorisation. Someone must be responsible for this. Note requests such as owner to approve copy and adhere to them. Five things property management staff must achieve in relation to marketing materials are: The type of marketing must be what was agreed with owners. Marketing materials must fit within the agreed budget. Marketing must be prepared in time to meet agreed timelines. Marketing materials must be checked for accuracy. Marketing materials must be legally compliant e.g. identify the agency, not mislead consumers, not discriminate.
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Activity 30
Marketing plan and budget
Complete the following using the Marketing Plan and the Advertisement Work Sheet templates in Appendix 6 as a guide. You can use the list of marketing items following as a guide to pricing for the purposes of this exercise. You have decided to place your own property on the market for lease. 1. Describe the property and the current rental market
2. Design a cost- effective marketing strategy for the time period you believe is needed, using media you think are appropriate. A table of approximate costs appears below for the purposes of the exercise.
3. Explain how your budget has been set.
4. Justify the media you selected.
5. Justify the period of time you chose to plan the campaign over.
Show your plan to a colleague or your tutor and obtain feedback. Compare your response by visiting the model answers.
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Marketing Item Internet 3 sites 100 black and white brochures made in-house for home opens and reception use West Australian 5 lines, 4 appearances (Wednesday and Saturday for 2 weeks) Sunday Times 6 line classified ad x 2 weeks Community newspaper 5 line ad for 2 weeks Professional photography Professional photography including slideshow tour Small agency sign
These prices are for study purposes only
Approximate Cost $80 $50 $100 $65 $25 $100 $120 $40
Roles and responsibilities Your role is to make the marketing process simple and cost effective and to achieve the desired outcome of a suitable tenant as soon as possible. You should seek a balance between avoiding unnecessary advertising expenses and giving the property good exposure to attract quality tenants. You may have assistance from administrative staff or be handling every stage yourself in a smaller agency, but ultimately you are accountable. Responsibilities will include:
Ensuring the marketing plan is implemented as agreed e.g. on time. Ensuring that costs are within budget. Preparing materials, checking proofs, checking that ads are correct in published form (e.g. a classified ad appears in the right heading). Providing owners with copies of advertising materials and detailed invoices to substantiate expenditure. Ensuring outgoings are recorded in the agency file and that the accounts area of the system is updated. Supervising other staff involved in placing or monitoring marketing. Ensuring response to marketing is prompt/ appropriate. Ensuring property is well presented (in conjunction with the owner). Monitoring the effectiveness of the marketing plan. Updating the owner on developments. Adjust marketing strategies if they are ineffective. Discussing changes with the owner. Finding and presenting applicants.
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The owners also have a role to play: Understanding the state of the market. Agreeing to the budget for the marketing plan. Approving the marketing plan. Approving copy and photos (optional). Ensuring property is well presented (in conjunction with property manager). Providing insights into the benefits of the property. Cooperating with inspections organised. Considering applicants under your advice.
Activity 31
Presenting marketing plan to the owner
Using the Marketing Plan designed in the previous activity, answer the following questions: 1. What can you do to ensure that you are effective in implementing the marketing plan?
2. What should you explain to the owner so they are effective in supporting the marketing plan?
Compare your response by visiting the model answers
10.4 Securing marketing funds

Asking for marketing costs
The property owner normally pays for the direct costs of marketing, although in competitive times some agencies will absorb some or all of these costs in order to secure business. If owners argue that you should pay for all the marketing but your agency does not allow you to, you need to be prepared with answers. One way is to explain that if the agency were to fund 100% of the campaign, they could not invest enough to allow the property to be marketed correctly. This could lead to lesser quality of applicants or longer vacancy periods.
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It is also worth explaining that some property managers who offer advertising as part of their package are charging more in ongoing management fees. One successful property manager has a matrix of what others in the area charge which she compiled by having friends do some secret shopping for her. She uses this to demonstrate how the agencies who pay for advertising recoup the costs in other areas. Another approach is to explain that some agencies who pay for marketing do so because they are desperate for business, and that your agency is very successful in property management and does not need to buy the owners business. Explain that the service you deliver is not just managing the property but working to enhance the investment the owner has made, and that this service is worth the costs involved. Property owners expect a property manager to market their most valuable asset professionally. They expect a marketing plan which includes owner paid advertising and may simply be trying you out, so dont over react to this suggestion just answer it and move on. Sometimes the reason owners ask for this is because of a perception that a previous property manager has failed to manage a previous advertising campaign cost effectively. The owner may feel that they have paid too much to achieve a result. Make sure that you reassure them that you have your marketing approach well honed to get them more bang for their buck and that you never spend marketing dollars unnecessarily. To avoid wasting marketing dollars, ensure that you: Understand the target market and how best to reach it. Learn from what you (and others) have done in the past - use media that are proven successful for the type of property and the area. Consider fresh approaches if the market is seasonally quiet and develop marketing strategies to meet the circumstances. Check proofs with care and check publications to ensure that ads appear and appear correctly (no typos and in the correct section). Be organised never spend money advertising to get an enquiry and then frustrate the prospect by not responding promptly.
Property managers must keep owners informed. The owner is then more likely to be satisfied that their money is being well spent. Agent paid advertising Some Property Managers monitor other agencies in the area who subsidise marketing campaigns and keep a record of:
The properties they market. When they were listed, and how long they took to lease. The original rental price, and any price reductions. The level of marketing.
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By doing this you may be able to show that your marketing approach achieves a better result. If the properties were not adequately marketed because the owner did not fund the campaign, this may have resulted in: The properties taking too long to lease. The properties leasing for less than if it had been better promoted.
There is no guarantee you will be able to prove this however. If the agency-paid approach is working well for those agencies using it and they are your direct competitors, you may need to adapt to compete. The costs of advertising rental properties are not huge, due to the low cost of the internet. If the trend in your area is towards agency paid advertising, work out how much you would need to increase ongoing charges to cover advertising and give your employer a proposal to allow you to offer owners a choice. It should cost no more in the long run. If marketing costs could be a deal breaker it may also be worthwhile to pay for the ads to win the business, especially if the owner has more than one property and is a client well worth having. It is also common to absorb some or all of the cost of marketing that is paid for via subscription because of difficulties meeting the regulator's requirement to be able to demonstrate clearly that the agency incurred a specific cost on an owners behalf. This is necessary to be able to charge it back. Ensure that agency-paid advertising agreements lock owners in for a period sufficient for you to cover costs outlaid. A form such as the one below can be used to summarise costs. Copies of detailed invoices should also be attached or available: Advertising and Promotion Costs Property Address: 9 Third Street Midland Owners: J and S Dunbar Media Marketing Expenditure Limit The West Australian Classifieds 5 lines Wednesday + Saturday x 2 weeks Internet REIWA, realestate.com and agency site for 3 weeks 50 Brochures Office Window and Vacancy List TOTAL Due to the Agent Property let Jan 22 2009 Campaign: January 15 to Jan 21, 2009 Estimated $200 Up to $100.00 Up to $80.00 $25.00 No charge $205.00 $150 $60 Actual Cost
$80 $10
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10.5 Implementing the Plan

Property Listing Target Market
Marketing Mix
Promotional Mix
The initial information from a telephone conversation with an owner or the details they complete on an online form can start to help you to profile a prospective tenant. To further refine the tenancy profile, discuss the following points with the owner: Number of persons to occupy the property. Any limitations for total occupancy. Rental period if it is set. Type of tenancy periodic or fixed term. Expected length of the tenancy. Any exclusions e.g. a locked area. Inclusion of items which may appeal to prospective tenants. Options to extend. Rules regarding pets. Any particular conditions e.g. pool or garden maintenance. Any owner preferences e.g. a tenant willing to do gardening.
In the course of this discussion the owner may need to be made aware of the requirements of the Equal Opportunity Act (WA) 1984 which prohibits discrimination on the basis of protected attributes such as: Sex / Sexual orientation / Gender history. Age (including having children in the family). Marital status or Pregnancy. Race Religious and political conviction (or lack of). Impairment (includes physical disability, intellectual handicap, psychological disorders).
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There are ways of avoiding conflict with owners who request a particular type of tenant using a description that is discriminatory. If the owner would like a middle aged woman because they believe that type of tenant is likely to care for the garden, suggest that the advertising is worded to attract that type of person in a non-discriminatory way. For example, using wording such as Would suit tenant who enjoys gardening is likely to put off tenants who do not want to garden, while reference checking can eliminate careless people of any gender or age who have damaged property or not cared for gardens in past tenancies. You must comply with the REBA Code of Conduct which states; An agent must act in accordance with the instructions of a principal, except where it would be unreasonable or improper to do so. Placing discriminatory advertising could be an example of an improper action. You should know and understand the provisions of the Equal Opportunity Act (WA) 1984 and educate and advise owners regarding these requirements. Communication It is important to keep the owner fully informed of any developments with regard to the marketing. Including them in the decision making process throughout avoids any recriminations if a property takes longer than expected to let and ensures that you are aware of their views. Informing them by telephone or email of the level of responses to the advertisements received is generally adequate. Also provide a copy of any print advertising as they may not read the publications you are using. Your records should contain information on the following: Number of enquiries from the website. Attendance at home opens. Enquiries from direct mail (if used). Enquiries off the sign (if used). Enquiries off newspaper advertising (if used). Enquiries from window display (if used). Feedback from those who have inspected the property. Expressions of interest or offers to rent. Any special factors e.g. market circumstances or seasonal issues. Where the successful tenant first saw the property. Copies of detailed invoices to prove costs reimbursed.
How much of this information is fed back to the owner depends on what they have asked for and how detail oriented they tend to be. Some will not be interested in this level of detail but it is still valuable to you for future planning.
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If you feel that the rent is set too high or that the property badly needs a particular improvement, and want to convey this information to the owner, feedback from prospects may be valuable. Do not offend the owner with negative feedback that serves no purpose. Key Points in implementing the marketing plan include: Brief other staff involved in implementing marketing activities. Have controls to ensure the agreed plan and budget are used. Make someone responsible for each stage. Comply with policies and relevant legislation. Keep owners informed of what responses have been gained. Review the marketing if property is slow to let. Seek expert advice if necessary.
10.6 Monitor enquiries

Property managers should monitor all enquiries unless they have experienced staff to assist with this. Dont wait until the end of a campaign before monitoring results. If advertising is not achieving its desired results, you need to know sooner rather than later. Use the features available on the property management system in your agency to keep an electronic record, or keep manual records e.g. enquiry slips, records of phone calls generated by press insertions and logged visits to any open inspection. Any comments about advertisements, signs etc should be logged for agency records. Useful comments about the property should also be recorded and provided to the owner. It is important to monitor the number of enquiries and the types of people making them. If a home has attracted interest and inspections, but after two weeks no one has applied to lease the property, this may suggest the wrong target market has been reached or that the advertising has been creating the wrong expectation. This can happen when there is something off-putting about the property that is not mentioned in advertising e.g. it is next door to a demolition site. Feedback that is consistent in a particular criticism may also indicate the need to improve the property e.g. lay new carpet. If people have not volunteered comments, call some of those who have viewed the home and ask what they expected and why the property did not interest them. If the feedback is that the standard of the property was below their expectation, and the owner is not interested in upgrading it, a different target market e.g. students may be worth considering.
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Marketing effectiveness It is important to analyse what has worked well when marketing each property and record results. This can: improve the effectiveness of future marketing help get clients better value for money improve the time it takes to lease properties help ensure compliance with legislation and agency policy. To enable this to happen: Use online tools to monitor responses to online advertising. Keep a record of other advertising (dated) and responses. Record the source of all applicants and successful applicants.
In addition to inquiry results, actual costs must be monitored. If the prospective client is paying for advertising, an accurate record of expenditure must be provided so that the owner can see evidence of expenditure. This is also necessary for audit purposes. Activity 32 Progress reports
Design a simple progress report of responses to marketing activities in a format suitable to present to an owner. You can base it on the marketing plan designed earlier.
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10.7 Review marketing activities

After monitoring the enquiries that come in, if results are not what is required then it is necessary to review marketing activities to determine what parts of a marketing program are effective and which are not so effective and should be changed. This assists both for future planning and to plan how to overcome current barriers to letting a property. If marketing isnt working, consider: Is the rent too high for the market? (Review feedback and compare the property with similar properties in the same price bracket). Has the right market been targeted? (Is the tenant profile correct?) Is there a negative that keeps coming up that can be overcome (e.g. overpowering colour scheme, untidy garden). Can advertising be improved? (Have the benefits been identified?) Is an email campaign or direct contact with prospects desirable? Does the sign need improving (or should a sign be added?) Are the home open times right?
If your marketing is not getting results, then price and the properties competing the market at a lower price may be the problem. You may need to re-do the CMA adding other properties new on the market at the time. Every property can be let at a price, so adjusting the rent (with the owners agreement) can sometimes turn things around and may even help to gain the interest of parties who have already inspected. If there has been a recent influx of properties onto the market (as happened in Mandurah in 2008 when many property owners unable to sell tried to rent their properties) then you may need look critically at what else is available in the same price bracket and consider whether the property is pricing itself out of the market. Discuss strategies with colleagues and agency staff and then discuss with the owner. The other non-marketing issue that can arise is a seasonal slow time. In Perth statistics show that the lowest vacancy time is between December and March so this is a good time to relet a property. Families move when school is out and students soak up a lot of accommodation when they return after the long break in February. The highest vacancy period is September so that is the hardest time to find tenants. Try to avoid leases which end in September (or whatever is the quietest time in your area) and have strategies to overcome the difficulties in letting property at that time. There is anecdotal evidence to suggest that discounting becomes necessary at such times and encouraging tenants to continue for a few months may be useful.
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You may also need to review the marketing strategy, including the media used and the pictures and copy writing, based on feedback. The first step if a property is not moving is to ensure the basics have been covered: The marketing materials target the right demographic. The style of writing in advertisements is positive and realistic. The exposure is sufficient for the market. The owner is aware that it is a difficult time and prepared to be flexible.
If your most successful medium is normally internet and yet it is not getting hits, or getting hits but few enquiries, marketing content or photos may be the issue. Look at the photos and copy and assess whether there are enough images and enough benefits to convey all of the propertys strengths. Words and photos should be appealing and true to the property. Consider whether the property has a feature that is turning people off if so maybe you need to think of a way to turn it into a positive. For example if people have commented about the busy road nearby, feature it in the ad by saying seconds walk to the bus so there are no surprises when people arrive to see the property. All feedback should be noted to improve marketing strategies long term and for the property advertised. If you have a property listed that is being beaten by tough competition or is slow to move because it is a tough time of year, you may need to discuss strategies that are outside the square with your owner: Offering a short term lease to get through to a better letting period. Considering refurbishment to make it more appealing. Offering a longer lease at a fixed rent. Furnishing it as holiday/ or executive accommodation for a period (only if there is good demand for that type of accommodation). Marketing via universities e.g. for overseas students or relocated staff. Contacting the defence accommodation department. Offering a rental range or indicating rent is negotiable (with owner agreement) a lower range will be picked up in more searches. Value adding e.g. owners pay for gardening or a monthly clean. Liaising with other property managers especially if it is out of area. Targeting interstate, overseas or specialised markets via niche websites or publications. Staff and current tenant networks (a fee can be paid for referrals).
Also be open with communicating average days taken to rent a property at the current time so that owner expectations are realistic.
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As discussed in an earlier part of the course, Australian Property Investor recommends some strategies to boost rents based on their research. These strategies may also reduce vacancy times in a slow market. Paint Change window treatments Clean and de-clutter Polish floors/new carpet Repair faults
Adapted from: www.apimagazine.com.au
Strategies that are relatively cheap (e.g. painting, replacing carpet, cleaning, changing floor coverings and repairing faults) can make a property more appealing and help to maximise its rental value. Some owners will consider allowing pets or accepting a lesser bond (although this is not advisable) to open up a property to a wider market. Fortunately some of WA has an under supply of rental property so these strategies do not often prove necessary. Activity 33 Reviewing marketing activities
You list a 25 year old 3 bedroom triplex property with 1 bathroom in Kensington. It is run down and the garden has large shrubs that havent been pruned for a long time. You research the propertys rental value the median for the suburb is $398 for a 3 bedroom house and $370 for a 3 bedroom unit but most of these have 2 bathrooms. You recommend a rental figure of $345 per week. The owners want more, so on their instructions you list it for $365 per week on 2 websites. You open it on two Wednesdays at 4.00pm and on a Saturday at 4.00pm. One person comes to each Wednesday inspection. On Saturday two couples inspect. No one applies to rent it. The first viewer says it is overpriced. One couple want more room, one couple comment on the stained carpet, and overgrown shrubs which they feel make it dark. The last viewer wants a more up to date home. a.) What research will you do before talking to the owner?
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b.) What will you recommend to the owner?
Compare your response by visiting the model answers
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In summary
A simple Marketing Plan should be developed to show owners how their property will be marketed. It should include the strategy, the target market the recommended media and maximum costs. It is good to offer two choices. All enquiries resulting from the marketing strategies should be recorded and monitored so evaluation of the activities can occur. This will assist in justifying any changes to the Marketing Plan. It is important to keep the owner fully informed of any developments with regard to the marketing. Monitoring will help you to understand what works for future campaigns. The internet should be the key platform of your campaign - only use other media if they work well. If a campaign isnt working assess why and come up with proposed changes to improve it.
Self-check questions 1. What is the purpose of designing a Marketing Plan? 2. What processes would you use to keep the owner informed of all activities? 3. How will you monitor the effectiveness of your marketing strategy?
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PART 11: Advertising Statutory Aspects

Learning Outcomes
This part of the learning materials aims to help you: Identify the range of advertising methods suitable for marketing property. Write effective real estate advertisements. List the acts which govern advertising in the real estate industry. Identify the consequences of misrepresentation in advertising.
Elements:
CPPDSM4013A/1 Develop marketing plan for property CPPDSM4013A/2 Check marketing materials
1.2 Strategies and timeframe for marketing property, including possible marketing activities, are discussed with landlord. Marketing materials that reflect agreed property and agency marketing plan are developed within agreed budget and timeframes. Marketing materials are checked for accuracy and compliance with agency and legislative requirements. Persons involved in marketing property for lease are briefed on their roles and responsibilities to ensure success of marketing activities. Marketing activities are implemented that comply with agency practice, ethical standards and legislative requirements. Landlord is kept informed of progress of marketing activities according to agency practice and legislative requirements. Ethical and conduct standards and key principles of consumer protection, equal employment opportunity and privacy legislation in relation to property management are identified in the context of legislative requirements and agency practice. Strategies for marketing property are identified and assessed in the context of legislative requirements and agency practice.
2.1
2.2
CPPDSM4013A/3 Implement marketing activities
3.1
3.4
3.5
CPPDSM4007AA/1 Apply knowledge of property management
1.6
2.4
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11.1 Statutory aspects of advertising

There are many laws that impact directly and indirectly on advertising and you should be aware of the key issues relating to them, i.e. Consumer Laws Australian Consumer Law (ACL). Fair Trading Act 2010 (Western Australia).
Human Rights & Equal Opportunity Laws Equal Opportunity Act (1984) (WA). Various Federal Acts covering discrimination.
Real Estate Laws Real Estate and Business Agents Act 1978 (Western Australia). Residential Tenancies Act 1987.
Advertising Laws The Spam Act 2003. The Do Not Call Act.
Consumer Laws The Australian Consumer Law (ACL) The most important Act in relation to advertising rentals is the Australian Consumer Law. Its makes it illegal to use false or misleading statements when marketing a property. This applies to situations such as: Advertisements placed in newspapers. Information provided in printed handouts. Information placed on the internet/emails. Comments made to prospective tenants regarding the property.
The ACCC can find agencies and individuals guilty of misleading conduct under consumer law even if there was no intent to mislead or deceive (e.g. where an agent has used information given to them by an owner). Agents making incorrect claims about a propertys value, features, quality, or location can face claims and possible prosecution. Some examples of issues that have caused complaints include: Advertising the property as peaceful when in fact it is often noisy. Advertising using photos that are not accurate (e.g. a view that is not from that apartment). Advertising a rental figure and then asking for more on application. Misleading copy e.g. walk to the beach if the beach is not walking distance for everyone. Advertising a rental range e.g. $200-$250 pw if the low end is unacceptable to the owner.
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While there is an obligation under consumer law to disclose material facts to applicants, it is not compulsory to mention a material fact (such as a stigma) in every advertisement. It does however need to be disclosed prior to taking an application, so it can be useful to include it in a brochure you give to all viewers so that there is proof of disclosure. The use of fine print clauses and claims is risky and to be avoided. Some recent cases won by the ACCC in relation to retail tenancies have shown significant developments in the law. Agents who engage in unfair practices towards retail tenants may be prosecuted. One case involved advertising that a particular major store would be taking space in the centre. This did seem certain at the time of advertising, but the deal fell over and the agent became guilty of misleading smaller tenants who took space on the strength of that assurance. Property managers must make sure they do not support unfair practices towards any tenant or prospective tenant, including in advertising.
Prohibited practices under consumer law

Not showing the full cash price The true total price including GST must be clear to the consumer before they buy. Not disclosing a cost such as common property water charges would breach this. You can not advertise at a price if you are unable to supply at that price. Owners changing the rent after a strong response to an ad would risk a breach of this section. Advertising 'dummy' property to build up the agency's list of applicants. Using a photo that has been digitally altered or exaggerating closeness to the beach/river etc. Targeting a vulnerable group such as new migrants or the elderly with advertising that takes advantage of their vulnerability would breach this. An agent who destroyed advertising done by a small competitor was also found guilty of this.
Bait advertising
No intention to supply Misleading and deceptive conduct Unconscionable conduct
Claims of misrepresentation against property managers It is property managers role to make a property as attractive as possible to potential tenants in order to persuade them to lease the property. However, care must be taken to ensure all representations are accurate and will not fall foul of consumer protection legislation.
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Claims relating to rental returns These claims arise when the agency markets property to potential investors. You may be asked to provide figures on the projected rental return or income stream investors might expect, for use in marketing. This information could lead to a claim if the projections are incorrect, or cannot be substantiated as having a reasonable basis. It is best to be conservative and it can help to add a disclaimer saying that the figure is only valid for the current point in time. You cannot predict future market conditions. Avoid projecting % returns or net profits because of the possibility of unexpected costs. Sales people should encourage potential buyers to make their own enquiries and obtain other expert advice relating to the potential rental return that may be achieved from a property. If you speak with buyers, you should do the same, pointing them to information sources with statistical data on current average rent figures by suburb, such as the REIWA website. Consequences of breaches There are a number of remedies for breaches of the Australian Consumer Act. These may include injunctions against similar conduct, award of damages and corrective advertising. Section 87 allows the Court to make other orders, which have included varying contracts, ordering the return of money or property and requiring a person to supply services. The consumer protection provisions of the Australian Consumer Law are wide reaching. The complaining party only needs to show that the conduct was likely to mislead or deceive. A property manager may not have intended to mislead or deceive and yet may still be found liable. A party seeking to make a claim under the Australian Consumer Law may do so at any time within six years of the cause of action that relates to the misleading and deceptive conduct occurring. Breaches of the Australian Consumer Law or the Fair Trading Act can attract fines, cause leases to be rescinded, attract other penalties from regulators or civil action by parties who believe they have suffered a loss. There can be repercussions for the agency and the individual. Loss of reputation is another serious outcome that can occur even if no formal complaint is made. Being fair and honest is good business. Human Rights and Equal Opportunity Law in advertising As mentioned earlier in the course it is illegal to discriminate against people in matters relating to accommodation on the basis of any of a number of 'protected attributes' named in The Equal Opportunity Act (1984) (WA) and various Federal Acts covering discrimination. These Acts set out the types or grounds of discrimination which are unlawful.
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It is unlawful to advertise an intention to do something that would be unlawful under the Equal Opportunity Act so you must make sure advertisements contain nothing that implies or states direct or indirect discrimination against people protected by these laws. Direct discrimination is directly excluding people because they have a protected attribute e.g. -'Suit single woman' (discriminates against males, couples and families). Indirect discrimination is when certain requirements make it harder for people with a protected attribute to be successful e.g. - 'Evidence of current employment required' - this could be argued to discriminate against the elderly / retirees. Residential Tenancies Act Section 56 of the Residential Tenancies Act 1987 which deals with discrimination against tenants with children states that: (1) A person shall not refuse, or cause any person to refuse, to grant a tenancy to any person on the ground that it is intended that a child should live in the premises. Penalty: $1 000. (2) A person shall not (a) instruct any person not to grant; or (b) state his intention, whether by advertisement or otherwise, not to grant, a tenancy to any person, if it is intended that a child should live in the premises. Penalty: $1 000. (3) This section does not apply where the premises the subject of the tenancy are the principal place of residence of the owner or where the owner or his agent appointed to manage the premises resides in premises adjoining the premises the subject of the tenancy. While this offers a loophole in relation to excluding children, doing so could be challenged under the Equal Opportunity Act e.g. as age discrimination so it is best avoided, especially given the recent ruling that resorts can no longer exclude children. It is important that all advertising reflects a fair and legal approach to selecting tenants and that the appearance of fairness is never compromised by the wording of ads. Real Estate and Business Agents Act (1978) This is the main Act that WA real estate agencies must comply with. Section 62 of this Act states that: Any advertisement in respect of the business of an Agent or a Developer shall not be published without his authority, and that a duly authorised advertisement shall contain sufficient details to identify the Agent or Developer.
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In practice, this means that advertisements must have a minimum level of identification and include at least the agency name in full (which may be incorporated in the logo) and a telephone contact number, so that consumers know who they are dealing with. The property managers name without identifying the agency is not sufficient. Non-compliance is an offence for which a penalty is prescribed. The Code of Conduct requires that an agency must not: make misleading statements advertise a property without written authority advertise a property at a price or terms different from that authorised by the principal claim advertising costs from an owner unless the owner has initialled the amount on the management authority.
These rules apply in property management as well as sales and mean that if an owner calls or emails you and asks you to take on a property, you cannot begin advertising without signed authority for the management of the property itself. You should also have signed authority for any additional advertising costs agreed to after the initial agreement is signed, if you wish to recover these from the owner. The Code reinforces the consumer legislation that requires you not to mislead and precludes you concealing information. Some examples of marketing that can be regarded as misleading include:Wrong Suburb Heading advertising in the name of the next suburb which is a more desirable location could be misleading advertising unless the copy makes it very clear where the property is. 'Distance' claims e.g. distance to amenities, the ocean, etc., should be stated in kilometres and not 10 minute stroll - this may be misleading as not everyone can walk at the same speed. Tenants Waiting a statement such as this used in an advertisement must be able to be substantiated. An agent (and therefore a property manager acting for an agent) is required under Section 11 of the Code of Conduct to advise an owner of any circumstance that could impact on the rental value of their property while it is listed for lease. If a similar property lists or leases for considerably more or less than the asking price of the subject property, you must inform the owner. To not pass on this information could be misleading. REIWAs daily alerts are a good source of data about new listings in the metropolitan area. Again regional property managers may need to rely more on local contacts.
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The Spam Act 2003 The Spam Act prohibits the sending of unsolicited commercial electronic messages that originate or are commissioned in Australia, or originate overseas but are sent to an address accessed in Australia. As Property Managers sometimes use e-marketing, including email, SMS (text message), MMS (image based text messages) or instant messaging, you must understand the key requirements of the Spam Act: 1. Consent - make sure you have consent to contact the recipient and record the fact that you obtained that consent. 2. Identification ensure that all messages include accurate information to identify you and your organisation as the senders. 3. Unsubscribe all messages need a usable unsubscribe facility, so recipients can easily unsubscribe if they no longer want to be contacted. The Spam Act prohibits the supply or use of address harvesting software for the purpose of sending spam and sets financial penalties for breaches. The Do Not Call Act This Act allows individuals to register their phone numbers to avoid receiving unsolicited telemarketing calls. Most property management departments deal mainly with consumers who have contacted them first, but if you are cold calling people, you should consider this law. It is normally a breach of the Do Not Call Act for a business to make unsolicited calls to a telephone number listed on the Do Not Call Register. Breaches of the legislation could attract penalties. It is legal for a business to call a number on the register if the owner of the number has asked to be called or consented in advance to receive calls. Agencies running telemarketing campaigns need to be aware of the rules about when calls can be made and avoid calling anyone on the register.
Activity 34
Legislative requirements for advertising
List a key point from each of the following Acts / Codes and explain what it means in terms of your responsibilities when advertising rental properties. Give a practical example of a breach that a Property manager might cause if they were not aware of the law or rule in question. The Australian Consumer Law
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The Equal Opportunity Act (1984) (WA)
The Real Estate and Business Agents Act 1978 (Code of Conduct)
The Residential Tenancies Act 1987
The Spam Act 2003
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In summary
Two laws which make it illegal to make false and misleading statements in advertising are: o Australian Consumer Law o Fair Trading Act 2010 (WA) You do not have to intend to deceive to break these laws. Claims of misrepresentation can relate to views, profitability, rental returns, and breaches. The Real Estate and Business Agents Act 1978 (WA) requires property managers and their employees o to be fair and honest o not to mislead people o to only advertise property when they have written authority to do so o to only advertise exactly as authorised by owners o to get very specific authorisation (initialled amounts) if they want to claim reimbursement. The Residential Tenancies Act precludes discriminating against tenants with children unless the property is the owners own home or the property manager lives next door. This loophole could be challenged under EO laws. The Equal Opportunity Act (1984) precludes discriminating against tenants on the basis of protected attributes e.g. age, sex, race, religion, having children, gender reassignment, sexual preference and membership in an organisation.
Self-check questions 1. How do the legislative requirements impact on a real estate agency in regard to marketing rental properties?
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PART 12: Tenant enquiry

Learning Outcomes
This part of the learning materials aims to help you: Identify the needs of a potential tenant. Match the potential tenants needs with a rental property.
Elements:
CPPDSM4010A/1 Screen tenant enquiries. 1.1
Enquiries from potential tenants regarding lease of property are handled promptly to enable quality service delivery in line with agency requirements. Appropriate rapport is established with potential tenants. Enquiries from potential tenants are screened to determine their preferences, needs, financial limits and capacity to pay and care for the property in line with agency practice and legislative requirements. Factors likely to influence the lease of properties are identified and potential tenant intentions clarified. Discussions with potential tenants are undertaken using promotional materials detailing agency rental arrangements and effective interpersonal communication techniques to identify and match stated requirements with known listings. Strategies for assisting potential tenants to decide to view properties are implemented in line with agency practice, ethical standards and legislative requirements. Areas of dispute are analysed and evaluated in line with agency practice and market expectations to enable resolution of dispute. Agency records associated with prospective tenant enquiries are completed in line with agency practice. Principles of property management are identified in the context of legislative requirements and agency practice. Ethical and conduct standards and key principles of consumer protection, equal employment opportunity and privacy legislation in relation to property management are identified in the context of legislative requirements and agency practice.
1.2 1.3
1.4 1.5
1.6
1.7
1.8 CPPDSM4007AA/1 Apply knowledge of property management 1.5
1.6
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CPPDSM4007AA/2 Develop knowledge of PM process CPPDSM4007AA/4 Identify roles/ responsibilities of agency personnel in property management
2.1
Need for demonstrating effective needs, providing accurate advice, addressing client concerns and dealing with conflict is identified in line with agency practice. Roles and responsibilities of agents in leasing and managing property are identified in line with legislative requirements and agency practice.
4.1
12.1 Enquiries from prospective tenants

Initial enquiries may be the result of prospective tenants: Seeing advertising for the property on the internet or in the newspaper. Calling into the office because they are looking in the area. Responding to an agency window card or sign. Telephoning the office to ask about vacant property generally. Attending an open for inspection of an advertised property. Sending an email or other type of correspondence from a website ad. Meeting you or your staff outside the office. Establishing contact because of an ongoing need e.g. the housing officer at a TAFE college, a HR person, or a relocation specialist.
Responding to tenancy enquiries When an enquiry is received it must be recorded, and the prospective tenants needs clarified. The next step is to assess the enquiry so that the correct response can be set in motion. This involves assessing the: Degree of urgency. Ability of the agency to provide the service and/or the information. Most appropriate person to effectively deal with the enquiry. Possible time frame for an effective response. Type of follow-up required.
How the property manager responds is also guided by the agencys predetermined policies and procedures relating to tenancy services. These systems may dictate: What the preferred greeting is. Who can handle the different types of enquiries normally made. How soon calls must be returned and emails/letters responded to. Whether private appointments or open houses are used.
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How enquiries are recorded and by whom e.g. they may be logged for actioning, and for market research purposes. Who has authority to act on different types of enquiries (this is partly determined by legislative requirements). Criteria for effective referral. Expected time frames for follow-up action. Processes for making appointments e.g. Outlook or paper diary. Preparation required for appointments and any requisite research.
12.2 Screen tenancy enquiries

Rapport can continue to be built while you are qualifying a prospective tenant, provided you do this tactfully. Qualification is the process of establishing a persons needs, time frame and budget. This helps you to identify a property that matches their needs and/or to determine whether they will suit the property they enquire about. Some property managers regard qualifying tenants as a way of avoiding time-wasters. The most successful real estate people ask qualifying questions to help the tenant and to build up their network for the future. Qualifying questions should never make a tenant feel put down - if they can't afford a property they enquire about, focus on the positive and offer to try to find something that does suit them rather than making them feel inadequate. The questions should support the development of rapport and help you to distinguish prospective tenants to focus on most strongly in the short term. Those who will require most attention include: Those whose budget and needs match properties currently listed. Those who have an urgent need to find a rental property in your area e.g. the tenants property has been sold. New renters who plan to enter the rental market soon in your area provided they have references e.g. a couple who have just sold and will be renting until they buy again. Long term renters with good qualifications wanting a place soon. People who have the potential to be repeat customers e.g. a builder who habitually rents while he looks for properties to redevelop. Potential tenants likely to refer other tenants to you e.g. a contact from a relocation firm.
To provide effective service and to ensure tenant satisfaction, you should first identify prospective tenants needs. Initial needs may be the provision of information, the need to view a property, or information on future vacancies.
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Ongoing needs will relate to the prospective tenants accommodation requirements e.g. how much space they need, desired location etc. To identify a prospective tenants needs, the property manager should: Establish rapport with prospective tenants. Ask questions and listen to the responses closely. Show respect for prospective tenant's opinions, values and experience. Ask open questions so they will open up e.g. tell me what you need? Ask closed questions to clarify e.g. so when does your lease end? Use effective listening skills to verify identified needs (take notes).
Prospective tenants normally approach an agency seeking general information about current rental vacancies or more information about a specific property. The response they get when they first contact the agency is important as first impressions often set the tone for the ongoing relationship. A poor response from the agency can even scare a prospect away. The property manager or staff member needs to quickly determine the prospective tenant's primary qualifiers: Price range. Employment status. Type of property needed e.g. house/flat, how many bedrooms. Whether they have adequate references.
You should also try to find out about the things they 'must have' and their 'nice to have' list. This information may be uncovered by asking questions like: Can you tell me the key things you need? What rent range did you have in mind? 'When are you hoping to move?' What length of lease were you aiming for? How many bedrooms and bathrooms would you like? What locations would you consider? Do you need to be close to a particular school or bus route? Do you like a big garden or would a courtyard suffice? Do you have pets or any other special needs? Is a garage or carport important? 'Are you working nearby?' 'Have you rented elsewhere recently?
Some tenants will be clear about their needs, while others may not have considered what they need in much detail. A skilful property manager can gauge the level of help a prospective tenant requires and adjust their approach accordingly. A confident person who has a clear understanding of what they require may be irritated by too much information. Special care is needed if potential tenants might be considered vulnerable.
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The prospective tenant's level of knowledge is usually indicated by what they ask and how they respond to the property managers questions. A first time renter or someone who has not rented for many years will usually need more help. Make sure that you offer to explain everything to people like this. Some personalities want more reassurance than others and very young people, the elderly and those with a language barrier may need someone to support and advise them. An effective property manager will verify that a property is appropriate for a prospective tenant's needs before taking up their time viewing the property. Helpful questioning: saves tenants time and effort in searching for a property assists them in making better rental decisions reduces disappointment when a property is not up to expectations creates a sound ongoing relationship with the agency.
For the agency, gaining accurate information helps to: match the right prospective tenant to available properties determine whether a property inspection is warranted enhance agency reputation assist in the agencys fiduciary responsibility to owners.
How effectively you select tenants depends on how thoroughly you have screened applicants. Core property management competencies that will help you include listening, communicating and being tactful. It is also important to take the time to explore prospective tenants needs and motivations. You will also need skills such as: Careful organisation. Investigation. Documentation. Intuition.
Follow up questions are critical to determine a prospective tenants needs. Effective follow-up questions can save everyone time. e.g. Q) What sized home are you looking for? A) 3 bedroom is ideal. Follow up Q) The 3rd bedroom is quite small in this unit - previous tenants have used it as a study. Does that sound as though it is likely to be suitable? OR Follow up Q) This has 3 good bedrooms and a good central bathroom. Is an ensuite bathroom vital?
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Finding the appropriate tenant for a rental property is one of the most critical tasks of successful property managers. To match a prospective tenant with a suitable rental property, a property manager must have: A strong sense of the tenant's needs An in depth knowledge of the agency's current rental list.
Asking effective questions in tactful way is essential to gain quality information and clarify the prospective tenants needs and how well they match a particular property. The questions should be relevant and focus on information which is required. It is also important to be a good listener and to encourage an informal relaxed conversation with potential tenants. During the viewing you can often get a feel for their character and motivations. This can be useful when comparing applicants. Key points about enquiries Enquiries from potential tenants should be handled promptly. Take time to build rapport with potential tenants so they will be open with you. Screen enquiries to determine needs and financial capacity. Try to speak to callers when they have access to internet - viewing online pictures of the property makes discussions more effective. Agency records must be kept - follow agency practice, apply ethical standards and ensure legal requirements are met. Notify agency management of any complaints.
Think about the communication skills you will use with potential clients as a property manager. Practice questioning skills with a colleague. Ask them to provide you with feedback on your skills. Activity 35 Investigate the clients needs/qualifications tactfully
Design three questions to ask each of these two prospective tenants. Try to find out a need, qualify them and build rapport. a) Dee Smith calls in at the office. She enquires about an upmarket 2 bedroom unit you have just listed. It is an expensive property that will probably let to a Double-Income-No-Kids couple. What do you ask her?
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b) Jeff Miller telephones about a 3 bedroom house listed on your website. It is an inexpensive family home but the owners are fussy as it has been their own residence until recently. Jeff is on his mobile so you need to be brief. What do you ask him?
Compare your response by visiting the Model Answers.
12.3 Clarify factors likely to influence leasing of property

The more information a property manager can obtain from, and provide to a prospective tenant, the better they are able to help them. Fundamentally, assisting a prospective tenant involves: Confirming that the property they are interested in is appropriate, or Directing them toward a more appropriate property.
Giving information to prospective tenants is a big part of your role. If you are unaware of the agency's current listings you may investigate a prospective tenant's requirements but miss the opportunity to match the tenant with a property that is available (or will be soon).
12.4 Decision to view

When a prospective tenants rental criteria are established, the next step is helping them to make the decision whether to view the property, if they have not already decided. As they have either usually initiated the enquiry or given you information that makes it clear the property matches a number of their needs, this is normally quite straightforward. There is little point pushing people to inspect properties that do not match their needs - this can be a waste of their time and yours. Part of a pre-qualifying process may be to ensure that the prospect has: seen the property in some detail on the internet or driven by and viewed the property from the street.
Prospects normally complete preliminary viewing online. You then: advise the tenant of the next open for inspection to the general public if there is one coming up within a reasonable time period, or organise an appointment for an inspection.
The exception might be where the party clearly does not match the owners and/or the agencys criteria for tenants. If for instance they have told you they
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are not working there may be little point encouraging them to view the property. (You must be careful not to discriminate, if the person insists on viewing the property you may need to show them even if you dont think they are suitable). How you respond to callers may also depend on the type of property and current vacancy rate. For instance, an exclusive property is usually by appointment only. If the vacancy rate is high, it is important not to delay showing a tenant as they may take another property in the interim. If it is low, it may be quite viable to try to limit viewings to home open times. The first conversation with a prospective tenant might go as follows: Prospective tenant: Its Greg Atkins here. Im interested in the 2 bedroom property you have advertised in Fremantle. When can I view it? Solomon Street? It is a great property in a quiet street, with easy access to everything. I can show you later today if that suits you, but may I ask a few questions first? Yes OK. Did you notice that only a six month lease was available? Yes, that would suit us. So you are looking with someone else? Yes, my girlfriend. Are you aware that there is only one car bay? Yes, that is fine. We only have one car. Thats good. You do have great facilities within walking distance. Can I ask do you both work in the area? Not too far away. That will be convenient then. Are you in a lease currently? It ends soon. We can move in 10 days time. There is strong interest so if you are keen lets get you through today. I can meet you at 5.30pm if you like. Great we will see you then Good Can you both bring ID, references, a credit card or cheque book and proof of earnings with you? That way if you would like to make an application we can complete the paperwork. Let me get your number and your partners name. Thats fine. My number is 0400 432 555 and her name is Paula - well see you at 5.30.
Property manager:
Prospective tenant: Property manager: Prospective tenant: Property manager: Prospective tenant: Property manager: Prospective tenant: Property manager:
Prospective tenant: Property manager: Prospective tenant: Property manager:
Prospective tenant: Property manager:
Prospective tenant:
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It is appropriate now to invite the tenant to view the property. You have established that the property may suit them and that they have an income, so the appointment is qualified and less likely to be a waste of time. NB Not all agencies screen to this extent - this is a matter to discuss with senior staff in your agency. Activity 36 Decision to view (think of a property you know)
1. Develop three 'selling points' you might use to promote a property to a particular type of prospective tenant (e.g. a single person or family).
2. Consider an aspect of the property that might be viewed as a negative and outline what questions you would ask to screen out people for whom this will be a problem.
12.5 Areas of dispute

It is very unlikely that any dispute will arise at this stage, as the obvious sources of conflict (e.g. rent increases, bond disputes) do not exist before a lease is signed. Prospective tenants frustrated by high rents can however become hostile as can people finding it difficult to get a place in a tight market, so be prepared to use tact and empathy when dealing with such callers. The best way to handle frustration is to listen and allow the person to have their say. Rents are obviously not within your control, so suggest to callers some areas where you feel they may be better able to find affordable accommodation, and try to end the call positively. Be aware that the way you manage enquiries can prevent (or lead to) a dispute at a later stage, so be sure to handle calls with care and have them managed only by trained property management staff. Issues that can give rise to disputes later include:
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Misleading or deceptive conduct, e.g.: o o Telling applicants that the property has an alarm system or solar hot water, if the equipment is no longer functional. * Advertising a property at a price, then asking for a higher price (e.g. because there was a strong level of enquiry). *
Unconscionable conduct e.g. bullying, or taking advantage of someone who is vulnerable/less powerful.* Third line forcing e.g. telling potential applicants that they must pay via an automated direct debit system with a particular provider.* *These practices breach the Australian Consumer Law (ACL). Discriminatory conduct e.g. saying that tenants will not be considered because of their age, being single or any other discriminatory reason. Breaches of the Residential Tenancy Act (e.g. asking a tenant to pay a letting fee, asking for more bond than is legally permitted, trying to contract out of mandatory obligations). Breaches of the Privacy Act e.g. wrongly disclosing personal information given in the course of the initial enquiry.
Be aware of compliance issue. Even unsuccessful applicants can bring a complaint against you and the agency.
12.6 Agency records

Record keeping begins from the first conversation with owners and continues throughout each stage of the leasing process. The enquiry stage is no exception. The agency that you work for will have its own systems and will usually keep records of enquiries for marketing purposes. They may ask staff to enquire of every caller where they got the number or saw the property advertised, to ensure that they can continuously improve the marketing they do, improving outcomes for owners. If this is the case you should make sure that you and your staff are diligent in recording this information. Some PMs keep such records purely for their own information and to provide feedback to owners. The other reason to keep records of enquiries is because it is a good risk management practice. You may never have a complaint against you, but if such a complaint should arise, records are likely to be vital in your defence. Being able to show the number of enquiries received, when they were received and how they were managed, can demonstrate that the process was sound.
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In summary
Building rapport with a prospective tenant will instil confidence and trust with the property manager. Investigating the tenants needs thoroughly saves the tenant and agency time. It is better to determine whether a tenant is appropriate on the phone than during a property inspection. Matching the appropriate tenant with an appropriate property is a critical element of successful property management. Successful property managers promote the key elements of their rental list and know their properties. When the right tenant is found for a property, confidence and excitement should be built in the property. Be aware that the way you manage enquiries can prevent (or lead to) a dispute at a later stage. Record keeping begins from the first conversation with owners and continues throughout each stage of the leasing process.
Self-check questions 1. How will you determine the tenants needs to match them with an appropriate property? 2. What are the legislative requirements which need to be considered when screening potential tenants? 3. What type of promotional material would you use when conducting discussions with potential tenants on rental properties?
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PART 13: Showing the Property

Learning Outcomes
This part of the learning materials aims to help you: Prepare property for inspection. Accompany tenants through inspections. Provide the owner with a report after the inspection.
Elements:
CPPDSM4010A/1 Screen tenant enquiries.
1.1 Enquiries from potential tenants regarding lease of property are handled promptly to enable high quality service delivery in line with agency requirements. Appropriate rapport is established with potential tenants. Factors likely to influence the lease of properties are identified and potential tenant intentions clarified. Strategies for assisting potential tenants to decide to view properties are implemented in line with agency practice, ethical standards and legislative requirements. Appointments are made for property inspections in line with agency practice, ethical standards and legislative requirements. Preparations are made for property inspection in line with agency practice. Procedure for property inspections, including key control, orientation of prospective tenant to property and strategies for ensuring security of managed property, is implemented in line with agency practice. Effective questioning techniques are used to clarify prospective tenants interest in the property. Agency documentation associated with inspections is completed in line with agency practice and legislative requirements. Property leasing process is identified in the context of legislative requirements and agency practice. Statutory and agency leasing documents are identified, completed and stored in line with legislative requirements and agency practice.
1.2 1.4 1.5
CPPDSM4010A/2 Undertake property inspection
2.1
2.2 2.3
2.4 2.5
2.5 2.6
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CPPDSM4007AA/4 Identify role and responsibilities of agency personnel in property management CPPDSM4007AA/5 Use key register
4.1
Roles and responsibilities of agents in leasing and managing property are identified in line with legislative requirements and agency practice.
5.1 5.2
Key register system is accessed and maintained in line with agency practice. Security of register and keys is maintained in line with agency practice.
13.1 Appointments for Showing the Property

An important part of a property managers profession involves making arrangements to allow prospective tenants to inspect properties which have been listed for lease. This can be achieved via: By appointment: The prospective tenant meets the property manager at a designated time to view the property. In this instance, the prospective tenant will ideally have already been qualified, have viewed the property online and may also have seen the property from the street. This is not the most efficient means of showing property but may be necessary if owners are reluctant to allow home opens or if the nature of the property makes you concerned that the appointments are most appropriate e.g. due to security issues. When the property is already tenanted you need to be aware of the tenants rights regarding legal notice required. Section 46 (1) (f) & (g) of the Residential Tenancies Act 1987. By appointment inspections are not generally considered risky provided the prospective tenants are accompanied throughout. To allow prospective tenants to roam unsupervised in an occupied property could be seen as negligent. Your agency will have protocols and these should be observed, bearing in mind the safety and security of the owners and/or occupants. There can also be issues relating to staff safety you may consider having two staff members attend the appointments if possible. Home Opens If a property can be advertised as being available for inspection at a certain time to the general public then many prospective tenants can see it at once.
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The property manager (and for large homes another staff member for added security) attend to meet prospective tenants and discuss the property and lease requirements. Opening a home for inspection is a highly successful way of marketing a property because it creates a sense of urgency and competition among prospective tenants by bringing them to the property at the same time. Be aware that insurers may not cover thefts that occur during inspections, so staff attending must be vigilant. Prospective tenants like this method because they can view the property in a non-intimidating way without having to make an appointment or give too much information away. Times can be planned and advertised on the internet from day one of the campaign. Property managers like it because they are able to show multiple prospective tenants the property in a time-efficient way. The property can be shown at the most favourable time of day, in premium condition and this method causes least inconvenience for occupants as current tenants/occupants can plan their absence and ensure the condition of the property is adequate. The downside to this method is the risk of theft or home intrusion. Criminals and opportunists may steal small portable valuables and there have there have been cases of doors or windows being deliberately unlocked by a prospective tenant so that they can later return to commit a burglary or other crimes against occupants. It is impossible to have someone in every room at every moment of an inspection so Property Managers must use their judgment and observe prospective tenants closely, staying close to those who show any sign of suspicious behaviour. If owners are reluctant to have home opens and/or do not want to lock valuables away, appointment only inspections may be best. It is obviously highly risky and potentially negligent to allow people to inspect a property without taking their name address and telephone number, and the most risk-averse agencies will ask to sight photo identification to verify these details. They will also ask owners/tenants to put portable valuables away under lock and key.
13.2 Planning the Viewing

Physical presentation As well as making arrangements to protect the property and its occupants you should consider how best to prepare the property for inspection and recommend strategies to owners to improve presentation. This is important as prospective tenants will assume that the standard of the property on viewing is how the property will be maintained. Making a property as presentable as possible helps to attract the best tenant.
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To ensure the property is presented at its best when inspected, this should be considered well before the day of inspection, and any work completed prior to the inspection, as obviously properties that are dirty or visibly in need of repairs are harder to let: If anything else comes to your attention during inspection, that also needs to be dealt with. You should know where to turn on electricity, gas and water at each property. If outgoing tenants are still residing at the property, discuss with them how the property should be presented for inspections. The period when you are attempting to relet the property can be a stressful time for tenants in the process of packing up; so be empathetic and respect their rights, to gain cooperation. Some tenants will present a property well out of personal pride or because they have been well treated by the agency or the owners in the past. You may be able to negotiate an arrangement where in return for limiting the number of inspections, tenants who are not keen to cooperate agree to clean up for scheduled inspections. You can also try to negotiate with owners to pay a cleaner or drop the rent slightly during this period, in return for tenant cooperation. It is rare that property managers drive individual tenants around to see properties, except at the most exclusive end of the market, however this may happen. If you are taking a prospective tenant to properties, make sure you understand their requirements so that you arrange for suitable properties to be available for inspection on that day. The prospective tenant should study the available properties online to avoid time wasted on unsuitable properties. If this has not been possible prior to the day, ask them to do this at the office. Obviously you must plan the order of inspection end ensure keys are available. If you are taking a prospective tenant to see a property (or a number of properties) plan the route to pass some of the more attractive parts of the area. You would normally show the property most likely to suit the prospective tenant last. If arranging to inspect a tenanted property you must comply with the Residential Tenancies Act and Regulations. In the last 21 days of an agreement tenants are entitled that you give a reasonable amount of notice, conduct inspections at a reasonable hour and limit them to a reasonable number of occasions. Prior to that at least 7 and no more than 14 days written notice is needed, or the tenant must give permission. The Act doesnt define reasonable, as circumstances differ for all tenants. Some tenants are shift workers or have young children who sleep during the day. What is reasonable for one tenant can be inconvenient for another. Try to reach mutual agreement about inspection times.
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Activity 37
Planning Viewings
1. List the steps you would take in preparation for offering a rental property for inspection.
2. You have 3 properties to show a prospective tenant in town for the day. He is an executive single parent who wants a 2-3 bedroom home close to a good high school for his son and close to the city. He has a budget of $370. The properties you have include: i) A 10 year old 2 bedroom + study duplex on 350 sq m near shops in Shenton Park for $360 (nearest high schools - Shenton College and John 23rd College). ii) A new 2 bedroom townhouse with a courtyard in a large complex on a busy street in Leederville for $320 (schools - Aranmore Catholic College and Mt Lawley High School). iii) An old house (2 bedroom + sleep-out) on a large block in North Perth for $340 (schools - Aranmore College and Mt Lawley High School). Describe how you would arrange the property inspections and why.
Compare your response by visiting Model Answers.
13.3 Risk Management for Viewings

Most agencies will have a protocol for property inspections which should take into account the need for security awareness. Comply with this or develop a sound procedure yourself if none exists, so that no matter which staff member organises and conducts an inspection, it is conducted in a safe and compliant way. Personal Security Property managers and staff may sometimes need to be at properties alone with prospective renters. This may leave staff vulnerable to the risk of injury, threats and aggressive behaviour from prospective tenants.
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There have been actual cases of property managers and agents being threatened and assaulted during property inspections. In Victoria an agent was murdered. Other incidents such as falls, heart attacks, electric shocks etc also have the potential to put PM staff at risk if they are alone. To minimise risk provide procedures, information, equipment and safety training for employees who conduct inspections. If an individual making an enquiry has behaved inappropriately or been identified as potentially threatening, no meeting or visit should be conducted alone. Some agencies have now decided that personal advertising showing pictures of staff is risky, particularly for young, female staff. Many have dispensed with photos and channel all calls through an answering service or office number. It is certainly unwise to make a home address or home telephone number known in the course of business. Meeting anonymous enquirers alone may also expose staff to risks. To reduce this risk, some agencies ask prospective tenants to visit the office to establish their identity before going to the property. They may also ask applicants to fax through details such as: references and/or proof of current address 3 forms of ID e.g. phone numbers, car make and registration number.
If you accept appointments from unknown applicants by telephone, at the very least confirm these with a return call. Keep a central calendar where staff appointments are logged in detail, so that someone is always aware of who a staff member is meeting and when they are due to return. This is an easy safety measure to implement. Requiring regular phone contact between the office and staff working out-of-office is another practice that can help to improve safety. If the areas you work in have poor mobile coverage, a back-up system such as a pager or personal alarm device may be advisable. Work vehicles must be serviced regularly and audited against a safety checklist. Use vehicles with remote locking and an alarm. Encourage prospective tenants to take their own cars to property inspections. Arrive early and park so your car is easily accessed and cant be blocked in. When listing a property, check its condition and location to identify safety concerns such as cracked paving, unsound flooring, exposed wiring, etc. Anything that might pose an unacceptable risk should be reported and discussed with owners. This might include security issues for agency staff and potential tenants e.g. windows that can't be locked, absence of lighting on a dark porch or remoteness from neighbours. To improve security while at property inspections you can: Try to conduct viewings during the day. Have a prearranged strategy for a situation where a staff member feels threatened e.g. a coded voice message or alarm.
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Never do evening viewings alone. Ensure you have a clear path to an exit, at all times. Leave the property immediately if anyone becomes aggressive.
At open for inspection viewings, have enough staff to avoid security concerns. Record ID details of viewers to deter any with criminal intent. Injuries and situations with the potential to cause harm (e.g. a near miss) need to be reported to the agency. All staff should understand that personal safety issues are considered important. Adapted from materials developed by WorkSafe Victoria and the Real Estate Institute of Victoria Limited published at www.reiv.com.au. Key Security Agencies always have procedures for the safekeeping of keys as they are responsible for this whether a property is tenanted or vacant. This protects the owner's asset and the security/property of tenants. Keys are coded so that a property address cant be identified. This is in case of loss or theft (without a coding system keys could be taken to the property to gain illegal access, compromising property and safety). Keys to vacant properties should not be given to a prospective tenant to use without supervision. The agency would be liable if a key was duplicated and used for illegal entry of the property at a later date, leading to burglary or assault of tenants. If keys are lost recommend that owners change their locks, to avoid any risk or liability. Cash Risks Cash carries inherent risks, so discourage the payment of application fees in cash (especially outside the office). If you are known to receive cash you may become a target and this can be a safety risk for staff. Legislative requirements when conducting open inspections It is important to understand and adhere to legislative requirements when wanting to show prospective tenants through a rented property. This means you must ensure respect for the rights of the tenant. A tenant has the right to quiet enjoyment of a property they rent, and the right to be given proper notice of entry. The owner / property manager has the right to enter the property, if they comply with the provisions of the Residential Tenancies Act in relation to notice periods and method of notification. The Department of Commerces brochure Residential Tenancies Act 1987 Information for tenants (A Statement of your Rights and Duties) (Schedule 2) which all tenants receive, summarises what the Act states:
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*11. Entry by owner THE OWNER may only enter the premises (a) with the permission of the tenant given at or immediately before the time of entry; or (b) in an emergency; or (c) for any purpose, if at least 7 and no more than 14 days notice is given; or (d) to collect rent if the agreement allows for rent to be paid weekly or less frequently and permits collection at the premises; or (e) for an inspection at the time of a rent collection referred to in (d) but not more than once every four weeks; or (f) to carry out or inspect necessary repairs after giving at least 72 hours notice or (g) after giving reasonable notice, to show the premises to prospective tenants on a reasonable number of occasions during the 21 days before the end of an agreement; or (h) after giving reasonable notice, to show the premises to prospective purchasers on a reasonable number of occasions. Except where (a) or (b) applies the owner must only enter at a reasonable hour. The same brochure states that: A notice under the Act can be given (a) to any person by handing or posting it to the person; (b) to a tenant, by giving it to (i) someone living in rented premises who appears to be over 16; or (ii) the person who usually pays the rent; (c) to the owner, by giving it to (i) the owners agent; (ii) someone living with the owner who appears to be over16; or (iii) the person who usually receives the rent. Where there are two or more owners or tenants notice need only be given to one of them. You do not necessarily need permission from the tenant, provided the correct time periods and forms of notice are adhered to and properly served on the tenant (see Notice of Intended Inspection form in Appendix 7). It is however best to work cooperatively with tenants where possible. You should not enter a property if a tenant refuses entry, even if they originally agreed to the inspection. They do not have to leave the premises nor do they have to tidy up, so alienating them can make things much more difficult. As discussed, inspection times in the last three weeks of an agreement must be 'reasonable' in notice, timing and frequency. Communicating with tenants and managing each situation on a case-by-case basis is best. It is usual to have one or two inspections per week.
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Activity 38
Open Inspections
1. Outline four important considerations when organising an open inspection of a rental property.
Name one other consideration if arranging a private viewing.
2. What rights do existing tenants have in regard to reletting inspections?
3. List four questions you would ask a prospective tenant to determine their interest in the property.
13.4 Documenting Viewings

All details of inspections of properties shown, including dates, times, attendees, the outcome of the inspections and copies of feedback given to owners, should be recorded in the appropriate files at the agency. If a complaint of theft or damage arises later this can be a crucial record. Give written feedback to the owner e.g. in the form of an inspection activity report, so they are aware of the level of interest generated by marketing and to pass on comments made by those who view the property. This information can be useful and help owners to make
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decisions that will assist the rental of the property e.g. to adjust rent asked, alter marketing or to do work on the property. Matters which can be addressed based on feedback documented include: Is the property priced correctly? Is there any single issue detracting from the appeal of the property? Is the marketing program effective? Can presentation be improved?
You must also report to owners if: any incident occurs that could cause a claim or breach security e.g. a slip or trip at the property, lost keys anything occurs in the market that influences the appraised rental price of the property e.g. another similar property coming onto the marker at a significantly higher or lower rent.
At times there have been claims against property managers for not passing on updates about the market, especially if it can be argued that the price achieved by the subject property is below what could have been achieved. There have also been cases where owners ignored a property manager's advice and later complained about the outcome (or lack thereof), so having evidence on file of advice given is essential. Be guided initially by the agency's guidelines as to what records are required, but if they seem inadequately maintained, keep your own diary notes. Some property managers have diaries going back years because they want to be sure that if a claim arises they are not dependent on records that may not have been well maintained within an agency they no longer work for. Summary of Key points re showing the property Give reasonable/ statutory notice to tenants still in residence. Be prepared with forms etc and follow agency procedures. Maintain security of keys and register . Use key control procedures. Don't make evening appointments to go alone to meet applicants. Ask questions to check prospective tenants needs / price range. Document the inspection and give owner feedback. Minimise risk of theft / property damage at inspections. Ask entrants to provide photographic ID prior to inspecting a property provided you observe the requirements of the Privacy Act. Consider your duty of care with regard to safety of all persons.
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Activity 39
Post viewing report
a) Today six couples viewed a 2 bedroom unit you have listed for $300. None applied to take it. The previous weekend 4 parties viewed it with no applications. Most other 2 bedroom properties advertised in the area over these two weekends were between $260 and $285. One was $320 but had a study and double garage. (Yours has a single carport). One couple said the property was too expensive. Two couples expected it would be larger / in better condition. Two left without giving feedback. One couple showed mild interest but felt the decor was tired and rent too high. You have only advertised on the internet so far - this would normally be adequate. Draft the report to the owner. What recommendations will you make to achieve secure a tenant?
Compare your response by visiting Model Answers
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In summary
Prior to an inspection, a property should be at the standard you would expect throughout a tenancy. Keep the keys to all properties secure, whether tenanted or vacant. Where the prospective tenant is interested, build interest and enthusiasm by highlighting key features. An inspection offers more opportunity to informally interview prospective tenants. Effective questioning techniques help you to match properties to tenants. Document every inspection and record your reports to owners.
Self-check questions 1. What is your agency practice in regard to preparing rental properties for inspection? 2. How can you add value to the agency practice? 3. How will you ensure that security is maintained when prospective tenants are inspecting properties?
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PART 14: Review tenancy applications

Learning Outcomes
This part of the learning materials aims to help you: Review tenancy applications. Check applicant references. Ensure application processes comply with legislative requirements. Gain owner approval for tenancy. Negotiate with owners and tenants. Notify successful and unsuccessful applicants.
Elements:
CPPDSM4010A/3 Obtain and review tenancy applications
3.1 Tenancy applications are reviewed to ensure that they have been completed in a full and accurate manner, consistent with legislative requirements and agency practice. Applicants references are checked and results recorded according to legislative requirements, ethical standards and agency practice. Application processes are reviewed to ensure compliance with ethical standards and legislative requirements. Procedures for gaining landlord approval for tenancy are implemented in line with legislative requirements, ethical standards and agency practice. Effective negotiation techniques are used to persuade and reach agreement between owner and tenant on terms of tenancy agreement or lease. Selected and unsuccessful applicants are notified and details are recorded in agency systems. Legislation regulating the lease and management of properties is identified in the context of agency practice. Ethical and conduct standards and key principles of consumer protection, equal employment opportunity and privacy legislation in relation to property management are identified in the context of legislative requirements and agency practice.
3.2
3.3
3.4
3.5
3.6 CPPDSM4007A/1 Apply knowledge of property management. 1.3
1.6
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CPPDSM4007A/2 Develop knowledge of property management process.
2.1
Need for demonstrating effective communication strategies in establishing rapport with clients, determining client needs, providing accurate advice, addressing client concerns and dealing with conflict is identified in line with agency practice. Property leasing process is identified in the context of legislative requirements and agency practice. Statutory and agency leasing documents are identified, completed and stored in line with legislative requirements and agency practice. Roles and responsibilities of agents in leasing and managing property are identified in line with legislative requirements and agency practice. Strategies for resolving disputes between owner and tenant are identified and evaluated in line with legislative requirements and agency practice. Effective communication strategies for managing conflicts involving clients are identified and evaluated in line with legislative requirements and agency practice.
2.5 2.6
CPPDSM4007A/4 Identify roles and responsibilities of agency personnel in property management.
4.1
4.3
4.4
14.1 Review tenancy applications

When tenants lodge an application to lease residential property, they make a formal offer for the property which, while it is not binding, can cause them to lose their application fee if they are accepted and then do not proceed. Under the guidance of the property manager, owners can accept or reject their offer. Acceptance can at times be a mistake in hindsight. Reviewing tenancy applications must therefore be a formal process, conducted fairly and with due diligence and care and in compliance with all relevant legislative requirements. There is also an informal aspect to assessing tenants which happens as you interact with applicants when responding to their enquiries and during inspections. In fairness this should not outweigh the evidence gathered when formally assessing an application. REIWAs Form 302 Offer of Option to Lease Residential Premises is at Appendix 8. The purpose of the form is to: Capture the prospective tenants details and their requirements for the lease - for example, if they wish to have pets at the premises. Specify the money to be paid prior to taking possession of the property - i.e. the total including security bond and initial rent payment.
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Make the tenant aware of the owner's conditions - for example when they can take possession, if successful. They should also be advised of the agencys Privacy Policy re unsuccessful applications. Create a legal option to take the premises. If the application is accepted, then an option to take up a lease exists. Unless otherwise agreed, the tenant has 2 business days to make a decision.
The form should also create the legal basis to conduct reference checks. It is important to use a fair and defensible process to assess applications. Many Property Managers will draw up some form of matrix or use a 'star' system to allocate points (both plus or minus) to applicants so they can compare applicants fairly, when there are several applicants worth considering. Of course this is not necessary if you have only one suitable applicant e.g. where all others are disqualified by significant negatives such as lack of positive references, or inadequate income. You may form strong impressions based on all sorts of factors when you meet applicants face to face, but you should balance these by doing the proper checks and objectively weighing up what you find. Tenants may lawfully request access to their own files under the provisions of the Privacy Act, so property managers must ensure that all notes and comments kept in their files are strictly professional and objective. Subjective and derogatory remarks should not be recorded. Property managers could face complaints if they dont remain objective. All information regarding the applicants personal details and financial position must be treated as confidential and only discussed with others in the agency if necessary for work reasons. When weighing up applicant details you will prioritise information differently at times, depending on the property owner's priorities. If owners are keen to find someone who will look after the garden, evidence of this ability (e.g. past references) will be important. If they want reliable cash flow then income may be the key factor. First it is important to ensure the application form is fully completed. Scrutinise the document carefully once it is completed. Some key steps in checking applications are: 1) Check the form for blank areas to ensure all the facts have been gathered (blank fields may be carelessness, but may also be subterfuge. 2) Verify factual data - don't accept mobile numbers for employers without a landline and company name. Check the company name of employers given in the white pages or online. It is easy for a tenant to give a friend's number and claim they are an ex-owner or employer. 3) If something makes you uneasy, check further! Not all 'bad tenants' look the part -some well dressed impressive people are also trouble. Always verify information where possible. You could be seen to be negligent if you accept an application on face value and it goes wrong!
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Some factors are critical - no matter how good an applicants income, a poor rental history (e.g. property damaged or rent left unpaid) can never be ignored. The following examines the Standard Application form in detail: Tenancy details Sections 1 -8 of the Standard Application contains details about the tenancy: Names of the applicants and contact details. The address of the premises. The tenancy period starting and completion dates. The rent payable. Total number of persons occupying the premises. Type of pet breed, how many and age. Whether tenant is applying for Department of Housing & Works Bond Assistance.
Amounts payable Sections 9-16 details the security deposit, pet bond (if applicable), initial rent and documentation fee (if applicable).The property manager should complete this information and provide a sub-total, less any option fee paid. (An option fee can be charged upon application for tenancy. If the application is successful, this amount may be taken off the rent. If the application is unsuccessful, the amount must be returned to the person. The amount is usually the equivalent of one weeks rent.) Conditions relevant to making an application and offer Sections 18-27 details the conditions relevant to making an application. Applicants full names and relationship to other prospective occupants Section 34 captures prospective tenants details including: Full names of all parties, dates of birth, including children. If in doubt as to the surname (e.g. Asian names) ask the applicant to underline the family name. Explain that joint tenants are 'jointly and severally' liable to the owner (either one can be pursued for all debts). Current address, phone numbers and email address. Drivers license number (including state of issue), passport number (if available) plus other details of proof of identity. Pay particular attention to full name appearing on a drivers license, especially where the applicant has a hyphenated or double surname. If the tenant agrees, take a photocopy of the ID details. Personal references Beware of references from friends or relatives - they are not a valid way to assess the persons viability as a tenant, and should be used as a character reference. Personal references from people of standing, e.g. a previous employer may have some value. In the case of a very young person, a family reference may be used but should be given limited weight - relatives can however become guarantors. All information adds to the big picture.
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Rental history amount of rent currently paid, period of current lease, current property manager/owner and their contact details, previous property manager, why they are leaving/left. Occupation occupation and period of employment need to be documented and verified so you need the employer's name, business name, landline and mobile telephone number and business address. Self-employed people should provide current trade references and tax returns as well as rental history references. Emergency contacts/ next of kin details: address and telephone.
The same information should be obtained for additional applicants. Special conditions Section 37 - it is important that any special conditions the applicant requests are detailed in writing. For example, they may request window locks be fitted. This needs to be noted. Special conditions placed on the lease agreement by the owner are to be noted in Section 38. A rent review clause should be noted in this section. Bear in mind the rules about Contracting Out. Applicants need to sign in order to acknowledge that the special conditions form part of the lease agreement. Option Fees Some agencies require applicants to pay an option fee for the consideration of their application. This is normally one weeks rent. The Real Estate and Business Agents Act (1978) requires that a copy of the Tenancy Application is given to each applicant at the time the application is made. If this is not done the regulator has advised that there is no legal obligation on behalf of the tenant to pay the option fee. Application forms This section has used REIWAs Standard Application as an example. Whatever type of tenant application is used, it will capture similar information about the tenancy, prospective tenant and property. It is important that it is completed thoroughly and accurately. Other forms REIWA Form 325 Explanation Residential Tenancy Applications appears at Appendix 8 after Form 302 Offer of Option to Lease Residential Premises. The purpose of this form is to clarify the tenants options and obligations when making a tenancy application and to explain the significance of the Residential Tenancy Application Form.
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Activity 40
Tenancy Application
1. What are some important considerations when assessing a tenancy application?
2. What might the consequences be if information in the Tenancy Application is not provided and you do not follow up?
14.2 Tenant selection reference checking

The selection process is a critical step in establishing a new tenancy. It is the basis for the property manager's recommendation to owners, and should take into account all the information available as well as the rights and obligations of the parties concerned. The decision process begins at the interview when the property manager is attempting to find answers to two main questions: Will this person make a suitable tenant for the property? Will this person be able to meet the financial commitment involved?
Using rapport and probing questions, you will quickly form an impression of each applicant, and their attitude to renting. You will often form a view of their prospects. This must be balanced by objective evaluation. As you may be called on later to justify a recommendation and the owner's choice of tenant (or rejection of an applicant), detailed records of the selection process should be maintained and include the application form. A completed checklist or matrix should rank applicants according to valid, legal selection criteria.
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Avoid discriminatory decisions and always have facts and evidence to back up recommendations. Avoid possible accusations of negligence by checking apparently well-to-do applicants as thoroughly as you would a less prosperous looking applicant. In property management everything must be documented, and tenant selection is no exception. It is not sufficient to make mental notes of information gained when verifying information and checking references. You have a clear duty of care to act in the best interests of the owner at all times. Summary - Selection Process In summary, once the information is supplied by the tenant via the application form the selection process is to: Check form is full completed. Verify applicant identity. Verify information given by applicant/s e.g. o Check rental history - speak to current and previous property managers or owners, check data base if you have permission. o Verify employment status and 'ability to pay' - call the applicant's employer and only accept recent pay slips. o Do not depend on personal references - 'arms length' references are essential. o Always get a colleague to do checks if a friend or relative applies - you cannot objectively assess their application and risk a conflict of interest. Compare information with predetermined selection criteria and application with other applications. Discuss with owners or email them e.g. if there are two strong applicants. Recommend preferred applicants. Follow owner instructions. Advise applicants of the outcome. Document this process.
Tenant selection criteria Valid legally acceptable selection criteria should be pre agreed with owners and should demonstrate their preferences and the minimum standards acceptable within the agency. From a risk management perspective, it is essential that you can demonstrate that each tenants application has been processed with reference to those criteria. While you can have criteria such as 'non smokers' you cannot base a recommendation on age, sex, sexual preference, family or marital status, impairment, race, ethnicity or religion.
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Accurate identification When an application for tenancy is received you need make an informed decision as to whether or not the applicant is suitable to take possession of a client's property. The first step is positive identification. This is a prerequisite is for all other reference checking and information verification. Your agency may ask for 100 points of identification, or similar. The best forms of ID are government issued and have full name, address, photograph and signature of the applicant; e.g. drivers licence, passport or 18+ card. A combination of other forms of ID can suffice if an applicant doesn't drive and has no passport e.g. pension card, Medicare card, utility accounts, credit cards, Student ID card, Workplace Security Card. Do not accept two items that duplicate one another e.g. two cards from the same bank. Try to ensure the combined ID includes a photo, current address and signature. Some applicants will have less ID than normal due to unusual circumstances for instance they may have come to Australia as refugees. Whatever 'best practice' standards of identification you normally apply may have to be reviewed to avoid discrimination. In these circumstances an employer, welfare group or government agency may be prepared to vouch for the applicant. Tenancy record and proof of previous living arrangements The verification of the applicants previous rental history is also a critical part of the selection process. In addition to references provided by previous owners, the tenancy record also provides information concerning: The applicants previous rental experience. Their stability as tenants; i.e. how often they have moved in the past. Reasons why they have moved or are seeking a move. Any history of breaches of a tenancy agreement.
To verify the applicants rental history you need to ask the previous property manager or owner (if they rented privately) some key questions. For example: When did the tenant rent from you and for how long? Did they pay their rent on time? Did they breach their lease at all e.g. keep pets without permission? Why did the tenant leave? Did the tenant leave the premises in a good condition? Did they receive a full bond refund? Would you rent to them again? Would you recommend this person as a tenant?
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The following questions can be asked to gain further information: Has an owner/property manager ever terminated a tenancy with you? Has an owner/property manager ever refused you another property? Are you in debt to another owner/property manager? Were any deductions made from your rental bond at your last address? If so, provide details.
It is difficult to assess applicants who claim to have no recent rental history. This may be a subterfuge or they may have owned their own property and be renting because of a recent divorce /separation, work transfer, or financial crisis. Ask for proof of what they tell you, e.g.: Copy of a contract. Rates notice. Confirmation from a selling agent. Documentation from the managing agent of property they own.
Information can be verified through a property ownership database. Ability to pay rent It is also wise to verify financial data. You should sight a valid record of income in the form of pay slip, and call the company to verify that the person still works there. For self-employed people ask for accountants figures or tax records to determine the applicants ability to pay the rent. The prospective tenant must provide accurate information - if you discover they have lied about something (even a relatively minor point) be suspicious of other information given. You have a fiduciary duty to always act in the owner's best interest. You must only recommend a tenant who has shown evidence of their capacity to meet the financial commitment they are entering into and proof of financially responsible behaviour in the past. References A written reference cannot be taken at face value, nor should agency staff rely on it as the equivalent of screening the applicant. Owners expect more from property managers than the acceptance of a glowing recommendation without scrutiny. Reference checking is essential. By contacting the last property manager or owner, the applicants employer, or the writer of any personal reference, the property manager can also ask questions about matters not covered in the reference. When checking with referees, the property manager should use questions that encourage factual, objective answers (avoid recording anything on file that appears to be based on personality or prejudice). For example: What sort of tenant was he? can be better asked as, Can you give me some information on how they handled their tenancy?
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This technique encourages actual examples and factual information which are more valid than general opinions. Questions should be framed around the following factual points: Can you confirm the names on the tenancy agreement? How long did the tenant rent from you and what rent were they paying? What was their payment history like? Did any problems during the tenancy require special intervention? Was there cause to issue a Notice of Breach or Notice of Termination, during the tenancy? If so, what was the reason? Did the tenant fulfil their obligations with the tenancy? Was the bond refunded in full? Did the tenant have any pets? Was the property maintained to an acceptable condition?
During the discussion, be alert for signs of discomfort, hesitation or avoidance of a question - this may indicate that the referee is withholding relevant information. When an applicant has provided misleading information or has been given a poor reference they should be eliminated as appropriate applicants. Employment references Verification of the applicant's ongoing employment will determine if there is sufficient income to pay the rental amount, which should be no more than a third of the applicants income. The best workplace evidence is a pay slip, or bank statement showing payments deposited into the applicant's account. The applicant should be requested to fax this to the property manager, or to provide this with their formal application. This information is still best verified as applicants sometimes use recent payslips for jobs they have been given notice from. The property manager should be suspicious if: If work references are hard to reach, as workplaces are normally easily accessible. If the only number for the workplace is a mobile phone. If the person who answers doesn't use the company name.
If the company is large you may need to speak to more than one person as it is often useful to ask to speak with the manager of the payroll section as well as the applicants direct supervisor (some tenants will give you the name of a person to ask for, qualify this person as it may be a work colleague/friend not their supervisor), and if the applicant is self employed require them to produce their last tax return.
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Personal references This verification check is particularly important when dealing with someone without a rental history or who is not employed. This entails asking the applicant's referee some general questions about the applicants character with respect to their reliability and history of abiding by agreements. If the agency is dealing with a young person with no rental history, it may be beneficial to ask their parents or close relative how they feel about the applicant undertaking the lease of a property. This often encourages a quite honest portrayal of the young person. Some relatives will suggest the young person is responsible and serious and therefore ready to lease a property whilst others may be negative. Some property managers value opinions and thereby give them significant weight in their evaluation of young applicants. If checking personal references, enquire about the character of the applicant, and in particular, if they are reliable and ask: 'If you had a rental property would you let it to the applicant?' Attitude to renting The property manager can obtain a lot of useful information at every stage of the selection process - both from observation and questioning the applicants. When the property manager is accompanying prospective tenants on property inspections and personally conducting the interview, they will be well placed to accurately determine their past experience, their sense of responsibility, the way in which they treat property, their attitude towards the property manager and their rights and obligations as tenants. This is all valuable information and should be sought in assisting to make a more accurate decision. Tenancy reference databases There are national databases that, for a fee, provide information to property managers on a tenants previous rental history. These national databases vary in their composition. However, the Residential Tenancies Act regulates the information property managers can list on the database. Privacy legislation dictates how long the information can remain on the database and the fact that information must be correct and up-to-date. Examples of databases available to the real estate industry include: NTD - www.ntd.net.au TICA - www.tica.com.au Barclays - www.barclay.com.au Tenant Reference Australia - www.tenantreference.com.au RP Data - www.rpdata.com.au
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These organisations were set up to support the industry in recording key information on existing tenants. Property managers pay to become members and to have access to the database. Property managers also provide all of their previous tenants with a reference. When a tenant defaults on their tenancy obligations, the agency adds that tenants details to the database. Their full name, date of birth and either drivers licence or passport number, as well as details of the reason for lodgement are provided. Alternatively, instead of a reason, the comment may be to refer to listing property manager for further details. The tenancy database is used in the tenant selection process when processing tenancy applications. You should check all prospective tenants from tenancy applications through the database. The results reveal whether the applicant is recorded for a previous matter by any other member by producing a list of possible matches. The property manager can then select any that look to be a likely match for the particular person being checked and the specific details will be shown so an exact match can be confirmed. Do not assume the tenant is a good tenant if there are no listings of them on the database, not all property managers use databases and private owners have minimal access to them. You can also access an entire record of all listings under an agency name in order to check that all listings comply with legislative requirements and to update information as necessary. Property managers who use tenancy databases rely on a flow of personal information to and from the organisations maintaining the databases. These organisations and property managers must comply with privacy law. Legislation requires that the quality and security of personal information is maintained and that only staff who need access to the data see it.
14.3 Application processes are reviewed for compliance

It is essential that there is nothing discriminatory about application and selection processes and that they are compliant in terms of equal opportunity, privacy, consumer law and other related legislation. Whatever policies and processes in place, the agency's internal audit should include a periodic review of their compliance. This will help to ensure, for example, that people with protected attributes are not discriminated against in dealing with the agency. Staff training in such processes and why they exist is also important. Processes must also be effective if there are negative occurrences such as complaints, the process and policies used should be reviewed to determine what went wrong and improve them for the future.
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14.4 Selection procedures

Matching the right applicant to the appropriate property results in long term tenancies, well maintained properties and contented owners. Agencies should have formal procedures in place to enable them to seek owner approval for the best and most risk-free tenancy applications, without placing themselves or the owners at risk of a complaint. It is also important that this process records what recommendations you made, what information you provided and how owners responded. If for instance they chose applicants who were not recommended by you, then there needs to be a written record of this so that they cannot try to blame the agency if things go wrong later. When verifying applicant information, you may come across reasons, (e.g. poor rental payment history, neglect of a previous property, or issues with the applicant's character) which eliminate them as appropriate tenants. This usually leaves a number of applicants who are able to pay the rent and to fulfil the obligations of the lease. These applicants should then be considered in relation to the property and the owner's preferences. It is important to note that an ideal tenant may be even better suited to another property rather than the one for which they have applied. Inadequate selection procedures can lead to negative outcomes. e.g.: Problem tenants who damage the property. Lost rental income during tenancy or afterwards if repairs are needed. Loss of owners confidence. Legal action/claim if owner believes you were negligent. The following is a general guide to the different types of tenants and the properties that may be appropriate for them.
Tenants
Young urban professionals
Suited to:
Newer more attractive properties, that require little maintenance.
Less likely to be suited to:

Cheaper, less attractive properties. They will often only stay for a one lease period before they upgrade and may not have time to attend to maintenance such gardening. Expensive housing or housing with poor access to public transport and/or retail facilities. This tends to lead them to leave as soon as the lease expires.
Tenants on government subsidies
Moderately priced homes. They can be reliable tenants and take good care of a property. If well matched to property they may be long-term tenants, e.g. > 5 years.
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Mature single People
Often make excellent, loyal tenants and if they have the skills will often complete minor maintenance. If they are satisfied with a property they often stay long term. Housing that is well priced and may be old or in need of updating. Housing in a predominantly young persons apartment complex or busy nightlife area. Housing in suburban areas with garden, near facilities plus enough bedrooms, bathrooms and living space
Housing in areas that are noisy particularly at night. Housing that is isolated or in a predominantly young persons apartment block or not accessible to retail and transport facilities. Expensive or new housing may be unaffordable. Homes that require the tenant to maintain gardens as they may not have time or knowledge. Homes remote from transport if no car is owned. Very small properties, noisy areas or few amenities for families will often mean only a short term tenancy.
Students/ young people
Families
Owners preferences and involvement We have already discussed the fact that owners may ask for a particular type of tenant, and the basis of their request may be discriminatory. You must advise them of the legal situation and explain that the qualities they want can be sought through ad copy rather than discriminatory practices e.g. you can advertise for a quiet tenant who likes gardening but not for a "middle aged female". Some agencies make owners aware of the provisions of the Equal Opportunity Act (WA) 1984 when signing the management authority, to avoid embarrassment. If you wait until owners have already expressed their instructions, they may feel cornered and protest that they should be able to choose tenants according to their own preferences. A professional property manager will act legally and follow a fair process but still find tenants acceptable to the owners. Owners should be involved in the final selection unless they have specifically directed otherwise in writing. (Some owners, especially corporations, will not want to be involved in the decision making process at all.) Take into account: The agency office procedures. The specific instructions given by the owner at the time of negotiating the Exclusive Authority to Act as a Managing Agent.
As every application is a form of offer, it is necessary to verify the terms of the tenancy with the owner and seek their acceptance, unless they have instructed you to act on their behalf and the lease you enter into complies exactly with the agreed parameters e.g. the rent per week, term of the tenancy and commencement date of the tenancy is exactly as instructed.
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Whatever the instructions, it is best that there is some level of involvement and communication with owners even if it is only an email outlining what you propose to do, and giving them opportunity to comment on the applicants. Some Property Managers: Present the owner with background summaries of all applicants, emphasising the best two or three applicants and suggest the owner chooses the preferred tenant from these. Owners will normally seek the guidance of the property manager in arriving at a decision, or Present the owner with the application of the preferred applicant and a summary of how they compare with the other applicants, seeking confirmation that they agree with the property manager's logic in recommending the preferred tenant. If the owner does not agree then the other applicants are discussed.
Many property managers prefer the first approach and give owners details of all applicants along with their recommendations. If owners choose not to peruse the information, that is their choice, but the Property Manager cannot later be accused of not giving them the full range of choices. Either way you need to identify the shortlist of applicants before approaching the owner for input. Avoiding complaints under the Equal Opportunity Act The Equal Opportunity Act WA prohibits discrimination on the basis of certain protected attributes. There is a risk of complaint against the owner, the agency and the property manager if decisions are based on the protected attributes during the tenant selection process. Under WA law the protected attributes are: Age being regarded as too young or too old. Family responsibility having a caring role. Family status being a relative of a particular person. Gender history having a reassigned gender. Disability or impairment physical, intellectual or mental disability. Marital status being single, married, de facto, separated, divorced. Political conviction including a lack of conviction. Pregnancy. Race including colour, ethnicity or national origin or descent. Religious conviction including a lack of conviction. Sex being a man or woman. Sexual orientation heterosexuality, homosexuality, bisexuality. Spent conviction (Spent Convictions Act 1988.)
The most important element in avoiding a discrimination complaint is to clearly understand what constitutes discrimination.
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Discrimination complaints in property management generally arise from a PM, owner or staff member deciding an applicant is unsuitable as a tenant based on their protected attribute, rather than on valid selection criteria such as tenancy history, financial history or references. An example of this would be if you were to fail to seriously evaluate an application because of the applicant's race, age or gender. Choosing not to accept an applicant because they are a pet owner is not discrimination. It may seem unfair to some, but owning a pet is not a protected attribute under anti-discrimination legislation; so excluding applicants on these criteria is not illegal. If a discrimination complaint is made, the agency must show that the applicant was not treated differently because of a protected attribute. To protect yourself, the agency and owners you should: Understand the provisions of the Equal Opportunity Act (WA) 1984. Educate property owners regarding these requirements. You can not take instructions which contravene anti-discrimination legislation. Use the same procedure for every applicant ( (e.g. a points system). Document process -show clearly why the successful applicant was chosen. Avoid giving reasons for declining application s- express regret that the applicant was not successful, without commenting on reasons. Train staff to never casually pass comments that may create grounds for a complaint. e.g. a receptionist saying "I know it's hard for young people to find a place" can imply that age was an issue.
If faced with a complaint you will have to demonstrate that your process was fair and not discriminatory. While of course a negative report from another property manager (e.g. damage to a property or unpaid rent) will make it easy to justify not recommending an applicant, every minor negative impression about applicants does not need to be recorded. Stick to the facts and avoid subjective or derogatory comments. Most tenancy decisions are made because the successful applicant was better qualified than other applicants, not because the unsuccessful applicant was no good, so show the reasons applicants were successful in your records. It is helpful if it is clear that the successful applicant came up best on points, so have a system that weighs up all aspects of each application. This might include allocating points for: Earning capacity. Length of employment. Past history as a tenant in relation to maintenance and payment. Other factors important to owner e.g. o o expressed willingness and past record re gardening desire for a lease of the length offered
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o o o
expressed interest in option to renew no requests to keep pets willingness to take property as is.
Privacy Act 1988 In gaining owner approval for a tenancy application, do not overlook the provisions of Privacy Act 1988: Try to gather personal information from people directly and use it as agreed in the course of business. Get permission to gather it in any other way. Protect personal information from misuse and keep it secure. Understand when private information should not be disclosed e.g. to staff who have no part in the decision and therefore no need to know.
Be aware that you cannot add unsuccessful applicants to mailing lists, for example, without their permission. Many privacy complaints are caused by staff having access to information they dont need to know for instance a receptionist looking at a rental application for an old boyfriend. These complaints can be prevented by training staff to respect the privacy of applicants and by only giving access to files to those who need it for their work. Much of what helps to avoid privacy complaints comes down to good business etiquette. Discouraging office gossip, destroying files when they are no longer needed, and working on a 'need to know' basis will all help. PM staff Should Not Collect unnecessary sensitive personal information. Give out personal information to unauthorised parties. Collect sensitive information without consent unless required by law. Allow untrained staff to deal with or hand out personal information. Use personal information for purposes other than the original purpose without permission. Gossip about owners business. Leave files unsecured. Allow staff to access confidential records they don't need for their work. Ethical approach You may be sure that you have judged the applicants correctly and that you know best who should be offered the tenancy, but it is the owners decision in the end. It is unethical to exaggerate the negatives or positives of an application to persuade owners to take your advice.
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If you have any connection with an applicant it is important to stay at arms length from the selection process and to disclose the potential conflict in writing. In this scenario have someone else conduct the reference checks. If owners ask you to conduct a dutch auction among interested applicants for more rent (e.g. due to an unexpectedly strong response and multiple applications) explain that this risks breaching consumer law as it makes the original advertisement misleading. If you have not made the negotiability clear in advertising and an owner insists that the rent must be adjusted then it is best to readvertise at the new price and write to all the applicants explaining the owner has withdrawn the property at the original advertised price and will be readvertising it at the new price. The problem can be avoided by advertising 'negotiable from $X' in the first place. It is then obvious to consumers that the owner is seeking above that figure, so there is no issue of being misleading. The following are requirements of the REBA Code of Conduct can relate to staff conduct when taking and assessing tenancy applications Act fairly and honestly. Do not knowingly partake in misleading and deceptive conduct. Do not engage in harsh or unconscionable conduct. Exercise due skill, care and diligence. Ascertain and communicate material facts relating to transactions to parties affected. Only disclose confidential information if you are sure it won't get back to the person. Make a written disclosure of any significant relationship or possible conflict of interest. Activity 41 Tenant selection MANDURAH 4 Bedrooms $530.00 per week Massive Family Home - great Location 33 RYAN AVENUE, MANDURAH 4 bedrooms (all with BIR's), 2 bathrooms, ideal family home. Large lounge, home theatre, study, double garage, alfresco area, dishwasher, reticulated gardens. The Minskis and the Wallaces have both applied for the property. Both want a 12 month lease. References from past property managers show the following: The Minski family The Minskis last tenancy was for 2 years. They were good tenants overall but didnt care for the garden well. They paid late on 2 occasions. Agency staff found them likeable. The previous tenancy reference can not be checked as the agency closed down. Emily Minski has been
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employed for $50,000 per annum for 2 years. Husband Adam earned $45,000 in the past 12 months but earned 20% less the year before. The children are aged 13, 16 and 19.The Minskis offer to pay the advertised price but want the owners to arrange for lawn mowing included in this. It will cost $40 per week. The Wallace family The Wallaces last tenancy was a 6 month lease prior to Jim taking up an overseas contract. The agent said they paid well in advance, once had a complaint from neighbours about noise and were prickly to deal with. The tenancy before was 1 year and problem free. They took good care of both properties, improving gardens. Jim is a geologist. His tax records show he earned $90,000 pa+ for the past 5 years. Leona earns $30,000 pa working part-time. They have an 8 year old daughter. They have offered $500 per week paying 3 months upfront and monthly thereafter. The property is well kept with a basic garden (never landscaped). The owner wants financial reliability and maintenance of the propertys value. Can you decide which couple you will recommend on the information provided? If so, justify your selection. If not, explain what you will do?
Compare your response with Model Answers.
14.5 Negotiations between tenant and owner

Negotiation is less of an issue in property management than in sales the stakes are lower and many tenants accept the terms offered by the owner if they are keen to lease the property. If however tenants want to negotiate on terms or rent, then you should have the skills to assist the owner in this area. Successful negotiation is dependent upon the ability to manage both the actual issues being negotiated and the people side of the negotiation, to achieve effective outcomes. The primary objective is to arrive at an agreement that is mutually acceptable to all parties without sacrificing the aims of the owner, who you represent. Before undertaking a rental negotiation, ascertain: What are negotiable items for each party? To what extent are these points negotiable? What are the non-negotiable points on each side? Why are these issues non-negotiable? Are there any special circumstances e.g. deadlines to consider?
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Ask appropriate questions to identify the needs and expectations of both parties. The types of questions to ask of owners (if these points were not clarified when taking the listing) may include: Would you consider a longer lease? Is there any room for movement on the rent? Would you be willing to do any work to the property for the right tenant? Questions that could be asked of applicants might include: Will you go ahead if the owner wont put in a dishwasher? How important is the option for a 2nd year to you? Can you pay the asking price if the owner wont discount the rent? Use the questioning skills you have already learned to find out the priorities of the parties without being obtrusive or generating resistance. Use a conciliatory style of questioning, e.g.: If this proposal is not acceptable, how could we change it so you will be satisfied with it?
Successful Property Management negotiators use a range of tools to support their negotiations, such as: Relevant facts and figures e.g. CMA, articles on market trends. Communicate with all parties (sometimes the quiet one is most influential). Choose the right time and way of communicating (some owners are better dealt with face to face others like to mull overwritten information). Match and mirror body language, use listening skills (match your tone and speed to theirs, use sympathetic body language, repeat words back). Sensitivity to feedback during negotiations. The agency-principal relationship and legislation require that you: Act in accordance with the owners lawful instructions. Act in good faith at all times, putting the principals interests first. Exercise due skill and care. Not mislead anyone and disclose all material facts to parties. Keep your principal informed of all relevant information. The basis of an effective negotiation is to be sensitive to the people and firm about the substantial points you are negotiating. Never forget you are representing the owners not the applicants. You can however present what they offer positively and try to find common meeting ground.
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The end result of a negotiation should be a sustainable agreement that all parties can live with. Sometimes your own judgment and advice are needed when owners are unsure of whether to accept what an applicant offers. Give the best advice you can but always let owners make their own final decision. There should never be any inference of overt pressure on either party. You must be particularly careful when negotiating with young people and first time renters. To avoid any suggestion of unconscionable conduct, never pressure anyone to sign now and read the fine print later. Suggest vulnerable people have someone assist them in the negotiation. At times it may be best that they take paperwork away and seek advice before signing it. Interpersonal/negotiation techniques There will be occasions when the tenant is not happy with conditions that an owner insists on (e.g. the amount of rent to be paid, the exclusion of pets) and there seems to be no way to bring the two parties to a meeting of minds. If this situation arises and you know the applicant is the most suitable you have been able to find for the property, your interpersonal skills may become crucial. When communicating with either party, show respect and empathy. Be honest about what will happen next if they cannot reach agreement. When dealing with owners: Be honest explain that you respect their right to insist on certain conditions, but that you may not find another tenant as suitable. Explain the costs in time and marketing expenses if the property needs to be re-advertised. Ask whether the owner can see a solution to avoid the lost rent involved if you go back to square one and begin the campaign again. Talk with the applicant and explain the owners position again: Show you understand their point of view and encourage them to understand where the owner is coming from. Encourage them to offer something to offset what they are asking for. Make it clear that the owner is not in a negotiable mood. If the situation cannot be resolved and the process needs to begin again, at least all parties will have been made aware of the impact of sticking with their position. Sometimes one party walking away can be the catalyst for the other to become more compromising.
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14.6 Notification of successful / unsuccessful applicants

Many property managers give verbal conditional acceptance to the applicant, explaining that the applicant must come into the agency and complete the paperwork and payments necessary to secure the property. The conversation is not legally binding on either party but is ethically binding on the Property Manager. The written agreement should be signed ASAP so that both parties know where they stand. Occasionally a successful applicant may decide not to take up a lease. For this reason it is best if unsuccessful applicants are only notified once the successful applicant has signed the lease. If a prospective tenant completes The REIWA Application for Tenancy (Form 302) and is accepted as a tenant and then decides against entering into a tenancy agreement, they lose their option fee. This is a legally supported penalty under section 27 (2) (a) of the Residential Tenancies Act 1987 and is made clear in Sections 27 and 28 of the Application Form. Once the new tenant has been secured it is important to let all the other applicants know ASAP so that they may continue looking for a suitable property. When telling a tenant the have been unsuccessful, give minimal details. Explain that the owner has chosen another applicant, who best fitted their needs. There is no requirement under the Residential Tenancies Act to give reason for not accepting a tenant. Many Property Managers telephone all unsuccessful applicants themselves. There are also some agencies who use email to communicate the fact that applicants have been unsuccessful. Once the tenancy has been determined, shred unsuccessful applicants application forms to avoid any risk of a breach of Privacy legislation. You can keep the names and contact details of unsuccessful but suitable applicants for a few weeks, in case a suitable property becomes available, with the permission of the applicants e.g. an appropriate tick a box on the form. Communication with unsuccessful applicants should always be positive and professionally worded. Leave the door open for them to call back if they need further information and assistance. If they press to know why they were not selected, shift the focus from them to the successful applicant, saying something like the successful applicant fulfilled all the criteria the owners had set. It is acceptable to not elaborate further in the interests of the privacy of owners and other applicants. If applicants are upset and disappointed, be empathetic. This reduces the chance of disappointment turning to anger, which can lead to a claim. If a complaint seems sensitive and has potential to turn into a claim, advise senior management immediately. Staff should be empathetic while asking complainants to put their concerns in writing.
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The last step of the process is to cancel all advertising, taking down To Let signs, updating web sites and cancelling print advertising. Some agencies let ads run their course (e.g. if prepaid for a fortnight) to build up their list of potential tenants. This is misleading advertising once a lease has been signed, and is not recommended. Summary of key points Get written approval from owners before offering a tenancy. In negotiating a lease you can only offer what owners have authorised. Comply with the agency-principal relationship and legislation. Application processes should be reviewed from time to time to ensure compliance. Unsuccessful applicants should be notified promptly once the lease is signed.
Activity 42
Selecting the right tenant
1. Using the scenarios in the previous activity, list the key points to consider about both applicants.
What is negotiable with each applicant?
Which tenant do you believe will best fill the needs of the owner?
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Outline a counter offer for the preferred applicant.
2. Assume agreement has been reached. Design an email notifying the unsuccessful tenant of the outcome of their application.
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In summary
The application for tenancy is an important legal and property management document. Checking references is the best way of protecting the owner, the agency and the property from inappropriate tenants. The goal of tenant selection is to match the most appropriate tenant with the appropriate property. Consultation with the owner is preferable to ensure that the owner is committed to the tenant. Be mindful of discriminatory practices and other legal requirements such as the Privacy Act when selecting tenants. Both successful and unsuccessful applicants must be informed of the outcome of their application.
Self-check questions 1. What items will you discuss with the prospective tenant when they are completing an Application for Tenancy? 2. How will you check references from an employer and from a friend? What are the differences in the questions you will ask? 3. Why is it advisable that you include the owner in the tenant selection process? 4. Which two Acts are you to consider when selecting a tenant?
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PART 15: Standard Residential Property Lease

Learning Outcomes
This part of the learning materials aims to help you: Complete a Standard Residential Property Lease. Present lease with tenant making them aware of their obligations. Obtain and process bond payments.
Elements:
CPPDSM4010A/4 Complete tenancy documentation and place tenant in property
4.1 Tenancy agreement or lease documentation is produced and completed in line with agency practice, legislative requirements and owner instructions. Procedures for placing new tenant in property are implemented in line with legislative requirements, ethical standards and agency practice. Required government fees and duty are paid in line with legislative requirements. Security deposits are obtained, deposited and recorded as required by agency practice and legislative requirements. Tenancy agreement or lease documentation is served to relevant parties in required timeframes. Types of tenancies are identified in line with legislation.
4.2
4.3 4.4
4.5 CPPDSM4007A/1 Apply knowledge of property management CPPDSM4007A/2 Develop knowledge of property management process 1.4
2.1
Need for demonstrating effective communication strategies in establishing rapport with clients, determining client needs, providing accurate advice, addressing client concerns and dealing with conflict is identified in line with agency practice. Authority documents and other agency documents for property management are identified in line with legislative requirements and agency practice. Property leasing process is identified in the context of legislative requirements and agency practice. Statutory and agency leasing documents are identified, completed and stored in line with legislative requirements and agency practice.
2.3
2.5 2.6
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CPPDSM4007A/3 Handle moneys
3.1
Processes for receiving, recording, lodging and releasing bonds or security deposits are identified in line with legislative requirements and agency practice. Roles and responsibilities of agents in leasing and managing property are identified in line with legislative requirements and agency practice. Strategies for resolving disputes between owner and tenant are identified and evaluated in line with legislative requirements and agency practice. Effective communication strategies for managing conflicts involving clients are identified and evaluated in line with legislative requirements and agency practice.
4.1
4.3
4.4
15.1 The Residential Property Lease

As soon as an applicant is accepted and details of a tenancy are confirmed, a lease is drafted and an appointment made for tenants to sign (e.g. REIWA Form 303 Standard Residential Property Lease - see Appendix 9). This document is commonly referred to as a Residential Tenancy Agreement (RTA). Other forms may also be used if compliant. Discussion about all the negotiable points must occur before signing, so that all agreements are documented well prior to the commencement date. The Standard Residential Property Lease is a legal contract and is binding unless some breach occurs to invalidate it (e.g. Tenant Information Form not given to tenants at the time of signing). It states tenant and owner obligations including: The amount of rent to be paid. The length/term of the tenancy. The security deposit. The number of people to reside in the property, and names of those responsible for the payment of rent and care of the property.
There are serious potential consequences to an agency and /or property manager if a lease is not completed correctly e.g. not properly signed, dated and witnessed, copies not given to parties in a timely way, clauses contravene the Residential Tenancies Act).
If a lease is not completed correctly this can lead to: the lease may not be enforceable the owner may complain and seek compensation disciplinary action by the regulator under REBA Act 1978 may result agencys professional indemnity insurance / reputation may be affected.
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The lease form is set out in two distinct sections: 1. 2. Schedule. Operative part of the lease.
The Schedule
This section is completed by the property manager. It states critical information about the property, the owner, the tenant and conditions of the lease. The information detailed in the Schedule must be identical to that detailed in the Standard Application and Offer of Option to Lease Residential Premises. Where information differs, for instance the rental amount, this may be in breach of the Residential Tenancies Act and may be held to be deceptive conduct with serious consequences under the Australian Consumer Law. 1. Date of signing the lease 2. Address of the premises. Note exact address and the developments name if it is a strata property, retirement complex etc. 3. Name and Address of owner- Requires full name (surname & given names) and business address (not owners home address): Write C/o the Real Estate Agency and give the agencys address. If ownership of premises changes during the tenancy, a tenant must be notified in writing within 14 days of any change in the details previously notified by the owner. The conditions of the agreement apply to the new owner. 4. Name and address of the owners agent: Real Estate Agency. 5. Name and address of tenant Full name, current address(s) for all persons on agreement so they are jointly and severally liable for payments. 6. Number of persons allowed to occupy the premises adults and children. 7. Number and type of pets allowed to be kept at the premises. Special conditions apply to some breeds and this must be included. This will assist with the control of pets being kept at the premises. 8. Period of the Lease: There are two ways the duration of a lease can be laid down. You MUST define the period of the lease. DELETE Part A or B. A. FIXED TERM e.g. for a term of 6 months, 12 months or 2 years. Record the commencement and termination dates. B. PERIODIC Weekly, fortnightly, calendar monthly. 9. Rent The amount of rent payable and whether it is to be paid weekly, fortnightly or monthly. The day on which the rent is to be paid and when the first payment is to be made. The first advanced rental payment cannot be greater than 2 weeks rent (Section 28 - Residential Tenancies Act).
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Tenants Security Bond Must not exceed 4 weeks rent, unless weekly rent is in excess of *$1200, or premises were the owners principal place of residence for the 3 months preceding the letting. Pet Bond *$260 pet bond can be charged per property (not per pet). * Applies to tenancies commencing from 1 June 2011. The premises are being let furnished, unfurnished or partly furnished. If furnished inventory may be provided at time of occupation. Special Conditions Set out in the space provided, or attach as an annexure. Clauses that exclude or modify provisions of the Residential Tenancies Act may make the agreement legally invalid unless exempt. If the Tenancy is for a Fixed Period and Reverts to a Periodic Tenancy then the periodic rent upon expiry of fixed term will be: This allows you to set the rent should the tenant remain on a periodic tenancy after expiration of the fixed term lease. If this is an increase it must be stated in Section 38 of the Standard Application and Offer of Option to Lease Residential Premises and must comply with the Residential Tenancies Act. TENANTS SIGNATURE: Must be witnessed and dated at the time of signing by a person over 18 (i.e. a staff member). The property manager who has signed as the agent cannot witness the document. CORPORATION Complete name of the Corporation and ACN/ABN number. In the presence of: Signed by a director and/or company secretary of the company leasing the property. OWNER/OWNERS AGENT SIGNATURE Agent means a person registered as a sales person or registered property manager /agent under the Real Estate and Business Agents Act 1978. Signature should be witnessed and dated at time of signing. Corporation may require: a. The common seal with the sealing clause. b. Signature and office of persons authorised to sign under a Memorandum of Association. These persons signing are witnessing the contract. Independent witnesses are not required. A true copy of ..... has been received by the Tenant ..... (tenants sign). All persons party to the tenancy agreement over the age of 18 years and not bankrupt must receive true copies of: 1. The lease agreement. 2. Information for tenants booklet. 3. Strata company by-laws if applicable. 4. Any additional documentation e.g. Property Condition Report (if ready) and any instruction manuals the tenant is being given.
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Definition Periodic Tenancy A Periodic Tenancy has no specified term beyond the required notice period. If a fixed term is not renewed at the time of expiry of a fixed term lease, the tenancy automatically becomes a periodic tenancy. A periodic tenancy continues until such time as either the tenant or the owner gives notice of termination of the tenancy (Section 60 (1) (g) and Section 67 of the Residential Tenancies Act 1987). The tenancy agreement document has been designed for use either as a Periodic or Fixed Term tenancy. To write that a tenancy is a Section A term of 6 months or, a Section B weekly tenancy does not make sense from a legal point of view. The correct terminology Periodic or Fixed Term must be used or a legal complication may arise. Definition Fixed Term Tenancy A Fixed Term Tenancy is for a specified period of time and has a specified start and finish date. The tenancy agreement normally contains the provision that, at the termination of the specified period of the Agreement, the tenant may (with the owners consent) remain as a periodic tenant at a reviewed rent, not less than the amount already being paid, but otherwise subject to all the terms and conditions of the agreement. Documentation for a fixed term tenancy is usually prepared by the property manager, and associated costs are paid by the tenant. Due to legal costs, it is unusual for a solicitor to prepare a tenancy agreement for residential premises, unless for a very expensive property. The date the tenancy is to commence is usually the date of possession. The Operative Part The Operative Part of the lease is a set of standard conditions that in most cases do not need to be amended. The Operative Part works together with the Schedule to define the exact terms of the lease the obligations of the tenant and owner. It is sub-divided into the following sections: 1. Lease Refers to premises, rental, period of lease, and possession. 2. The Tenants Obligations Refers to rent, dishonoured cheques, water consumption, security bond, pets, pet security bond, smoking, Property Condition Report, services, telephone, strata company, tenant to keep the premises clean, maintenance-chattels, maintenance good working order, light globes, maintenancegardens, maintenance-swimming pool/ spa, damage and disrepair, repairs, insurance, excess on insurance, alterations to the premises, purposes other than dwelling, water beds/aquarium/swimming pool/spa, laundry, non assignment, indemnify the owner, inspections, tenant unable to attend inspection, monies payable, keys and electronic keys.
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3. The Owner - Covers outgoings. 4. Special Conditions. 5. Default. 6. Holding Over. 7. End of Lease Conditions Return premises to condition as at commencement of lease, condition of swimming pool/spa, application of the pet security bond, keys, lease, movement of chattels, carpet cleaning. 8. Definitions and Interpretation. 9. Privacy Act 1988 Collection Notice. Summary of monies payable Records all monies including bond, (which is broken down into tenant contribution and DHW Bond Assistance), pet bond, rent paid to, subtotal and balance owing. It is essential that Property Managers understand the Operative Part of the Standard Residential Property Lease and can outline to applicants and owners the content of these clauses. Property Managers should not however give legal advice. Owners and applicants should seek their own advice if they require a technical question answered or further interpretation of how breaches of these clauses might impact on the tenancy
General Points
A tenant must Not give a false name or place of occupation. Notify owner/ property manager of any change to their place of work during the tenancy, and Give the owner a forwarding address at the end of the tenancy. Under Section 48 of the Residential Tenancies Act owners bear outgoings in respect of residential premises. It is a term of every agreement that the owner shall bear all rates, taxes or charges imposed in respect of the premises under any of the following written laws: (a) The Local Government Act 1995. (b) The Land Tax Act 2002. (c) Any written law under which a rate, tax or charge is imposed for water services, as defined in the Water Agencies (Powers) Act 1984, other than a charge for water consumed.
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Activity 43
Drafting an Agreement
1. Draft a paragraph explaining Clause 2.35 of the Operative part of The Residential Tenancy Lease, as you would explain it to an applicant.
2. Draft a paragraph explaining the key points of Clause 7.3 of the Operative part of The Residential Tenancy Lease to an owner.
Signing the Lease Applicants will normally sign their lease agreement at a face-to-face appointment. It is usual to accurately complete all details of the lease prior to this meeting. During the appointment, you should clearly outline the tenants rights and responsibilities. You should also: Provide time for the tenant to read the agreement thoroughly. Ensure all important items such as rent, payment dates and any additional conditions are understood by the tenant. Explain how rent is to be paid. Discuss the Property Condition Report and the tenants role in verifying its accuracy.
Most agencies require the tenant to pay for the bond and two weeks rent in advance at the time of signing. The tenant should be informed of the total of these amounts prior to the appointment, including the pet bond if that applies, and should be made aware of the acceptable methods of payment. Some agencies only require the tenant to pay these amounts prior to the beginning of the tenancy and not specifically at the time of signing the lease. Upon payment, give the tenant a detailed receipt immediately.
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Compliance issues You must be qualified to enter into the lease on the owners behalf. You need proof that the person leasing out the property is entitled to do so. Use compliant documentation (e.g. from Dept of Commerce or REIWA). The contract must be explained so that all parties understand it. Relevant fields must all be completed properly. Tenants must be given a copy of the agreement at the time of signing, and a fully executed copy within 21 days of signing. Tenants must receive a receipt for rent / bond payments immediately showing date, their name, the amount and address of the premises. Tenants must be given a copy of any strata company by-laws. Tenants must be given the form titled Information for Tenant (A Statement of your Rights and Responsibilities) Schedule 2. Tenancy agreements cannot require penalties or damages if the tenant defaults. Only a magistrate can make this type of order. If the lease 'contracts out' of any clauses these should be explained. Security deposits - Residential Tenancy Bond The main compliance area which generates revenue for the WA State government is the Bond. A rental bond is a refundable security deposit paid by a tenant at the start of a tenancy as security against them breaching the terms of the tenancy agreement. It is repaid at the end of a tenancy unless the tenant damages the property or fails to pay rent. The property manager and/or owner cannot spend the bond. The Department of Commerce brochure on Bond Administration states that park operators and private owners must lodge bonds within 14 days but that agents must lodge bonds as soon as possible "normally understood as the next working day". The bond must be paid into a 'Tenancy Bond Account' either with: the State Government's Tenancy Bond Administrator or
an authorised financial institution (bank, building society, credit union).
These are joint accounts in the names of all parties to the tenancy. It is recommended tenants sign a Combined Form 1 and 8 Record of Payment of Security Bond/Lodgement of Security Bond Money . Financial institutions may have their own version of this form. Under the Residential Tenancies Act 1987 it is necessary to provide the tenant a record of payment. The bond always remains the tenants unless claimed by legal means through the court or the tenant agrees to release it to cover an obligation.
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A bond can only be used in the case of a breach of agreement, e.g. unpaid electricity, gas, or water costs, repairs due to damage or neglect by tenants, or for rent owed by the tenants (Section 29 of the Residential Tenancies Act) provided the tenant releases it for this purpose or a court orders this use. There are significant legal requirements and penalties for misuse of a tenants bond. (See Divi 1, Part IV Residential Tenancies Act). From 1 June 2011, no more than four times the weekly rent can be charged as a rental bond unless the rent is more than $1200 per week, or the owner lived in the premises (as their main residence) for at least 3 months prior to the tenancy. In these circumstances the bond is negotiable. Where a tenant is allowed to keep a cat or dog, an additional bond of $260 is allowed to meet the cost of fumigation at the end of the tenancy. Note if part way through the tenancy a new tenant pays out bond monies to a former tenant, both the new tenant and the original tenant should sign a REIWA Form 316 Form 9, Notice of Variation of Security Bond to formally put the bond in the new person's name. A variation can also be made to top up the bond when a rent increase applies after 6 months. Example of REIWA Form315 Lodgement of Security Bond Money appears at Appendix 10.
Activity 44
The Residential Property Lease
Complete the following: 1. A Residential Tenancy Agreement (Appendix 9), for either the Minskis or Wallaces (whoever you selected as a tenant previously through the activity). Use the property identified in the activity. You may create information as required. Note any areas in which you had difficulty completing for follow up.
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15.2 Placing a new tenant in a property

It is important that when a tenant begins their lease and moves into a property, they are accorded their rights under the Residential Tenancy Act and understand their obligations. The following summarises obligations placed on tenants and owners under the Residential Tenancies Act. These appear in more detail in the Residential Tenancy Agreement form. Tenants should understand that their obligations include: Pay the initial rent and bond required. Sign all documentation. Return the condition report within the agreed time. Pay the rent due accordingly. Keep the property clean. Ensure the property is not damaged. Advise of any damage or required repairs ASAP. Seek written consent before adding fixtures (e.g. picture hooks). Provide copies of new keys when locks are changed. Allow entry to the premises permitted under the Act. Provide appropriate notice if vacating. Leave the property as it was at the start, fair wear and tear excepted. Return all keys upon vacating. Provide a forwarding address if requested in writing.
Owners and their agents have obligations when placing a tenant in a property- these include: Provide tenants a copy of the lease agreement within 21 days. Provide Form 310 Information for Tenants (A Statement of Your Rights and Responsibilities) Schedule 2 at time of signing. Issue receipts for bond and rent paid at the time of receipt. Deposit bonds in a Tenancy Bond Account or with the Tenancy Bond Administrator within 14 days. Provide property in clean, safe, secure condition with essential services such as water.
Ongoing obligations include:
Attend to maintenance. Enter the property only as permitted. Provide appropriate notice of rent increases, inspections and if vacant possession is required. Make a final inspection and report to the vacated tenant.
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While these obligations apply under the Residential Tenancies Act 1987 for all tenancies, special terms and conditions can be added that afford the owner better levels of protection against loss or damage. These must be included in the Tenancy Agreement. For example, an obligation for the tenant that the carpets are to be professionally cleaned on the last day of occupancy and a receipt provided accordingly. Confirmation of tenancy Many agencies provide the tenant with a letter at the time of signing. This should be written in a friendly tone and detail useful information such as: Agency and Property Manager contact details. Maintenance Procedures including Emergency out of hours numbers e.g. for plumbing or electrical repairs. Strata by-laws, Utility and Council information e.g. Garbage / recycling. How rent can be paid and what happens if its late. Process if keys are lost. Any information that helps with communication e.g. agency policies.
Keys The keys should be provided to the tenant on the day before the tenancy begins or on the day it begins. Ensure that all monies owing have been paid before providing the keys, (ensure funds are cleared). Cancel advertising The last step of the process is to cancel all advertising. This might entail taking down the To Let sign in the agency window, taking the listing off the web site and cancelling any scheduled newspaper advertising. Some agencies will let ads run their course (e.g. if they have been prepaid for a fortnight) as a way of building up their list of potential tenants. This is misleading advertising once a lease has been signed, and is not recommended.
15.3 Government fees and duties

Lease duty is no longer charged on residential leases in WA. GST does not normally apply to residential property leases but there may be some circumstances where GST may apply e.g. where a developer built a property for resale and then leased it because they were unable to sell in the short term. Owners who are liable for GST should be aware of their obligations and seek their own tax advice. Some kinds of leases have complex tax rules - these include retirement living developments, serviced apartments, and remote area employee accommodation. If involved in leasing any of the above, you should ask owners to seek tax advice on their GST obligations.
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15.4 Documentation is served in required timeframes

Under the Residential Tenancies Act, you must provide the tenant with a receipt for the payment of the bond immediately when payment is received. This is also the standard for receipts for rent when an agency manages the property. The Act stipulates that the receipt should specify the: Date on which the bond was received. Name of the person paying the bond. Amount paid. Premises in respect of which it is paid.
When a bond is lodged with the Bond Administrator, they send paperwork to the tenant and the owner. If bonds are deposited in another Bond account, the agency must provide copies of documents relating to deposited monies to the tenant within 28 days of lodgement. The agency must provide tenants a copy of the signed lease agreement within 21 days and the form Information for Tenants (A Statement of Your Rights and Responsibilities) Schedule 2 must be given at the time of signing the lease agreement. A copy of this appears at Appendix 12.
Activity 45
After signing the Tenancy Agreement
Identify the tasks you would do, as a property manager, after the signing of the Tenancy Agreement.
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In summary
The Residential Tenancy Agreement (RTA) is an important legal document. At the time of signing the RTA, it is important that the conditions of the lease are understood by the tenant. The agency procedures are to be followed when signing the RTA, handing over keys and receiving and receipting funds from the tenant. There are significant legal implications related to the bond if it is not deposited correctly.
Self-check questions 1. What are the legal implications if an RTA is not completed correctly? 2. Which Sections of the Residential Tenancies Act relate to the completion of the RTA? 3. What are the regulations relating to receipt and handling of bond monies? 4. What should you provide the tenant after the RTA has been signed?
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PART 16: Record tenancy arrangements

Learning Outcomes
This part of the learning materials aims to help you: Process tenant, owner and property information in a property management database. Describe the importance of Trust account processes.
Elements:
CPPDSM4010A/4 Complete tenancy documentation and place tenant in property CPPDSM4010A/5 Record tenancy arrangements
4.4 Security deposits are obtained, deposited and recorded as required by agency practice and legislative requirements.
5.1
Tenancy database is updated to record details of tenancy arrangements in line with agency practice. Trust account transactions are accurately recorded to show moneys taken in and disbursements made in line with agency practice, tenancy agreement or lease documentation, and legislative requirements. Processes for receiving, recording, lodging and releasing bonds or security deposits are identified in line with legislative requirements and agency practice. Processes for receiving, recording, processing and disbursing trust monies are identified in line with legislative requirements and agency practice. Processes for preparing and forwarding financial statements to owner are identified in the context of legislative requirements and agency practice.
5.2
3.1
3.2
3.3
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16.1 Record keeping

Information management systems provide an opportunity to record all aspects of property management transactions and arrangements. Tenant data should never be released unless authorised in writing by the tenant. Be aware of the provisions of the Privacy Act, and protect the information kept on the agency database. Be mindful of the fact that tenants and applicants can request a copy of their records when noting comments into the database. A lack of courtesy and objectivity in the way you and your staff make notes can cause the agency to appear unprofessional and expose you to complaints or legal disputes. Important property management records include: Original versions of all tenancy documentation with tenancy periods. Receipts. Maintenance and repair records. Correspondence with all parties involved in a property. Notes of telephone conversations e.g. with tenants, owners. Names/details of tenants who applied for or lived in the property. Rental charges, rent review dates, subsequent changes in charges. Types of tenancy agreements for each lease. Tenancy renewals. Reasons for termination of leases. Vacancy periods. Copies of Property Condition Reports. Copies of notices of impending routine inspections. Copies of completed routine inspections. Copies of Notices e.g. Notice to Vacate, Breach, related documents. A record of the results of notices and correspondence. Copies of all communication to the owner and lessee, pertaining to each tenancy; including correspondence, telephone calls and emails.
Property Management systems A property management system provides rapid and timely access to information. The two most common to the real estate industry in Western Australia are REST and GeeDee but there are many other effective systems on the market.
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These typically record: Money received for or on behalf of any other person. Records of payments. Bond receipts. Property details: address, property description, strata corporation manager, condition reports, maintenance history and taxes. Tenant data: contact details, beginning/end dates, payment history, correspondence etc. Owner information: contact details, instructions, history of disbursements. Correspondence/conversations: tenants, owners and service providers.
Websites for two systems which are currently well used within WA are REST - www.rockend.com.au GeeDee - www.geedee.com.au These systems should have appropriate back-up protocols. Some of these records, however, should still be stored in hard copy, particularly contracts. In most databases, record keeping follows a logical sequence, for instance, the owners details are entered first, a property is then associated with the owner and then a tenant is associated with the property. This is typically a fairly straightforward process of entering information specified in the Residential Tenancy Agreement and Exclusive Management Authority. The most important aspect of this process is to ensure that information is entered accurately and according to system requirements. It is also important to be as thorough as possible, e.g. adding emergency contact and maintenance information where possible.
16.2 Financial transactions Income and disbursements

Through the property management system, rental payments can be tracked, owner disbursements undertaken, and payments to service providers undertaken in efficient ways. These functions carry significant legal and financial responsibility and therefore are normally supervised by more senior property management staff. Databases are typically able to conduct the following financial tasks: Owner disbursements e.g. forwarding of rental income (less fees) to owners. This can be quite complex if rental income is split between different accounts, or a number of joint owners. Deduction of fees, taxes and payments from rental income. Development of reports to assist in monthly reconciliation of database records with bank records. Recording tenant bond.
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Issuing receipts for payment of rent. Issuing monthly owner statements. Issuing taxation documentation. Issuing service charges, such as water usage, to tenants. Processing payments for repairs and maintenance and maintenance account records.
Training and experience in agency procedures and the database system is normally required to conduct the above tasks successfully. Effective record keeping in agencies is critical for legal, financial and business reasons. This is because: It is mandatory for all businesses to maintain accurate business records, including those of owners for a minimum of 7 years. Agencies have a responsibility to keep proper records under Section 34 of the Residential Tenancies Act. Money that is held in trust for owners must by law be audited annually. Poor record keeping risks a negative audit result and threatens the overall license of the agency. The agency needs accurate historical records of each propertys condition, maintenance and improvements. It helps ensure tenants pay the right amount and pay on time. To ensure ongoing inspections and tenancy renewals are conducted in a timely manner you need good records. It helps ensure accurate, timely disbursement of rent and reports to owners. Complaints and subsequent court action can arise long after a tenant has vacated. Effective records are needed to defend any claim.
Clearly, a professional property management organisation needs effective record systems.
16.3 Setting up a new tenancy

Information for setting up a new tenancy should include: the name of the tenant the date of tenancy commencement the rent to be paid the expiry date of the tenancy the bond paid.
In such a system, this data is then linked to the owner and property data whose details should already have been set up in the system.
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Information for setting up a new owner should include: The name of the owner/s. Postal address. Contact numbers and email. Bank account details. General notes may include who the primary contact is if more than one owner, emergency contact/power of attorney.
Information for setting up a new property should include: Full address of property. Commencement & expiry date of management authority. Rent rate & expenditure limit (if any) for maintenance. All the fees applicable. General Description of the property and any special conditions relevant to it, including any current compliance issues e.g. whether it has mains powered smoke alarms and two RCDs. Advertising description. Key number. Who the property manager is. Strata manager (if applicable).
This simple process facilitates the receipting of rent against the new tenants name, and allows automatic calculations such as the new rent paid to date. It also facilitates ongoing management of the tenancy in accordance with the agencys guidelines and the clients instructions. Property managers commonly use both manual filing systems and computer database information systems to keep accurate records on tenancy transactions. Manual filing systems can consist of lockable filing cabinets with files for: Owner. Property. Tenant. Information under the owners name or property name.
Some agents prefer to keep all information in one file by using dividers to split the categories in Owner and Tenant.
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16.4 Daily processing

An effective records management system is based on daily processing of property management records underpinned by thorough agency procedures. Daily processing typically involves: Entering new owners, tenants and properties into the database. Entering the details of conversations with owners, tenants and service providers in the appropriate input boxes. Issuing various notices such as inspection and renewal notices. Issuing statements for owners and receipts for tenants.
Most Property Management Systems run a calendar that automatically schedules activities such as inspections, statements and reconciliation reports according to parameters set by the agency. A rule might be that inspections take place on a rental property every three months. Agencies also usually have procedures to control database usage. These can relate to: How information is entered. What should be entered. When information should be entered. Who can enter, view or produce certain information. Who can conduct financial transactions and view financial information.
These procedures need to comply with statutory obligations, particularly for the operation of trust accounts and trust account auditing standards. The agency also needs to keep records of the bond payment stipulating: Date on which the amount was paid. Amount paid. Name of the financial institution to which the amount was paid. The name and number of the account into which the amount was paid (that is if the account was a private trust account).
This information can be recorded on the Record of Payment of Security Bond form see Appendix 11. Where proper records have not been kept, significant penalties apply. As well as keeping accurate records you must follow prescribed processes when handling Bonds and Trust Moneys. For example:
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LODGING A BOND
Information on who holds the security bond during the tenancy
When a tenant pays a bond, the landlord must issue a receipt immediately. Where a bond relates to a residential tenancy agreement the receipt must include the: o o o o name of the person who paid; amount paid; date on which it is paid; and address of the rental premises.
If a real estate agent is handling the property, the agent should deposit the bond as soon as possible into a 'Tenancy Bond Trust Account' held with a financial institution, or into an individual tenancy bond account held by the Bond Administrator in the joint names of all parties to the tenancy. Separate bond accounts need to be opened for each tenancy. Under the Residential Tenancies Act 1987 there is no prescribed form for lodgement of bond money. It is suggested that you use a Combined Form 1 and 8 Record of Payment of Security Bond/Lodgement of Security Bond Money as the Acts require a record of payment (specifically Form 1 under the Residential Tenancies Act 1987) be given to the tenant following lodgement. If lodging a bond with a financial institution, they may have their own form. For two or more tenants the names and signatures of each tenant is on the lodgement form so that no tenant's share of the bond can be disposed of without their agreement. Record of payment The landlord must keep a record of the bond payment, which includes the date, amount, name and number of the account into which the amount was paid and the tenant must be given a copy of the lodgement form. Form 1 Record of Payment of Security Bond is a prescribed form in Schedule 4 of the Residential Tenancies Regulations 1989. The Department has combined Form 1 Record of Payment of Security Bond with its own Form 8 Lodgement of Security Bond Money for ease of use. If the Bond Administrator holds the bond, the tenant will receive a record of the payment directly from the Department. If the bond is held in a financial institution, the landlord should give the tenant a copy of the lodgement form as the record of payment required under the legislation. It is an offence if the bond is not paid to the Bond Administrator or a financial institution within 14 days of the persons receipt of the bond, or in the case of a real estate agent as soon as practicable after the agents receipt of the bond. Lodging bonds with the Bond Administrator When lodging a bond with the Bond Administrator DOC suggests landlords use a Combined Form 1 and 8 (Record of Payment of Security Bond/Lodgement of Security Bond Money). The publication, Bond administration - A guide provides useful information to real estate agents who want to lodge security bonds with the DOC's Bond Administrator. Summarised from
http://www.commerce.wa.gov.au/consumerprotection/Content/Real_Estate/Renting_and_tenanc y/Bonds/Lodging_a_bond.html
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Activity 46
Property Management Database
Once the tenancy agreement is signed you will need to record tenancy information on the property management database. What information will you need to enter?
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In summary
All agencies carry significant record keeping responsibilities with potential legal implications. There are a number of Property Management Systems which can assist in the control of information in agency databases. These must be kept secure and backed up appropriately. Agency databases are critical in conducting and monitoring financial transactions and in protecting the agency in case of future disputes or claims. Thorough, accurate daily record keeping processes are central to effective property management.
Self-check questions 1. What processes will you use to maintain contact with the owner? 2. What are the effective features of the database at your agency? 3. What would you identify as effective features if you were not with an agency? 4. What are the legal implications if proper records are not maintained? 5. How long should these records be kept?
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PART 17: Residential property

Learning Outcomes
This part of the learning materials aims to help you: Identify the rights and obligations of owners and tenants. Complete a Property Condition Report (PCR). Carry out a Routine Inspection. Identify the responsibilities in regard to maintaining a rental property.
Elements:
CPPDSM4016A/1 Implement conditions of lease or tenancy agreement.
1.1 Rights and duties of tenants and landlord or agents during the lease or tenancy agreement are identified in line with ethical standards, legislative requirements and agency practice. Inspections of managed properties are conducted and condition reports are prepared in line with lease or tenancy agreement, landlord instructions, legislative requirements and agency practice. Enquiries from tenants and landlords regarding managed property are handled promptly to enable high quality service delivery in line with agency requirements. Appropriate rapport is established with tenants and landlords. Appropriate interpersonal communication skills are used to clarify enquiries from tenants and landlords. Enquiries from tenants and landlords are resolved in terms of lease, tenancy agreement or management agreement or are referred to appropriate people in line with agency practice. Roles and responsibilities of government agencies regulating lease and management of property are identified in relation to agency practice. Legislation regulating the lease and management of properties is identified in the context of agency practice. Principles of property management are identified in the context of legislative requirements and agency practice. Ethical and conduct standards and key principles of consumer protection, equal employment opportunity and privacy legislation in relation to property management are identified in the context of legislative requirements and agency practice.
1.2
CPPDSM4016A/2 Respond to enquiries from tenants and owners
2.1
2.2 2.3 2.4
CPPDSM4007A/1 Apply knowledge of property management.
1.2
1.3 1.5 1.6
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CPPDSM4007A/2 Develop knowledge of PM process. CPPDSM4007A/4 Identify roles and responsibilities of agency personnel in property management.
2.7
Procedures for managing leased properties are identified and assessed in line with legislative requirements and agency practice.
4.1
Roles and responsibilities of agents in leasing and managing property are identified in line with legislative requirements and agency practice. Effective communication strategies for managing conflicts involving clients are identified and evaluated in line with legislative requirements and agency practice.
4.4
17.1 Tenancy
Each party to a tenancy agreement has rights and responsibilities under the Residential Tenancies Act 1987. It is a serious matter if a tenant, property owner or property manager breaches these. Rights and obligations under Residential Tenancy Agreements The Residential Tenancies Act 1987 places obligations on tenants and owners. While these obligations apply to all tenancies, special terms and conditions can also be added to the tenancy agreement (bearing in mind the contracting out provisions), to afford the owner better levels of protection against loss or damage e.g. the need to have carpets professionally cleaned by an approved contractor. Failure by the owner and tenant to comply with conditions set out in the tenancy agreement can result in either party issuing a breach notice. Property managers should ensure the tenant and owner are fully conversant with the terms of the tenancy. Standard terms and conditions should be explained, and any additional terms negotiated to the satisfaction of both parties before the tenancy agreement is signed. A copy of Form 303 Standard Residential Property Lease (tenancy agreement) is provided at Appendix 9. REIWA form 310 Information for Tenant (A Statement of your Rights and Duties) appears at Appendix 12. This is a government mandated document that all tenants must be given and owners can also benefit from reading it. The table following offers a useful summary of some of what the Act states:
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Owners obligations
Provide all required documentation, signed Issue proper receipts for bond and rent paid Pay all rates, land tax and insurance Hold bonds in a trust account, an individual account or with the Bond Administrator Provide a property that is clean, and in good repair at the time of letting Provide a property that is safe and secure Attend to maintenance Enter the property only as and when permitted Provide appropriate notice of rent increases Provide the appropriate notice if vacant possession is required Complete major garden maintenance (e.g. tree lopping) Control pest and vermin
Tenants obligations
Pay the initial rent and bond required Sign all documentation Tenants are not obligated under the RTA to return PCR Comply with all conditions of the tenancy agreement Never sub-let without the owners permission Pay the rent due accordingly and on time Keep the property clean Ensure the property is not damaged Advise of any damage Seek written consent before adding fixtures (e.g. picture hooks) Provide copies of new keys when locks are changed, with owner's permission Advise of any damage/ required repairs within 3 days Allow permitted entry to the premises Provide appropriate notice if vacating Leave the property as it was at the start, fair wear and tear excepted Return all keys upon vacating Provide a forwarding address if requested in writing.
Some of these responsibilities can be 'contracted out' of as discussed earlier.
17.3 Insurance cover

As already discussed, insurance is very important for owners of rented properties because of the potential for tenants to cause damage to the property or to injure themselves or guests. It is mentioned again to emphasise that it is not only needed to protect the owner's investment but also as part of their duty of care to their tenants. It is not acceptable for owners to decide to 'carry their own risk'. If an owner has inadequate insurance and a tenant is injured or killed on the property, the consequences can be very serious for all concerned. If owners are inadequately insured then those who have suffered a loss may seek damages from the managing agent. For this reason you should always ask for proof of insurance policies and have systems in the office to ensure that owners update these annually. Ask specifically about:
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Public Liability Insurance this is usually part of Building or Landlords' insurance and is essential to cover personal injury claims. Without this cover owners expose the agency to being joined in a claim. It is not advisable for owners to simply continue a policy they had while in residence - they should seek expert advice to ensure that they have suitable cover. Their old building insurance may not cover fittings and may be void if they are not personally in residence. If the agency is involved in paying insurance for owners, this responsibility it must be carried out like clockwork. Staff must understand the importance of systems set up to manage the payment of premiums to avoid claims against the agency, but should not advise on insurance or complete insurance documentation on behalf of the owner.
Activity 47
Insurance
1. A new owner has approached you about listing his 2 bedroom triplex as he is going to work interstate. He intends to continue the same building policy he had while living there and simply cancel the contents policy. Is this advisable? Why?
What will you do?
What should you be careful not to do?
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Activity 48
Tenant and owner obligations
a) Refer to the property lease form at Appendix 9. List below the items identified as Tenants and Owners Obligations. Tenant:
Owner:
b) Outline the conditions under which a tenant is allowed a pet.
17.4 Property inspections

Property Condition Report (PCR) A PCR describes the condition of a property at the beginning of the tenancy and is used to conduct the Bond Inspection. In some cases the report is also completed during the tenancy as part of a property inspection (this is not usual but may happen if a tenant is already in residence and a report hasnt being done previously). This report allows an item by item description for each room and external areas of the property, as well as documenting what is damaged and/or not working.
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The PCR is considered a vital document by Property Managers for compliance and practical reasons. Failure to complete a PCR is likely to be a breach of sections of the REBA Code of Conduct: 4. An agent must act in the best interests of his or her principal except where it would be unreasonable or improper to do so. 9. An agent must exercise due skill, care and diligence. A PCR provides a legal record of the agreed condition of the property at the time of leasing. At the end of the tenancy the property should be left in a condition comparable with what the PCR shows was its condition when the tenancy began (fair wear and tear excepted). If a property is let several times, an updated PCR can be an important record of changes to the condition of the property over time. At the commencement of a tenancy you may have noted that paint on gutters and fascias were powdering. 12 months later if it has not been attended to, it could well be peeling and flaking. During the course of a tenancy, if major maintenance works are carried out (e.g. carpet renewed, hot water system replaced, painting done) a notation should be made on the PCR to enable accurate re-assessment of the property at the time of the final inspection. The tenant should receive an amended copy and initial it. The refund of the tenant's bond rests on the documented evidence of the condition of the PCR, so it is vital to be fair to the tenant and to protect the owner's interests. Tenants may request a PCR is done if you do not provide one. A PCR forms part of the contract, providing it is specifically referred to in the Tenancy Agreement. (This is the case with the standard REIWA agreement). It should be carefully prepared, concise and accurate. Many disputes arise out of carelessly prepared PCRs where the degree of disrepair, lack of cleanliness, deteriorated state of gardens etc has not been adequately documented. When carrying out the bond inspection, it is almost impossible to accurately assess whether the tenant is responsible for damage if the original record is not detailed enough. The property manager needs to recognise the importance of a carefully prepared PCR ensuring that it is concise and accurate and use it tot continually update the owner regarding the condition of the property and recommend any necessary maintenance. A claim against the tenants bond to reinstate the property to the owners required standard will often lead to a dispute without an accurately documented PCR.
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An arbitrated decision will often be given in favour of the tenant. in that case Dated signed photos are important, as they prove exactly what condition the property was in if any dispute arises. If possible a copy of the PCR should be handed to the tenant at the time of signing the agreement. If this isn't possible it should be sent to the tenant soon after the commencement of the tenancy. Within 7 days of receiving the PCR, the tenant should return the document to the property manager, signed and noting any variations. The onus is on the tenant to return the document within the prescribed time and failure to do so will result in the unsigned copy kept by the property manager, becoming the basis of Security Bond disbursement at the expiration of the tenancy. Most agencies provide a PCR to protect the owner's interests. For it to be legally valid, the tenant must receive a copy and it is preferable they sign to say they agree with it (or amend it). Sample PCRs (REIWA Forms 298 and 306) appear at Appendix 3 (306 is used for Flat/Units). Amendments to PCR When a tenant adds comments to the initial PCR you must examine these. Where you feel comments are inaccurate, make a time to meet at the property and check through each comment one by one. You should have already advised the owner to bring the property to an acceptable standard for letting as required by the Act, or tenants may have accepted a property in as is condition. Either way you need to establish agreement as to the state of the property so it will be maintained in that condition. Inventory An inventory is a list of the furniture and chattels that remain in the property during letting (those which are not fixtures). It should detail the condition of each item (brand, make and serial numbers of appliances). There is no set format for preparing an inventory of furniture. It is recommended that items be listed room by room following the layout of the PCR. Each room should be viewed meticulously and contents recorded. Leave provision at the end of each line in which to write any relevant comments at the time of the final inspection. It is worth considering taking a photographic record of each room of a furnished property and particularly unique and special items as theft by a tenant is not usually covered by the owners contents insurance policy.
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Activity 49
Property Inspection Report
a) Complete the Property Condition Report at Appendix 3 on the property in which you live. (For students attending class this can be done from memory or as a homework task.)
Discuss with your colleagues or facilitator. Compare your PCR with the completed example in your e-Learning resources. Routine inspections Routine inspections fall between the PCR and the final inspection. They are sometimes referred to as periodic or interim inspections. The tenant should be notified in writing of any intended inspections. A copy of REIWA Form 318 Form 19 Notice of Intended Inspection is in Appendix 13. Management instructions will determine how often routine inspections are needed. Some owners will look to the agency for advice on this. The norm is for the first routine inspection to be carried out after the first six weeks and then quarterly. This gives a good indication of what to expect at the final inspection. It is an opportunity to make recommendations to the tenant and to the owner re any maintenance or improvements. Section 46 of the Residential Tenancies Act highlights the tenants right to quiet enjoyment of the premises. Owners may only enter the premises if the tenant allows this or under one of the following requirements: Inspection of premises at least 7 days written notice is given specifying a date and time when the inspection will occur. The time should be reasonable and tenants are entitled to be present. Inspection or carrying out necessary repairs or maintenance 72 hours notice and the owner/property manager/ tradesperson may only enter at a reasonable hour. During the last 21 days of the tenancy inspections may be scheduled to show prospective tenants through - these must be at a reasonable hour and reasonable notice given. You can inspect a property while collecting rent not more than once every four weeks.
Reasonable hour can theoretically be any day or time unless the tenant advises on reasonable grounds that the time is unsuitable. The Department Of Commerce brochure 'Renting Out Your Property states that: The Act doesn't define reasonable because all tenants have different circumstances e.g. some sleep during the day. If you can't agree on what is reasonable a court may have to decide.
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If you give proper notice and a tenant does not advise you that the time is unsuitable, you can use a spare key to enter if you have advised this will happen. If entering the property unaccompanied, be especially careful: - Lock up securely and be aware if there is a security alarm. - Don't let pets in or out (assuming pets are allowed.) - Leave a business card or note confirming the inspection has been done. Even with proper notice you can't enter if a tenant says that you may not enter - this is trespass. Again you may have to apply to the court. The routine inspection report is a report from the agency to the owner as to how the tenant is caring for the property and to advise the owner of any maintenance items that require attention now or in the future. Inspection reports are not necessarily confidential - some Property Managers leave a full copy for tenants so they can see what items including maintenance have been recorded. At the very least, tenants are entitled to know whether the inspection was satisfactory. If the property is less than satisfactory, a letter is written asking that the matters be attended to or stating that the presentation of the property was not up to the standard required. If the property has been damaged or is deteriorating through negligence, the property manager should advise the tenant that the property will be reinspected. In this case, a Notice of Breach is issued, setting a date and time at least 14 days hence, asking the tenant to be present, if necessary. It is good practice to ensure that the tenant has received the letter, advising of the re-inspection, by making a phone call. It is important not to issue a routine inspection report that bears a gloomy tale of tenant neglect without advising the owner that necessary follow up action has been taken. Check that copies of all correspondence between the property manager, owner and tenant are filed and a copy of the report is provided to the owner as soon as an inspection has been carried out. Owners want to be reassured that their property is being well maintained. It is essential the property managers report the over all condition of the property to the owner at the time of the routine inspection, regardless if it has been caused by the tenant. Tenants can be in properties for long periods of time. A vital part of managing the property for the owner is to ensure their investment is kept well maintained, with the ideal time to note any issues being at the routine inspection .Recommendations for any maintenance required would be appreciated by the owner including quotations of approximate cost. Safety and risk management during routine inspection Concerns relating to security during property inspections have increased and The Real Estate Institute of Australia has attempted to clarify the legal rights
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and obligations of real estate property managers and owners as a result. These were touched on earlier when discussing showing properties to applicants. While resident tenants may seem less likely to be a threat there is a need for safe practises with any inspection. Summary of risk management with routine inspections Property managers must minimise the risk of theft or property damage during routine inspections. The agency is responsible if the property manager acts negligently or does not exercise reasonable care e.g. failing to lock up after an inspection. The agency has a duty of care towards persons entering premises when conducting property inspections. Agencies must act to keep employees safe and ensure that staff are adequately trained and supported in their duties e.g. ensure other employees know where PM staff are going, in what order and when they will have finished, especially if an inspection is after hours.
REIA Guidelines on Property Inspections appear at Appendix 14.
17.5 Maintain property condition

Under section 42 of the Residential Tenancies Act, owners must hand over premises to tenants at the commencement of the tenancy in a good condition (unless this clause is 'contracted out'). This means ensuring that the premises and chattels (furniture, household appliances, etc.) are reasonably clean, in good repair and legally compliant e.g. in relation to smoke alarms, RCDs etc The Standard Residential Property Lease (Section 12) should clearly identify if the property is let unfurnished, furnished or partly furnished. Tenants have certain avenues they can pursue if the property is not in a suitable state (and as they viewed it) when they move in. Unless they contract out of their rights under the Act they can: Lodge a variation on the PCR within 7 days. Complain to the agency and ask for rectification. Lodge a breach notice. Complain to the Department of Commerce. Seek a discount on the rent until the matter is rectified. There is no obligation for the owner to discount the rent pending repairs, but a magistrate may order compensation in some cases.
Obviously any of these actions is a bad start to the tenancy. It is much better to have properties in good condition in the first place. Apart from health and safety issues, dirty run down properties with outstanding maintenance become less able to generate maximum rental income and will also lose capital value if allowed to deteriorate over time.
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The responsibility for the cleanliness and maintaining the rented property on a day to day basis rests mainly on tenants during the tenancy with all maintenance and repairs such as tree pruning, cleaning gutters, electrical and plumbing repairs, general repairs is the responsibility of owners. Owners are required to 'maintain the premises in a reasonable state of repair having regard to their age, character and prospective life'. Property managers must act promptly on requests once they are approved by owners. The practice of waiting until next month or financial year to accommodate owners cash flow or tax needs should only ever be considered for minor matters. No tenants health or safety should ever be put at risk by delaying repairs that constitute a safety issue. Preventative maintenance Owners should be encouraged to carry out annual maintenance programs rather than allowing the property to be continually subjected the repair of breakdowns. Cyclical maintenance in residential properties can be cleaning of gutters before winter, pruning trees away from roofs and power lines, servicing air conditioners, smoke alarms, hot water systems etc. A long term program can be set for things like painting and replacing gutters. Routine maintenance The Act requires the owner to maintain the rental property to a standard acceptable under health, fire and/or safety regulations. The property manager must monitor this and make recommendations based on minimum standards required by law. Your agency should have guidelines on this which should include details on requirements for smoke alarms, safety switches and any other local issues. Pest control is an owner responsibility unless the tenant can be shown to have caused the infestation e.g. through not disposing of rubbish. Should the owner fail to attend to reasonable requests for routine maintenance, the tenant has the right to consider that a breach of the tenancy agreement has taken place, and can issue the owner with a Notice to Remedy Breach requesting rectification. The tenant can seek a number of outcomes if this does not occur: an order from the court termination of the tenancy compensation. Repairs and Maintenance Systems Property managers must use a reliable maintenance system. Implementing a repairs and maintenance system should ensure that all steps are undertaken in a logical order. This checklist can be used as a guide:
Record fault report from tenant. Advise the owner.

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Get agreement to get quotes or proceed with repairs according to the expenditure limit on the management. Notify tenant of how and when work is to be done asking their permission or giving sufficient notice (72 hours). Issue work order to trades-person - supply approved service providers (insured appropriately) with full details of the job in writing. Review if applicable - seek a competitive price but do not rule out a more expensive solution if it offers a better long term outcome. Notify the owner of the options and get their approval to if needed (unless urgent). Authorisation must be in writing. Notify tenant of how and when work is to be done asking their permission or giving sufficient notice (72 hours). Arrange for the tradesperson to have access (provide keys if tenant agrees or ask tenant to be there). When the invoice is received, it is to be attached to the maintenance report. All documentation must be completed to approve the account for payment. Trades people should understand that they cannot exceed the authorised amount without seeking approval first. Invoices may be sent to the owner, or paid from rental income depending on owner instructions. Report - A report or file note with paid invoice attached should be put in the property file when the job is completed. The owner is notified in writing of the completion details.
With major work quotes should be sort with copies being provided to the owner for approval. Entry of premises by persons other than owner or managing agents The Residential Tenancies Act 1987 is specific as to who is authorised to enter the premises and under what circumstances the authorised person, may enter the premises. These provisions cover entry that is related to the tenancy agreement. They do not preclude entry on to the premises by persons who are lawfully required to enter, such as police officers, meter readers, council and other inspectors. Supervision of maintenance work Many agents do not closely supervise small maintenance jobs carried out by regular contractors, relying on tenants to report any irregularities. There is a small risk with this as some tenants do not have the experience to judge whether work has been done properly. It is advisable to conduct spot checks on work completed, even with suppliers used regularly, as some contractors can become complacent. If the tenant expresses dissatisfaction with the quality of the work, an inspection should be made by the property manager as soon as possible to determine the appropriate remedial action. Trades people should rectify work to the required standard as stated on the
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original work order, payment should not be made until the work is completed satisfactorily. In the case of extensive repair work, the property manager should inspect the work during the critical and completion stages. When the job is complete, the owner should be notified so that an inspection can be arranged if required prior to payment for the work. Activity 51 Maintenance of property - Case Study
A tenant takes possession of a rental property. The oven is very dirty, the bedrooms have clothing strewn around, the shower has mould, and there are rat droppings in the pantry. The property was ostensibly cleaned by the Ajax Cleaning Co. on behalf of the owner. One window frame has rotted where the lock is so it cannot be secured. a) Has the owner breached the Residential Tenancies Act? Why?
b.) What can the tenant do according to the Operative Part of the Standard Residential Property Lease?
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In summary
Rights and obligations for owners and tenants apply under the Residential Tenancies Act 1987, for all tenancies and are listed in detail in the Residential Tenancy Agreement form. Insurance cover of the property is the responsibility of the owner. Property managers must not provide insurance advice or complete insurance documentation on behalf of the owner. A Property Condition Report is completed at the beginning a tenancy and is used for the Bond Inspection, it describes the condition of the property at the commencement of the tenancy. The owner will determine how often routine inspections are conducted. Tenants must be notified in writing of any intended routine inspections. It is the obligation of the owner to provide the property in a reasonably clean condition and maintain it in compliance with any law relating to buildings, health or safety.
Self-check questions 1. What are the rights and obligations of both the owner and the tenant in regard to rental properties? What will happen if there is a breach? 2. What are the legislative requirements for conducting inspections of a rental property?
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PART 18: Tenancy management

Learning Outcomes
This part of the learning materials aims to help you: Understand the importance of policies and procedures in relation to owner enquiries. Describe the conditions under which rent can be paid and the methods used. Complete a rental statement for the owner. Outline the procedure if a tenant is in arrears. Explain reasons for rent reviews. Describe a system for rental renewals. Negotiate a rental renewal.
Elements:
1.3 Rental moneys are collected and processed in line with lease or tenancy agreement, legislative requirements and agency practice. Reports are accurately prepared and routinely communicated to landlord on rental moneys collected or in arrears. Strategies for collection of rental arrears are discussed with and agreed to by landlord prior to implementation of collection process. Procedures for collection of rental arrears are implemented in line with landlord instructions, legislative requirements and agency practice. Tenants in arrears are routinely followed up to obtain payment or vacant possession in line with landlord instructions, legislative requirements and agency practice. Where necessary, claims against rental bonds are prepared and forwarded to the appropriate authority within specified timeframe of the outgoing property inspection. Rent increases and reviews are conducted in line with lease or tenancy agreement, legislative requirements and agency practice.
1.4
1.5
1.6
1.7
1.8
1.9
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CPPDSM4016A/2 Respond to enquiries from tenants /owners CPPDSM4016A/3 Plan for renewal of leases and tenancy agreements. CPPDSM4016A/4 Manage renewals of leases and tenancy agreements
2.4
Enquiries from tenants and landlords are resolved in terms of lease, tenancy agreement or management agreement or are referred to appropriate people in line with agency practice. Agency renewal patterns for leases and tenancy agreements are assessed and strategies developed to maximise benefits for agency and owners. Lease and tenancy agreement expiries are scheduled to ensure renewals are obtained prior to expiry dates. Property is inspected and an accurate report is produced on property conditions and maintenance requirements in line with legislative requirements and agency practice. Property condition reports and rental details are provided to tenants prior to renewal of lease or tenancy agreement. Conditions of lease or tenancy agreement renewal are negotiated and agreed with all parties. Lease or tenancy agreement renewal documentation is prepared and provided to tenant and finalised in line with legislative requirements and agency practice. Property inspections are conducted in line with client instructions, legislative requirements and agency practice. Effective interpersonal communication techniques and negotiation skills are used with the landlord and tenant to obtain satisfactory conclusion to tenancy. Relevant procedures are implemented on behalf of owner to claim an entitlement to retain part or all of security deposit or bond money, if required, in line with owner instructions, legislative requirements and agency practice. Effective interpersonal communication techniques and negotiation skills are used to clarify issues and resolve disputes with owners and tenants emanating from the termination of leases and tenancy agreements. Regular reports are provided to owner on termination process and outcomes in line with agency practice. Property inspections are conducted in line with landlord instructions, legislative requirements & agency practice. Effective interpersonal communication techniques and negotiation skills are used with the landlord and tenant to obtain satisfactory conclusion to tenancy.
3.1
3.2 4.1
4.2
4.3 4.4
CPPDSM4016A/5 Manage termination of lease or tenancy agreement on behalf of owner
5.4
5.5
5.6
5.7
5.8
CPPDSM4016A/6 Respond to termination of lease or tenancy agreement initiated by tenant
6.3
6.4
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6.6
Effective interpersonal communication techniques and negotiation skills are used to clarify issues and resolve disputes with landlords and tenants emanating from the termination of leases. Regular reports are provided to landlord on termination process and outcomes in line with agency practice. Procedures for managing leased properties are identified and assessed in line with legislative requirements and agency practice. Processes for receiving, recording, lodging and releasing bonds or security deposits are identified in line with legislative requirements and agency practice. Processes for receiving, recording, processing and disbursing trust monies are identified in line with legislative requirements/ agency practice. Processes for preparing and forwarding financial statements to landlord are identified in the context of legislative requirements and agency practice.
6.7
CPPDSM4007A/2 Develop knowledge of PM process. CPPDSM4007A/3 Handle moneys
2.7
3.1
3.2
3.3
18.1 Owner and Tenant enquiries

Why do agencies have policies and procedures and provide staff with training in these? It is to ensure: staff are efficient and handle calls promptly staff know how to build rapport with callers enquiries are clarified so quality service can be given enquiries are referred to the appropriate person in the agency risk is minimised in handling the day to day business of the agency the agency does business in a compliant way. Policies and procedures can only help you to follow consistent practices and to operate within a designated framework if you are familiar with them, and ensure that staff who report to you are likewise. This should help to ensure that tenant and owner enquiries are handled accurately and efficiently from start to finish. This is also very helpful in the case of complaints and sensitive enquiries. If your employer does not have policies and procedures, start to develop them for the major activities you undertake in the agency.
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Policies are particularly important if an owner or tenant makes an enquiry that seems high risk e.g. about a potentially dangerous maintenance matter. In this case staff must know how to reduce the risk and understand the need to: 1. respond to the tenant when they make a request and to communicate with the owner within a short time 2. act on the maintenance matter 3. report the matter to someone more senior, especially if an injury or incident has occurred (or a near miss) 4. document the request or complaint and keep a record of the response and the action taken. Activity 52 Responding to owners enquiries
What action should an agency policy require staff to take in relation to a tenant reporting a potentially dangerous maintenance matter?
Discuss your answers with your trainer or colleague. Compare your response by visiting the Model Answers.
18.2 Payment of rent

Tenants cannot be requested to pay more than two weeks rent in advance at the commencement of the tenancy, however after the initial payment agents may request payment be made weekly, fortnightly, or calendar monthly depending on their agency practices. Any additional rental payments cannot be requested from the tenant until the period for the first payment has lapsed. (Residential Tenancies Act 1987, Section 28). It is important to establish clearly with tenants at the start of the tenancy where and how rent is to be paid. The tenant is required to pay the rent on time and at the place stated in the tenancy agreement. Collecting rents and accounting to owners for monies collected and disbursed on their behalf are two of the most crucial services performed by the property manager. Accepted methods of payment of rent vary from agency to agency, and the property manager should offer several payment options to tenants rather than require payment of rent in a particular way.
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Rent payments can include: Cash/cheque/money order Cash can be paid directly at the agencys office and a receipt issued immediately. Cheques and money orders can also be paid directly or posted to the agency. It is illegal to request a post-dated cheque from a tenant for payment of rent (Residential Tenancies Act 1987, Section 35). Paying at the bank Some agents provide tenants with a deposit book to make payments into the agents account at the bank. This option is declining in popularity as electronic payments are easier and avoid tenants having to travel to the bank and wait in a queue. Manual electronic payments Tenants can arrange one off payments electronically but must remember to do so on time. This method is not recommended as it can be hard to track payments should tenants fail to put reference details on the transaction. Direct Debit The tenant authorises the owner/agency to debit their bank account electronically when the rent is due. On the due date, an online banking process is used to upload the details to the bank which deducts the required amount from the tenants account and moves it to the agencys trust account. There are fees involved per transaction, and there can be a delay between the debit being processed and the money being shown as received in the agencys trust account of up to three or four days. In addition, dishonour fees are incurred if a direct debit is attempted on the tenants account when it contains insufficient funds. Errors can cause complaints e.g. an agencys systems may malfunction causing double dipping into a tenants account. Periodic payments The tenant authorises their bank to make regular rent payments from their nominated account. These are forwarded to the agencys trust account on a weekly, fortnightly or monthly basis. Tenants must take into account as it is their responsibility. The crucial difference between this and a direct debit is that the agency does not have control over the payment making tenants less vulnerable to administrative errors that may cause double debits.
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Centrepay This is a direct bill-paying service offered free to tenants receiving payments from Centrelink. Tenants who use Centrepay authorise Centrelink to deduct rent payments and transfer them electronically to the agencys trust account. The agent is required to complete a Centrepay Expression of Interest form for this purpose, and then sign a contract document. The tenant will then sign the authorisation and the payments will commence. The agency pays Centrelink for participation in this service and by law cannot pass this charge on to the tenant. BPay Various banks have different names for their own automated payment systems. The tenant is given a card with a unique BPay biller code identifier permitting them to pay rent at a post office, or by phone or online if they have BPay attached to their own bank account. The rent payment transaction on the card debits money from the tenants own account and credits it to the agencys trust account. Because the BPay biller code is scanned there is less risk of error. The agency will be charged transaction fees. This is convenient for many tenants. Rent Card services Rent card services such as Rent Pay & Rental Rewards are becoming popular. They offer a choice of payment methods, including most of the above and credit card, payments can be automated or reminders sent to tenants prompting them to pay their rent. This method ensures regular payments are made and allows tenants to accrue reward points if they pay via credit card. These schemes charge tenants a small fee, these fees must be disclosed to the tenant prior to the lease being signed. Other issues Rent accrues on a daily basis while the tenant occupies the premises, or holds the premises after termination. Despite any rent owed by a tenant, owners cannot seize or hold the tenants property or goods in return for unpaid rent. (Unless a court order has been obtained awarding seizure of property.) When tenants pay by cash or cheque a receipt must be issued immediately, the receipt must specify: The date on which the rent was received. The name of the person paying the rent. The mount paid. The period of the tenancy in respect of which it is paid. The address of the premises in respect of which it is paid.
Receipts do not need to be sent to tenants for electronically received payments.
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Through the property management system, rental payments can be recorded and tracked and owner disbursements undertaken. These functions carry significant legal and financial responsibility and therefore are normally supervised by more senior property management staff. Rental income, less fees, is disbursed to the owners bank account. There should be a cycle for this that is kept to so that owners know when they can expect their payments and manage their cash flow. Activity 53 Create a new tenant
1. What information do you think would be required to create a new tenant in a property management system?
18.3 Account to the owner

All financial transactions must be recorded within the agency and copies kept to satisfy the requirements of Section 69 of the Real Estate and Business Agents Act 1978, in readiness for auditing. Auditing the trust account is simpler if the agency has a system to maintain chronological records of financial transactions e.g. bank deposits, bank reconciliations, end of month accounting procedures and owner statements. Being accountable to the owner requires more than financial accounting but the financial side of it is the most crucial. As agencies are accountable for all that happens with the property, end-ofmonth account reporting can be used to serve a variety of functions such as reporting on: Income: statement of rental money received. Agency Expenses: e.g. petties. Events/Issues: e.g. vacancies, arrears or maintenance problems. Invoices to be paid or awaiting instructions. Payments: monies paid on behalf of the owner e.g. for maintenance. Updates on agency systems and requirements. Routine inspections or other agency activity at the property.
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The monthly statement can be used for PR e.g. to communicate useful information about the market to the owner and for general marketing/ advertising material.
18.4 Rental statement

During the course of managing properties for owners, agents will receive and hold monies in trust. Rent is receipted on behalf of the owner, and is paid to the owner either monthly, or more frequently, with agency commissions deducted. Each month, the agency will produce a statement to outline what funds have been received and paid. The rental statement is to convey to the owner details of the items that have affected their individual ledger account during the past month. Rental statements are formatted in a variety of ways, which usually depend on the computer program being used. The important criterion by which a statement should be judged is the ability of the owner to easily understand what is being communicated.
The statements credit information must include:

Rental income The rental income could be rent received from the current tenant and/or rent received from a previous tenant. Usually the period to which the rent refers, the name of the tenant and the date the rent was paid are indicated. Rent from Bond Refunds If a tenant vacates owing rent, the arrears of rent will be deducted from the bond. When the bond cheque is returned, it should be receipted according to its destination, i.e. if part of the cheque is for rent it should be receipted as rent. This shows the owner that the arrears have been collected. Other receipts These are sometimes referred to as owner credits and include other amounts received by the owner that are not rent for instance, payments from the tenants for outgoings (e.g. excess water), or for repairing damage to property or from insurance claims.
The statements debit information must include:

Property outgoings This generally refers to charges in relation to the property; such as rates, strata levies or insurance. Repairs and maintenance These are normally the responsibility of the owner unless the damage was caused by the tenant. The agent will pay the contractor, on behalf of the owner, from the rental monies received. If the tenant is responsible for the
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account the agent will collect the money from the tenant and then pay the contractor. Rent collection commission and management fees These are payments from the owner to the agency and are usually calculated as a percentage of the rental collected. This fee for service is negotiated and agreed at the time of signing the Exclusive Management Authority for Residential Premises. Agency outgoings These are amounts spent by the agent in carrying out of the letting and management of the property. These outgoings must be agreed to in writing with the owner. These may include advertising expenses, postage and telephone/fax costs. Owner payments This is the amount to which the owner is entitled after all the other amounts have been deducted. Sometimes this amount is paid directly to the owner by way of a cheque, but most often it is paid into the owners bank account. Activity 54 Rental statement
List the items that would appear on a rental statement for tenants.
. Compare your response by visiting the Model Answers.
18.5 Rent arrears

If a rental payment is late, you should be aware of this immediately. The time between a tenant falling into arrears and the first contact being made should be quite short. If your systems are effective you should be able to follow up within 24 hours using immediate forms of contact like email, telephone and text message. Care should be taken not to breach privacy in the way messages are left e.g. messages on answering machines may be heard by others in the household.
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You may find that the tenant has a genuine reason for being late. While you can show empathy, remember that you represent the owner, and their interests must come first. Do not allow the tenant to mistake empathy for permission to remain in arrears. Some agencies have policies that owners must be advised immediately of non-payment so they can plan cash flow (they may be counting on rent for a loan repayment). There may also be instructions requiring immediate contact on these types of issues in the management authority. Many agencies go straight to a formal notice as a matter of policy when rent is not paid, either the same day or the next day. Strategies for dealing with rental arrears depend on:

Owners instructions - Consult them unless they agreed to a set policy in this situation when they signed the agency agreement. Requirements of owner's insurance. Agency policy and Legislative requirements. The market at the time (how easy will it be to replace the tenant?) Whether the objective is simply to secure payment or whether vacant possession is desired (depending on the tenants history). Whether a claim needs to be made on the bond.
Owners should also be aware of the requirements of their insurers and factor this into decisions. Some Landlords Insurance will not pay under the rent protection clause unless breach notices are issued immediately. Continual late rent payments must be met with a firm request for strict adherence to a payment schedule and in some cases eviction may be necessary. Tenants must be reminded of their obligations. When contacting tenants a calm approach is best. Be clear about steps you will take if the payment is not made and what the tenant needs to do. Give owners the option for input. Two Alternative Approaches to non-payment of rent Under Section 62 of the Residential Tenancies Act, an owner can elect to take either of the following two actions: ALTERNATIVE 1) ask tenant to pay the arrears and allows the owner to terminate the tenancy regardless if the tenants pay. ALTERNATIVE 2) ask tenant to pay the arrears and request they vacate the premises because they have defaulted (termination cannot proceed if they pay by specified time). The processes for the two types of Breach Notices used for failure to pay rent are shown in Flowchart 1 (Alternative 1) and Flowchart 2 (Alternative 2) in Appendix 16. These flowcharts are from Appendix 2 of Renting out your property on the Department of Commerces website www.commerce.wa.gov.au
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The following explanations of these options are sourced from The Department of Commerce publication Renting out your property. Alternative 1: If the owner wants the tenant to remain but to pay rent arrears then, not less than one day after the rent should have been paid (but was not received) you may give the tenant a Breach Notice for Non-payment of Rent (Form 21). This requires them to bring their rent up-to-date within 14 days. The breach notice does not require a prescribed form, but must be in writing, state the tenant(s) name and the address of the rented property. It must also state the current amount of money owing and request payment within 14 days. If all the outstanding rent is not paid within the 14 days, you can then issue a Notice of Termination for Non-payment of Rent (Form 1A). This seeks to terminate the residential tenancy agreement and requires the tenant to vacate the premises within the next seven days. Should the tenant(s) refuse to leave the property after this period, it is essential that you apply to the court for an order to have them evicted. It is illegal to try to force the tenant out yourself. Even if the tenant brings the rent up to date, you can still go to court to have them evicted if the tenant has a history of continuously falling behind with the rent. Alternative 2: Not less than one day after the rent should have been paid but was not received you may give the tenant a Notice of Termination for Non-payment of Rent (Form 1B). This warns the tenant that unless the outstanding rent is paid within the following seven days, you may apply to the Magistrates Court for an order to terminate the agreement. If the tenant does not pay rent arrears within the seven days, then they will incur the cost of the court application fee after the seven days have expired as well as having to pay the rent arrears. The Magistrates Court hearing date cannot be earlier than 21 days after the Notice of termination (Form 1B) has been issued. If the tenant pays all outstanding rent and the court application fee to you by the day prior to the court hearing, the application cannot continue. Which alternative to chose? Our advice is as follows: If this is the first time the tenant has fallen in arrears, or if they have some previous history of late payments but youd still like to keep them as a tenant, then you may choose alternative 1. If your primary object is to obtain the rent as quickly as possible, or your tenant has fallen behind with the rent and you dont think theyll catch up, you may choose alternative 2 Regardless of which option you choose, you cannot force a tenant out of your property without a court order ending the agreement. Tenants who reasonably believe they are not behind in the rent can stay in the premises while negotiating, or until you apply for an eviction hearing in the Magistrates Court, where both parties can put their case. Under no circumstances can you seize tenants belongings in lieu of rent owed." For REIWA Notice of Termination Forms 311A, 311B and 311C (Forms 1A, 1B and 1C under the Act) see Appendix 18, Appendix 19 and Appendix 20.
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In Summary: Strategies for dealing with rental arrears should: be discussed and agreed with owners be in line with legislative requirements and agency practice consider the requirements of the owner's insurer be resolved by securing payment or vacant possession include appropriate claims against the bond where necessary. Activity 55 Rent arrears
1. A tenant is a day overdue with their rent. They are in their second year of tenancy and normally very reliable. What would you do first?
What should you take care not to do when leaving messages?
2. If there is no response what would you do next? Why?
3. The tenant does not respond and payment has not been received. Describe the formal process of issuing a notice for alternative 1.
When would you contact the owner? Why?
18.6 Breaches of a tenancy agreement

Breach of a tenancy agreement is when the tenant does not comply with the conditions on the agreement. These conditions not only include rent arrears but can also include:
Dishonoured cheques. Damaging the premises or chattels. Making renovations. Changing the locks. Subletting without the owners permission. Including pets if it is not in the agreement.
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Breach Notices other than for failure to pay rent The owner may issue a written REIWA Form 319 Form 20 Notice of Breach of Agreement (see Appendix 22) under Section 62 of the Residential Tenancies Act 1987. This notice outlines the breach and also provides the tenant with the opportunity to remedy the breach within 14 days of the notice being given. If the breach is not remedied, the owner can issue a REIWA Form 311C Form 1C Notice of Termination (see Appendix 20) where the tenant will be required to deliver up vacant possession. Where the tenant disagrees with the owner regarding the breach, they can respond in writing explaining the reasons. They can pursue a similar process if the owner is in breach and request: rectification an order from the court termination of the tenancy, and/or compensation.
For the process to serve Breach Notices other than for failure to pay rent refer to Flow Chart 3 of the breach process in Appendix 23 These flowcharts are from Appendix 2 of Renting out your property on the Department of Commerces website www.commerce.wa.gov.au
18.7 Residential rent reviews

The term rent review is generally taken to mean a rent increase. However, this is not always the case. In some markets there can be a significant increase in residential property investment leading to an oversupply of rental housing in some areas. This, combined with other economic pressures, may create market forces that limit rent increases. Rent reviews should also be taken to mean maintaining rental figures, as opposed to simply increasing them each time. Sometimes owners may need to reduce rental if a property was let in boom times especially if it is a very expensive property with a limited market. In cases when supply outstrips demand and vacancy factors rise significantly, owners may have to accept a lower income, or risk their properties remaining empty for long periods. Although it might sound illogical, a strategy to protect income and preserve capital might be to decrease rental levels, at least, in the short term. Rather than just decreasing rents to maintain occupancy, another approach is to evaluate properties to ascertain what can be done to improve them, thereby achieving a higher rental figure in the current market. The ideal time to do this is when the property manager undertakes a routine inspection.
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This inspection provides the evidence the property manager requires to substantiate recommendations to the owner for suggested improvements. This approach also works with new managements. Property managers need to have in place a system to ensure that rental incomes are maximised in line with market fluctuations. Their role is to maximise an owners net rental income. This is the total rent received over a period of time (e.g. 12 months), less expenditure. It is just as important that rents be set at market value to minimise vacancy time. Working in the best interests of the owner in this area requires commitment and a considerable degree of skill on the part of the property manager. Such commitment requires property managers to: Educate owners regarding the current market conditions. Be sensitive to market changes and how supply and demand interact. Regularly assess properties to look for ways of optimising rental income at minimal expenditure. Constantly balance achieving maximum rents against possible vacancies because of price.
RENT REVIEW: When reviewing properties and reassessing optimum, yet achievable rents, take into account the: Requirements of the lease. Rent of comparable properties. Availability of similar properties for rental. Facilities or improvements to the property. State of repair and general condition of the property. Work to be done or agreed to be done in lieu of the review. Intended term of tenancy. How existing tenancy has been conducted (if tenants want to extend). Level of enquiry for that type of property at the time. Owners wishes. Need to give proper notice under RTA.
Rent increases Rent increases must be provided in writing. Depending on the lease and the time since the last increase, rent can be increased during a fixed-term or periodic tenancy. Rent can always be increased at the end of a fixed term tenancy when the agent is negotiating a new tenancy agreement. Rent increase on a fixed term tenancy Rent can be increased during the term of a fixed term tenancy, if: A clause has been included under the Special Conditions providing for a rent increase 6 months after commencement date of the lease.
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The tenant is given 60 days notice. 6 months has passed since the last rent increase.
Example: A lease is signed on 1st May. The expiry date is 30th April the following year a 12 month term. A clause has been included allowing for the review of rent 6 months after commencement of the lease - the 6 month point is 1st November. You should count back 60 clear days from the 3lst of October to calculate the date by which the tenant should receive the notice of a rent increase and then add 4 postage days. Make a note in the work diary for the business day a few days before the postage date to allow for the notice of the intention to increase rent to the tenant to be prepared see REIWA Form 317 Form 18 R317 Notice to Tenant of Rent Increase at Appendix 15. A clause could be written into the lease as follows to avoid having to issue the 60 days notice: The tenant acknowledges and agrees that the rent will increase by $20 per week to $340 per week commencing from the 1 November 2010. Rent increase on a periodic tenancy - Rent can be increased if: The tenancy has been running for at least six months. Six months has elapsed since the last rent increase. The tenant is given at least 60 clear days notice.
If the incorrect notice for a rental increase is given, the tenant can refuse to pay the increase until correct notice is given this period begins when correct notice is issued, not from when the incorrect notice was given. There are no laws in WA that dictate precisely how much rentals can be increased. An application to a court can be made if the tenant considers the increased rent to be too high. Although there are very limited causes the court will consider as reason to block a rent increase (they include a rent increase being used to force a tenant out of a property, and deterioration of the amenity of the property since the lease began) the dispute process takes time. Once the dispute process is complete if the owner succeeds they must still reissue the notice of increasing the rent, so the tenant may in effect have several months more at the lower rent by disputing. For this reason it is best to make rental increases in smaller more palatable steps rather than in big jumps likely to provoke a complaint.
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Activity 56
Rental increase
Answer the following questions: a) Mrs Bolton is a tenant on a fixed term tenancy which expires on the 30th December. The lease allows for a rent review in June 30. On the 4th May, the owner asks you to increase the rent effective June 30. No notice has been given yet. What would you advise the owner?
b) An owner instructs you to increase rent on a property that has been let for 7 months on a periodic tenancy. You do this. 4 months later, he wants to further increase the rent. What advice would you give?
c) You are managing a property on a fixed term tenancy. It has a 6 month rent review clause and it is time to give notice of an increase.The garden is a mess because of a flash flood which caused a tree to fall over and has been that way for 6 weeks. The tenant has complained that her children can no longer play safely there. The owner wants to increase the rent by $40.00 per week based on market changes. 1) Is there a chance that this increase could be successfully disputed by the tenant under Section 32 of the Residential Tenancies Act 1987. 2) What would you advise the owner?
18.8 Residential tenancy renewals

A fixed term tenancy can become a periodic tenancy after the fixed term period expires. However, a fixed term tenancy should only revert to periodic tenancy if the owner has given prior written authorisation. Monitoring the end date of fixed term tenancies and seeking owners instructions must be a regular part of the property management service. Property managers use a diary system to manage tenancy agreement end dates. The agency will also use a system for the ongoing renewal of all tenancy agreements. It is good practice to act on fixed term tenancies prior to their end date by offering tenants a further fixed term period. This is always
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subject to the tenants performance during the lease and the owners instructions. The proper renewal of a fixed term agreement is an effective means to ensure continuity of the owners property income. An effective property manager needs a process for lease renewals: Diarise renewals 2-3 months in advance so owner can consider rent increase and tenants have time to decide whether to renew. Inspect property, complete report and assess tenancy history e.g. property condition, payment history. Prepare CMA to verify appraisal of value and trends. Ascertain whether tenant is likely to renew. Write to the owner with recommendations - request written authorisation to proceed ( specify the time period for reply). Follow up until owner confirms intended action, or seek alternative instructions. Telephone owners who have not responded. At least a month prior to the end date, advise tenant in writing of offer to renew the tenancy (or not). Provide all documents and specify deadlines for signing. Some tenants may not return new leases to delay the increase. Phone the tenant in this instance. Diarise and follow up until tenant confirms in writing. Contact owner in writing if tenant wants to vary terms of renewal. Seek owners written authorisation to vary terms of lease. Follow up as per owners written instructions. Have new agreement signed prior to end of current agreement. Send written confirmation of agreement to owner and tenant. Apply standard procedures used for termination of tenancy, including notification to owner if tenant gives notice of their intention to vacate. Provide written confirmation of any agreed periodic tenancies.
Two forms exist for the option to renew the tenancy REIWA Form 188 Option to Renew (Special Condition) Standard Residential Property Lease may be used see Appendix 24. This form gives the tenant an assurance that they can extend the lease, provided they lodge the request to exercise the option within the agreed time frame and have not breached the lease. If the REIWA form has been used it will state how long they can extend for, and at what rent. NB: Options are not recommended but do at times occur. REIWA Form 189 Notice of Exercise of Option to Renew (see Appendix 24) is used by the tenant to exercise the option by the agreed date.
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Extending an existing lease If there is no option to renew and the parties want to extend a current fixed term agreement, but not change other terms such as rent, the parties may agree in writing on a new end date before the original agreement ends. This can be done in either of the following methods: On all copies of tenancy agreement, cross out original end date. Write in new end date. Both parties must sign in full and date the change. NB only used for very short extensions, e.g. 1 week. Both parties sign a separate renewal statement (i.e. a letter) specifying new end date and that new agreement varies original tenancy agreement. This is then appended to the original agreement. While this is a legal way to make a change it is not recommended.
If any terms of the initial tenancy agreement are altered for the renewal of tenancy, a new tenancy agreement should be signed by all parties. Timing In property management it is possible to identify patterns of demand within different localities at different times of the year. Some months may herald high demand, while others do not. This may vary for types of property (e.g. student houses will differ from executive homes) and areas. Your aim will normally be to arrange fixed term tenancies to expire in a month when traditionally the rental demand is high. This may not be possible because of tenant or owner needs, but it should be considered. A fixed term tenancy need not be exactly 6 or 12 months. It can be 8 months, 13 months or whatever length of time which will result in an expiry during an anticipated period of high demand. What this achieves for the owner is that if the tenant vacates at the expiry of their tenancy it will occur during a time when potential new tenants abound. This will ensure prompt reletting at the best attainable rent for the owner. The plus for the tenant is that if they want to find somewhere else they will have more choices. It is also considered a good idea to seek longer tenancy terms if owners know their long term plans for the property and it suits them. This reduces wear and tear on the property, minimises lost rent between tenants and saves on letting costs. This can be achieved by renewing existing tenants if their tenancy has been satisfactory and if the owner would benefit from a longer period of security of tenure. Issues to consider with tenants include: Reliability of rent payments, assessed from payment history. History of other breaches e.g. pets, garden care etc. Manner in which property has been cared for during the tenancy e.g. cleanliness, as assessed at routine inspections.
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Tenants willingness to agree to the type and length of tenancy the owner requires. Tenant's willingness to pay the rent the owner requires. Activity 57 a) Renewal of leases/tenancy agreements
What factors would be taken into consideration in assessing a tenant for suitability of renewal?
b) Identify two ways a property manager would ensure they are meeting owner requirements in the renewal of tenancy agreements.
Compare your response by visiting the Model Answers. Owner wants fixed term tenancy and tenant wants periodic tenancy At times an owner will require a fixed term tenancy, and the tenant will require a periodic tenancy and vice versa. A property manager must attempt to conduct negotiations that eventually meet the needs of both parties. In situations where agreement cannot be reached about what type of tenancy will be used, the property manager must follow the instructions of the owner. It is a property managers duty to keep the owner informed, act in the owners best interests, and follow all lawful instructions. The owner should be advised of the consequences of any decision made. A tenant can't be forced to sign a new fixed term agreement. If an owner insists on a fixed term and will not accept a periodic tenancy, then notice can be issued to terminate the tenancy and for the tenant to vacate. It is important to determine this well before the termination of the current fixed term agreement so that appropriate notice can be given to the tenant prior to the end date of the current term. The notice is not issued as a result of a breach by either party, but merely that the terms of
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tenancy on offer are no longer agreeable to both parties and the owner requires vacant possession. Advise the owner that this decision will inevitably incur costs of re-letting and perhaps a period of vacancy. Owner wants periodic tenancy - tenant wants fixed term tenancy The tenant cannot insist that the owner offer a fixed term tenancy, however the tenant does have the option of giving appropriate notice and vacating the property. The property manager should advise the owner that this decision will inevitably incur costs of re-letting and perhaps a period of vacancy; and it might be difficult to secure a new tenant who is happy to move in even though a periodic tenancy is only available. Suggestions to assist negotiation include: Ensure that both parties understand the definitions and legal implications of both fixed term and periodic tenancies. Ascertain what is the degree of flexibility or inflexibility of each party. Determine if there is any specific underlying reason for either party refusing to consider any other option. It may be an incorrect assumption which can be easily clarified. Inform parties of any issues that may be easily resolved; such as: o o Tenant will sign periodic agreement if security screens are added Owner will agree to a fixed term if tenants do gardening.
If the parties verbally agree on renewing the lease with a particular consideration shown (e.g. adding screens) dont delay the tenancy renewal until this work is complete, but rather make it a term of the tenancy and have the tenancy document signed. Although related issues will be addressed, assist the parties to remain focused on the main issue of the tenancy renewal. Ensure the parties understand the implications of failing to reach agreement, i.e. the tenancy ends, tenant must move, costs must be incurred by owner, with wear and tear on property etc. Suggest appropriate compromises, such as a shorter fixed term. Keep file notes of telephone conversations. Do not relay emotive or off-hand comments made which may cause offence and further barriers to the negotiation.
If agreement can't be reached, confirm outcome with parties in writing.
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Activity 58
Negotiation of renewal of agreements- Case Study
Mr and Mrs Jones have been on a fixed term tenancy for 2 years. They are model tenants. The property is maintained in immaculate condition and they always pay their rent on the due date. The fixed term tenancy is due to expire in a months time and they would like to revert to a periodic tenancy as Mr Jones contract work is nearing completion. The owner is strongly against this as he likes the security of knowing that his property is rented for the long term with the same tenants, and has a regular income to help with mortgage repayments. a) What suggestions would you provide to reach a compromise?
b) What information would you record and report to the parties regarding the negotiations?
c) The periodic tenancy has been agreed to. What documentation is to be prepared and provided to the tenant?
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Activity 59
Managing Renewal of leases/tenancy agreements
1. You have just completed a routine inspection on a property. You were not completely satisfied with its condition. The owner has previously advised you, in writing, that he would like you to sign the tenant on for a further 12 month term tenancy. What would you do?
2. You are extremely busy and have five renewals of tenancy which require tenants signatures in the next month. a) How will you ensure that each is signed prior to end date of the current agreements?
b) What are your obligations after they have been signed?
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In summary
A tenant cannot be requested to pay rent in advance of an amount exceeding two weeks rent at the commencement of the tenancy. It is illegal to request a post-dated cheque from a tenant for payment of rent. All financial transactions must be recorded with the agency and copies kept in readiness for auditing. Being accountable to the owner not only requires financial responsibilities but all that happens with the property. Property managers should work to maximise a owners rental income. There are two alternatives a owner may take in regard to rental arrears o Tenant to pay rent and vacate the premises even if rent is paid. o Tenant to pay rent, is allowed to stay if pays.
A fixed term tenancy can become a periodic tenancy after the fixed term expires, providing the owner has given prior written authorisation.
Self-check questions 1. What strategies would be considered to collect rental arrears? 2. How can the rental arrears be collected ensuring the legislation is followed? 3. What process does your agency have to collect rent which is in arrears? 4. What are the conditions for increasing rent? 5. What are the legislative requirements when renewing tenancy agreements?
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PART 19: Tenancy termination

Learning Outcomes
This part of the learning materials aims to help you: Identify reasons a tenancy can be terminated. Describe method for terminating a periodic residential agreement. Describe method for terminating a fixed term residential agreement. Complete a bond statement to dispose the bond. Outline the process for a disputed bond statement. Identify the process to dispose abandoned goods.
Elements:
CPPDSM4016A/5 Manage termination of lease or tenancy agreement on behalf of owner
5.1 Documentation required terminate a lease or tenancy agreement on behalf of landlord is prepared in line with landlord instructions, legislative requirements and agency practice. Notice is given to tenant according to client instructions, legislative requirements and agency practice. Rights of tenant with regard to terminating a lease or tenancy agreement are observed in line with legislative requirements and agency practice. Effective interpersonal communication techniques and negotiation skills are used with the owner and tenant to obtain satisfactory conclusion to tenancy. Relevant procedures are implemented on behalf of owner to claim an entitlement to retain part or all of security deposit or bond money, if required, in line with owner instructions, legislative requirements and agency practice. Effective interpersonal communication techniques and negotiation skills are used to clarify issues and resolve disputes with landlords and tenants emanating from the termination of leases and tenancy agreements. Regular reports are provided to owner on termination process and outcomes in line with agency practice.
5.2
5.3
5.5
5.6
5.7
5.8
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CPPDSM4016A/6 Respond to termination of lease or tenancy agreement initiated by tenant
6.1
Rights of tenant to terminate lease or tenancy agreement are observed in line with legislative requirements and agency practice. Tenant intention to terminate lease or tenancy agreement is communicated to landlord and instructions are taken from owner in line with agency practice. Effective interpersonal communication techniques and negotiation skills are used with the landlord and tenant to obtain satisfactory conclusion to tenancy. Relevant procedures are implemented on behalf of landlord to claim an entitlement to retain part or all of the security deposit or bond money, if required, in line with landlord instructions, legislative requirements and agency practice. Effective interpersonal communication techniques and negotiation skills are used to clarify issues and resolve disputes with landlords and tenants emanating from the termination of leases and tenancy agreements. Regular reports are provided to landlord on termination process and outcomes in line with agency practice. Legislation regulating the lease and management of properties is identified in the context of agency practice. Principles of property management are identified in the context of legislative requirements and agency practice. Ethical and conduct standards and key principles of consumer protection, equal employment opportunity and privacy legislation in relation to property management are identified in the context of legislative requirements and agency practice. Need for demonstrating effective communication strategies in establishing rapport with clients, determining client needs, providing accurate advice, addressing client concerns and dealing with conflict is identified in line with agency practice. Authority documents and other agency documents for property management are identified in line with legislative requirements and agency practice.
6.2
6.4
6.5
6.6
6.7
CPPDSM4007A/1 Apply knowledge of property management.
1.3
1.5
1.6
CPPDSM4007A/2 Develop knowledge of property management process.
2.1
2.3
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2.8
Procedures for terminating leases and vacating leased properties are identified in line with legislative requirements and agency practice. Statutory and agency documents to terminate a tenancy are identified, completed and stored in line with legislative requirements and agency practice. Processes for receiving, recording, lodging and releasing bonds or security deposits are identified in line with legislative requirements and agency practice. Processes for receiving, recording, processing and disbursing trust monies are identified in line with legislative requirements and agency practice. Processes for preparing and forwarding financial statements to owner are identified in the context of legislative requirements and agency practice. Roles and responsibilities of agents in leasing and managing property are identified in line with legislative requirements and agency practice. Agent commission and management fees are identified and calculated in compliance with legislative requirements and agency practice. Strategies for resolving disputes between owner and tenant are identified and evaluated in line with legislative requirements and agency practice. Effective communication strategies for managing conflicts involving clients are identified and evaluated in line with legislative requirements and agency practice.
2.9
3.1
3.2
3.3
4.1
4.2
4.3
4.4
19.1 Introduction
When a tenant decides to vacate a property, procedures must be followed in accordance with the Residential Tenancy Act. The notice to vacate the property must be served in writing within the prescribed period of notice. Every action must be documented and filed. Both the tenant and the owner need to be kept well informed. On the day the property manager receives notification of vacation they must send: A letter to the tenant acknowledging the vacating advice. A letter informing the owner of the tenants intention to vacate.
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The owner requires ample time to vary instructions regarding the re-letting if required. The property manager will also need to do the following: Fax the special water meter reading request form to the Water Corporation. This can also be lodged online. Check the Agreement to take Residential Premises to establish that the tenancy period is at an end.
19.2 Termination of tenancy agreements

Reasons for a tenancy ending can include: The term of a fixed tenancy expires. The parties agree in writing for the tenancy to end. The court makes an order terminating the agreement. The owner loses entitlement to premises e.g. to a mortgagee. The tenant abandons the premises. The agreement is 'frustrated' e.g. premises become uninhabitable. Tenancy agreements can be terminated by either party provided they act in accordance with the Residential Tenancies Act 1987. They may also need to gain a court ruling to enforce the termination. Owner/agent gives Notice of Termination to the tenant. Tenant can gives owner/agent Notice by Tenant of Termination. Owners are obliged to use a particular Form of Notice dictated by the Residential Tenancies Act, except for a fixed term tenancy. Form of notice of termination by owner Notice of termination of an agreement by the owner shall (a) be in writing and in the prescribed form; (b) be signed by the owner or his agent; (c) identify the premises the subject of the agreement; (d) specify day on which possession of the premises is to be delivered up by the tenant; and (e) specify and give particulars of the ground, if any, upon which the notice is given. Grounds for termination by owner Breach of agreement (non-payment of rent). Breach of agreement (other) e.g. keeping pets without permission. Where a property is sold (30 days notice, only if periodic tenancy). Court rules that tenant has caused serious damage/ injury to people or premises (including neighbour's / property) or is likely to. When an owner proves excessive personal hardship in court.
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Agreement is frustrated, i.e. property is uninhabitable. The tenant abandons the property. A mortgagee takes possession of the premises.
Grounds for termination by tenant Tenants may terminate a tenancy agreement if: The owner/property manager has intimidated or abused them, or has interfered with the tenants peaceful enjoyment of the premises. When a tenant finds they will suffer excessive personal hardship if a tenancy agreement is not terminated and can establish this in court. Un-remedied breaches of the tenancy agreement, i.e. if any breaches are not rectified within a reasonable time frame. Agreement is frustrated i.e. where the property is partly or fully destroyed and can no longer be used by the tenant.
A formal termination process must be instituted by the property manager to ensure that the owner of a property can rightfully seek possession of their property. A Notice of Termination is an eviction order. An application can be made to the court for eviction within 30 days of the date of termination of the tenancy agreement if the tenant does not vacate in accordance with the termination notice. Terminating a periodic residential agreement Terminating a periodic tenancy can occur for any of the reasons outlined above. For the termination to be valid it must: Be in writing either by: o o o o o Letter. REIWA Form 321 Form 22 Notice by Tenant of Termination (see Appendix 25). REIWA Form 311a Form 1A Notice of Termination for Nonpayment of Rent (see Appendix 18) or REIWA Form 311b 1B Notice of Termination for Nonpayment of Rent (see Appendix 19). REIWA Form 311c Form 1C Notice of Termination (Appendix 20).
Include the address of the premises. Include the date on which the tenant intends to vacate the premises. Include names, dates and signatures.
Notice periods for termination are:
30 days, if the property is sold. At any time if the tenant and owner agree. At least 7 days if a breach is not rectified. 60 days if the termination is for no reason and the owner is giving it.
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7 days if the agreement is frustrated (e.g. the property is destroyed or becomes uninhabitable) and the owner is giving notice. 2 days if the agreement is frustrated and the tenant gives notice. 21 days if tenant gives notice during periodic tenancy for no cause.
Where premises are uninhabitable due to a breach by the owner, they must fix the property or end the tenancy with the tenants agreement. Should this occur, the tenant could claim compensation from the owner for loss incurred due to the breach. As per Section 67 of the Residential Tenancies Act 1987, a tenant's Notice of Intention to Vacate must be in writing. It must be signed by the tenant/s and identify the premises which are the subject of the agreement and specify the day on which the tenant will deliver up possession of the premises. Provided the letter received from the tenant meets the requirements of the Residential Tenancies Act 1987, it is an acceptable form of notice. Another alternative is for the tenant to complete a Form 321 Notice by Tenant of Termination, a copy of which is at Appendix 25. Terminating a fixed term residential agreement In a fixed term tenancy both parties are contractually bound for the duration of the agreement and the tenancy ends on the date written in the tenancy agreement. The tenant can leave on the last day of the fixed-term without giving any prior notice to the owner. Should a property be sold, the responsibilities of the tenancy are taken over by new owners and the tenancy continues, unless the sale of the property coincides with the expiry date of the fixed term tenancy. Tenants terminating an agreement Sometimes tenants advise that they cannot continue a tenancy. You must act on this information quickly - owners are entitled to know immediately. The Residential Tenancies Act does not clearly provide for this situation so it is a case of reaching a mutual agreement acceptable to both parties. The owner has the right to enforce the lease but it is difficult to do, so it is normal to agree that tenants can move out early but must pay rent until new tenants are found and pay reasonable out-of-pocket costs incurred by owners as a result of the lease being broken e.g. advertising or reletting costs incurred by the owner as a result of the breach. Under the Residential Tenancies Act agents can't charge tenants additional penalty fees for breaking a lease. The tenant remains responsible for the rent until the property is relet and upkeep (e.g. lawn mowing) until a replacement tenant has signed a new agreement. The owner/agent must by law mitigate losses, so you must make every effort to relet the property as soon as possible. A property inspection must be conducted.
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Fixed term tenancies can be terminated in the following circumstances: If the owner and the tenant agree that the lease can end. If there is a breach of the tenancy agreement by either party and the correct legal processes are gone through to end the lease. The premises are destroyed or taken over by a legal process. The tenant causes or threatens serious injury to others or damage to the premises and a court orders the lease to be ended. The owner proves they will suffer undue hardship and this is established in court. The tenant abandons the premises. The mortgagor repossess the property. Owner gives reasonable notice that vacant possession is required at the end of the fixed term tenancy. The owner threatens or harasses the tenant and a court orders the lease to be ended.
Summary of Notices The table below shows the DOC and court forms used for breaches and terminations of tenancy agreements according to the Residential Tenancies Act 1987 (RTA): REIWA versions are available as shown.
Compulsory Forms Under the Residential Tenancies Act

Form 1A: REIWA Form 311A Notice of termination for non-payment of rent (to be used only if a 14-day breach notice has been issued) Form 1B: REIWA Form 311B Notice of termination for non-payment of rent (to be used only if a (14-day) breach notice has not been issued) Form 1C: REIWA Form 311C Notice of termination (for all reasons other than the non-payment of rent) Form 2: REIWA Form 312 Notice to former tenant as to disposal of goods Form 3: REIWA Form 313 Notice as to disposal of goods Form 4: REIWA Form 314 Joint application for disposal of security bond Form 9: REIWA Form 316 Variation of security bond money
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Suggested forms (can be used)

Form 20: REIWA Form 319 Notice of breach of agreement (by tenant) Form 21: REIWA Form 320 Notice for breach of agreement to pay rent Form 22: REIWA Form 321 Notice by tenant of termination
Forms used for applications to the Magistrates Court

Form 6 - Application for disposal of bond money Form 11 - Proceeds of sale of abandoned goods Form 12 - Application for court order Form 13 - Summons to given evidence and produce documents Form 16 - Application to vary of set aside order Methods of delivery of a notice Under the Residential Tenancies Act you can serve notice several ways. A notice under the Act can be given (a) to any person by handing or posting it to the person; (b) to a tenant, by giving it to (i) someone living in the rented premises who appears to be over 16; or (ii) the person who usually pays the rent; (c) to the owner, by giving it to (i) the owners agent; (ii) someone living with the owner who appears to be over 16; or (iii) the person who usually receives the rent. Where there are two or more owners or tenants notice need only be given to one of them. Although notice can be served by handing it to the intended person or mailing it by ordinary post it cannot be served by placing it in the letterbox of their home or sending it by certified mail. Notice by mail takes effect from the time the letter would have been delivered by ordinary post. Certain periods of notice are required for some actions. For example: Form 20 - Notice of Breach of Agreement -14 days Form 21 - Breach Notice for Non-payment of Rent - 14 days
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Form 1A - Notice of Termination for Non-payment of Rent - 7 days (but only after 14 days notice has already been given.) Form 1B - Notice of Termination for Non-payment of Rent - 7 days (but only if14 days notice has not been given.) Form 1C - Notice of Termination (Form 1C) o 7 days if a Breach Of Agreement is not rectified after 14 days notice. o 30 days if the owner has entered into a contract of sale. o 60 days if notice is given without grounds. o 7 days if premises are destroyed/uninhabitable/not lawfully usable. Form 2 - Notice to Former Tenant as to Disposal of Goods) and Form 3 - Notice as to Disposal of Goods - 60 days each. The count of days for the notice period excludes the day the notice is served and the last day of the notice period. It is important that required timeframes are observed or the notice may be invalid. The flowchart following shows how 14 days notice is calculated if a notice is sent by post. A notice to end a tenancy must not be issued before the expiry of any time period given in a breach notice, otherwise a magistrate may reject court action to end the tenancy.
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Other approaches/skills used in termination

Owners can become emotional and inclined to blame the agency for the worrying situation they are in when a tenancy goes wrong. Do not become defensive. It is important to employ: Effective interpersonal communication techniques. Negotiation skills. Regular reports to owners.
Reaching an agreed outcome provided owners agree can sometimes be the best way forward. Exercising tact and avoiding personal attacks is always beneficial. Owners do not always understand their options so ensure these are clarified. Activity 60 Termination of Tenancy
1) Refer to the forms listed below and identify their key features. Appendix 17: REIWA Form 320 / Form 21 - Breach Notice for NonPayment of Rent.
Appendix 19: REIWA Form 311b / Form 1B Notice of Termination for Non-payment of Rent.
Appendix 22 REIWA Form 319 / Form 20 Notice of Breach of Agreement.
Appendix 20: REIWA Form 311c / Form 1C Notice of Termination.
Appendix 25: Form 22 Notice by Tenant of Termination.
Discuss your responses with colleagues and facilitator. 2) A tenant wishes to vacate a rental property. Write two compliant sample letters regarding termination of tenancy as follows: a) One to the tenant from the property manager confirming their intention. b) A letter to the owner informing them of the tenants intention (assume you have gained verbal agreement from the owner already.) Compare your response by visiting the Model Answers.
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19.3 Finalisation procedures

Regardless of how a tenancy is terminated there are procedures that must be followed in accordance with the Act and the tenancy agreement in relation to the refund of all or part of the bond monies. Final inspection A final inspection is carried out at the end of the tenancy after the tenant has vacated and prior to the bond being dispersed. A full inspection involves checking the property room-by-room and external areas against the PCR, (this may be the original PCR or the one amended by the tenants when they first moved in). If it is a furnished property the property manager should check the contents off item-by-item against the inventory. Bonds are held against wilful or negligent damage by the tenant i.e. expenditure on cleaning and gardening required to bring a property back to a condition comparable to the commencement of the tenancy (fair wear and tear considered). You must be able to judge the difference and stand by that judgement. The length of the tenancy and the size of the home have a bearing on how much wear and tear is deemed 'fair'. (A family home will receive more wear than a 1bedroom unit because more people live there). It is also argued that if pets and smoking are permitted, the related wear and tear becomes 'fair'. Fair wear and tear is not defined in the Act but is generally agreed to be the result of normal use over time. Certainly fading due to sunlight falls into this category. The difficulty is that judgements are subjective. Many property managers believe that if it can be cleaned off, it is not wear and tear, its dirt! The court may not agree. If you are unsure of whether something is 'fair wear and tear' you can discuss this with your manager, or with the Department of Commerce. Some things that have at different times been ruled as 'fair wear and tear' (or not) include: Fair wear and tear (Owner is responsible) Cracked window pane due to old warped frames Plaster cracks as building settles Worn carpets due to day-to-day use Careless or negligent damage (Tenant is responsible) Cracked window pane from carelessly slamming window shut. Plaster being damaged due to picture hooks. Scratches on kitchen bench tops due to cutting food on the surface.
(Tenants Advice Service Tenants Rights Manual, Bond Recovery, 5.2, January 2004)
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Remember that the law is not intended to provide owners with 'new for old' .They must allow for depreciation. If the paintwork was 5 years old when the tenants moved in it may not be reasonable to claim anything for smoke discolouration. A court would probably take the view that the paintwork had reached the end of its 'depreciable life'. If there is a need to repaint and tenants have contributed, apportion part costs in these circumstances. The final inspection is scheduled for a day following the day the tenant is due to vacate. If a tenant is unable to attend the inspection they are obligated to return the keys to the property manager prior to the inspection and should be aware that rent may be charged up until all keys are returned. You should ensure all keys given out are listed on the PCR (and to which doors). A photocopy of keys given out is a useful visual record. It is recommended that the tenant signs this. Synergy, Alinta Gas and telephone accounts also need to be finalised and are the tenants responsibility. The property manager arranges for the WCWA to do a final meter reading at the tenants cost. The tenant is entitled to attend the final inspection. It will normally work in the property managers favour to send the tenant a list of items required to be completed at the time they write and acknowledge the tenants notification of intention to vacate, and setting the day and time for the final inspection. Any changes in the condition of the property should be noted, as should any cleaning attended to by either the tenants or by cleaners. The document will be used in finalising the tenants bond so it must be accurate. Any matters regarding maintenance and cleaning that are the tenants responsibility should be sorted out immediately as often a new tenant is ready to move in. The tenant may be given the opportunity to put right any matters that require further attention. When the tenant vacates the property they are stating that they have completed all cleaning, etc. that is required. The property needs to be returned to the same condition, (fair wear and tear excepted) as set out in the PCR. It should be made clear that if it is not satisfactory, the property will be professionally attended to at the tenants cost, and set a time limit. If there is any rent owed when the tenant vacates this is also deducted from the bond, however it is a breach of the RTA for tenants to purposefully use the bond for rent, penalties may be applied for this. The best way to avoid arrears getting out of hand is for the property manager to monitor payments and to take action immediately if rent ceases to be in advance as required by the lease. This requires excellent monitoring systems and a high level of staff awareness. It is wise to inform tenants that all rent must be paid up to date in the vacating letter to avoid the bond being used for rent.
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Claim against rental bonds The bond refund is a relatively straightforward procedure if the full bond is to be refunded or if the tenant agrees to the forfeit of part or the entire bond when the owner is entitled to it. Owners are entitled to recover rent owed up until the handover day. This is the day the possession of the property is handed over to the owner/property manager. Bond disposal Where a tenant owes money for rent, damages, water use etc, and you need to claim the money owed from their bond, it can sometimes be difficult to reach agreement. Tenants may argue about water use (e.g. if a leak caused waste), about what deterioration is their responsibility and about how expensive rectification will be. For this reason the PCR must be accurate and ideally signed by the tenant so that at least the original condition of the property is not in issue. Basically, owners are entitled to recover the following costs from bonds: Cleaning of the property to bring it back to the condition it was in at the commencement of the tenancy (fair wear and tear considered). This is based on the PCR - photographs are clearly helpful and can include the cost of carpet cleaning and pest control if noted. Payment of rent owed up until the handover day. Repairs and maintenance resulting from tenant neglect or damage.
As explained a frequent source of difference of opinion is whether damage is fair wear and tear. The views of Property Managers are not always supported by court decisions in this area. The table below outlines some scenarios to help you understand this concept. Examples of issues where Courts may rule either way on fair wear and tear Smoke stained paint many PMs believe this is clear tenant damage but courts have ruled otherwise at times, particularly if paintwork was not new and the lease did not preclude smoking. Damage by pets not covered by pet bond most PMs see this as tenant damage but courts have sometimes ruled otherwise particularly if lease allowed pets. Cracked paving may be tenant neglect e.g. parking a heavy vehicle on paving. It is worth trying to appeal to tenants sense of responsibility, but is hard to prove unless the lease states no heavy vehicles and the area is protected from public access. If a heavy vehicle is listed on the lease it is difficult to allocate blame to the tenant. Loss of plants in garden if original state of garden is proven with photos some claim may be made, but this is hard to prove without photos. Owners should be advised of both ways of looking at a scenario, not just the owner oriented view so that they are realistic in negotiating with tenants. Sometimes a negotiated outcome is better than the outcome if the matter goes to court.
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Bond statement and disposal Once the final inspection has been completed and all matters have been attended to, a bond statement is prepared. The bond statement sets out tenant deductions and disbursements. For the release of any bond moneys, both parties must agree and sign a Joint Application for Disposal of Security Bond Form 4 (see Appendix 26). On completion and signing of this form, the bond money must be returned to the tenant within seven days either by the bond administrator or the property manager if operating a Bond Trust Account. To complete the Bond Statement and calculate a claim on the bond the following items are checked and may be applicable: cleaning damages electricity water accounts rent arrears any compensation applicable for breaking the tenancy.
Maintenance expenditure should be accounted for as the invoices are received. All accounts must be received before releasing the bond. Advise the owner of the bond inspection results. Do not release the bond until the final check is completed and the owner is satisfied. It is good practice to ensure that the form for bond disposal and the bond statement are forwarded/ available within 14 days after the tenant has vacated. If the tenant is in agreement with the final bond statement, they sign the disposal form and return it to the property manager for disbursement. A sample copy of a Bond Statement appears at Appendix 27. Once the property manager is in receipt of the disposal form it can be forwarded to the Bond Administrator, or the property manager can verify that the signatures are the same as those at the commencement of the tenancy and arrange for the bond to be refunded from the agencys Bond Trust Account. The Residential Tenancy Act does not require the bond to be refunded within any set time frame, however, it is not unreasonable for the tenant to expect to receive their bond statement from the agency within 14 days after vacating premises. Disputed bond statement If there is a dispute over how the bond money should be paid out, negotiations can occur to try and resolve the dispute. This is often successful and saves going to court. This needs to be done prior to signing the Joint Application for Disposal of Security Bond form.
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If an owner and tenant fail to reach agreement on the bond refund, and one does not sign the bond release form, an application may be made to the Small Disputes Division of the Magistrates Court. A fee applies. The court nearest to the rented premises is prescribed, however parties can agree on another location. The other party is given 7 days to respond. An Application for Disposal of Bond Money Form 6 can be obtained from the Magistrates Court website. If the tenant does not respond when sent a copy of this, the court may order the release of the bond after 7 days. Rights to compensation If the bond is insufficient to cover costs incurred by owners after the tenant has vacated, owners may be entitled to seek compensation. This can be claimed for damage or loss, including loss of rent, caused by a tenant breaching the terms of the tenancy agreement. If the owner justifiably believes the tenant owes them money in excess of the bond, they may apply to the court by lodging a Form 12: Application for Disposal of Bond Money. The court may order the tenant to pay compensation to the owner including and above the bond. Owners may also be able to make an insurance claim in these circumstances, depending on their cover.
Activity 61a
Property Inspection Case Study
1. Ms Sykes is a good tenant. She vacates after 2 years. One room has grubby marks on walls, stains on the carpet and there's an oil stain in the garage floor. You seek to claim $350 of the $1000 bond. She refuses to approve this saying it is normal wear and tear. You try to negotiate, without success. You have no 'before photos' in the original inspection report. The owner pays to do the work and wants you to go to court to recover the money. What do you advise? Why?
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2. Tenants leave a house dirty with torn curtains after a 12 month lease. They owe 4 days rent ($171.00). You have the house cleaned at and buy replacement curtains. The costs are $500. You have photos in the original inspection report and seek to claim 50% of the bond. The tenants say no. What do you advise the owner in this case? Why?
Activity 61b
Bond disposal
1. Tenants who paid a bond of $1200.00 are terminating their tenancy. You conduct a final inspection and find that walls are damaged through picture hooks being inserted. You estimate the cost of repairs to be $300.00. Owners instruct you to claim the costs from the bond. a) Use a property management system to complete a bond statement showing the cost of repairing walls, carpet cleaning of $120.00, and water consumption of $30.00. b) The tenant disputes the bond statement. What actions will you take to rectify the situation?
c) Agreement is reached on the refund amount of the bond. Complete a Joint Application for Disposal of Security Bond form.
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Discuss your completed application with colleagues and facilitator
19.4 Abandonment of premises

If a tenant leaves the property and stops paying rent without giving or being given notice, the premises may be considered abandoned. When this occurs, the tenant is liable to the owner for losses, including rent. Under Section 77 of the Residential Tenancies Act, the owner may apply to the court for an order declaring that the premises have been abandoned. Section 78 of the Residential Tenancies Act 1987 states that an owner may not be entitled to compensation when reasonable steps could have been taken to avoid the loss. In other words, if an owner knows that a tenant has abandoned the property and does not promptly commence the process to formalise this and re-rent the property, they may not later be able to make a claim on the tenant for all of the lost rent. Legislation provides for owners/property managers to mitigate any losses when possible. Processes for abandoned premises under the Residential Tenancies Act 1987 Order that premises are abandoned RTA Section 77 Sometimes tenants leave a property without any notification. (Take care in establishing this - they may be in hospital). If you establish that a property is abandoned, the Act states the process to follow. Apply to the Magistrates court for an order declaring the tenant has abandoned the premises (use Court form 12). The Magistrate will determine the effective date when the tenant left. Section 78 of the Act then takes effect. Right of owner to compensation where tenant abandons the property RTA Section 78 A Magistrate may then order compensation to the owner for losses.
Abandoned Goods RTA Section 79 After 2 days you may dispose of perishable foodstuffs. If the estimated value of other goods is less than the amount it would cost to remove and store them, request a certificate of indemnity from the Department of Commerce and dispose of them. You will need to provide a list of the goods and details of the tenant, property etc.
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If the goods are more valuable you must store them for at least 60 days & a) write to the tenant b) advertise in the newspaper. Goods not claimed within 60 days can be sold at auction. If goods are claimed you may charge for costs of storage before releasing them. The balance of monies is paid into the Rental Accommodation Fund. A claim for cost of removal, storage, sale and rent owed may be made in the Magistrates Court using Form 11. Become very familiar with the processes as outlined in sections 78 and 79 of the RTA. This process is the only way tenant's goods can ever contribute to a sum owed to owners. A sample Notice Regarding the Disposal of Goods appears at Appendix 28. Recovery of possession of premises prohibited except by court order RTA Section 80 To recover premises that are considered to have been abandoned during the term of a tenancy, or when a tenant has not vacated after a tenancy expires, an order is to be acquired from the Magistrates court. The owner/property manager cannot enter the premises without this order.
Activity 62
Abandonment of premises
Summarise the key points of the process used for abandoned premises and goods from the time you suspect that the premises have been abandoned to disposal of goods.
Discuss the process with your facilitator to address any issues which may arise from agencys practice. Compare your response by visiting the model answers
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In summary
A notice to vacate a property must be submitted in writing stating the prescribed period of notice. Terminating a periodic tenancy can occur for a number of reasons and must occur in writing. In a fixed term tenancy, the tenant can leave on the last day of the fixed term without giving any prior notice to the owner. Finalisation procedures include a final inspection of the property and bond disposal. Where the owner and tenant fail to reach agreement on the bond refund, an application may be made to the courts for a decision. A property is considered abandoned when the tenant leaves the premises and stops paying rent without giving or having been given notice to terminate the agreement.
Self-check questions 1. What type of documentation is to be completed on termination of a tenancy agreement? 2. What is the process for terminating a periodic tenancy and a fixed term tenancy in line with legislative requirements and agency practice? 3. What avenues are there for the owner to claim entitlements from the bond monies? 4. What avenues are there for the owner to claim entitlements which exceed the amount in the bond monies?
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PART 20: Managing strata titled and other shared properties

Learning Outcomes
This part of the learning materials aims to help you understand the following concepts in regard to Strata Titled properties: The strata plan and survey-strata plan. Exclusive use. By-laws. Insurance. Levies. Strata company meetings. Water consumption. Electricity and gas charges. 'Common property' o areas included as common property o 'exclusive use' of common property. 'Lot' and the area owned by a strata title proprietor within the 'lot. The composition of a strata company. Reasons why a search should be made of the strata plan in addition to the strata title of a lot within a strata property. The form of ownership known as Grouped Dwellings.
It is an overview only. More in-depth training is needed before attempting to manage large strata titled complexes with more than two or three dwellings.
20.1 Introduction
Property managers must clearly understand their duties and obligations when managing a property that is strata titled and be able to identify what actually belongs to an owner so that they disclose this correctly to potential tenants. To do this they should understand the basic concepts used in Strata Titles and have a checklist to ensure they disclose all the information a tenant need when deciding whether to lease a strata titled property. A sample Strata Plan appears at Appendix 32.
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History The current Strata Titles Act has evolved from the first Act that was introduced into Western Australia in 1966. The Act as amended creates and regulates strata titles in Western Australia. A strata scheme allows for more than one lot with an individual title within one parcel of land. The division of strata titled development into units is capable of being identified vertically, on the land and horizontally, that is, on a strata title. That is where the term 'strata' comes from. Checklist for managing a strata title property A property manager managing a strata title property should obtain the following information from the owner. This information should be kept on file for reference. How to obtain the information: 1 Title Search of the Lot A certificate of title for a strata lot will describe the lot to which it relates by number, e.g. lot 1 or pt lot 1, on Strata Plan 31002. Vol 2079 Fol 742 (Appendix 7D). The lot number and strata plan number must be obtained from the owner to enable a search at the Office of Titles. 2 Strata Plan or Survey-Strata Plan Search The strata plan should be searched at the plans and diagrams section of the Office of Titles for the following reasons: To positively identify which unit is being dealt with. The number on the front door may not necessarily be the unit lot number. To establish whether changes have been made to by-laws. To check owner's/tenants rights in relation to common property.
As the cost of these searches may be passed onto the owners it is important that you inform them that you will be searching the titles. 3 Unit Entitlement of the Lot Obtained from the schedule of unit entitlement on the strata plan. 4 Standard By-laws Statutory or standard by-laws are set down in the Strata Titles Act and automatically come into operation on registration of the strata plan or survey-strata plan. The Strata Company has the power to amend by-laws which can cover: parking for visitors damage to lawns and gardens comprising common property rubbish removal
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children playing in common areas doing business form home keeping of pets. Applicants for tenancy should be aware of any by-laws that apply, particularly re exclusive use. Exclusive Use Area Exclusive Use areas must be registered in the by-laws and noted on the strata plan. If there is no by-law registered then technically there is no exclusive use right, even if owners believe that they have this because of long term use of an area. This can become an issue if you wrongly tell a tenant they have exclusive use of a car bay, for instance. You need to establish: Are courtyards and carports part of the lot? Are driveways common property? Are there any exclusive use rights? 5 Insurance Details Obtain insurance details from the strata company or owner. Collect a copy of the insurance Certificate of Currency as it will provide all the required insurance details. Strata insurance is not in individual names. Ideally the insurance should be specifically for strata so that common areas are properly covered. 6 Councillors and Strata Company Managers Obtain details of the strata company manager or from the owner. If the strata company is managed by the owners obtain details of the secretary. 7 Power, Gas and Water Ask owners whether meters are separate, or a master meter with sub meters. Tenants must know the meter arrangements and whether a bond is applicable. 8 Laundry Facilities If there are communal or coin operated laundries tenants should be told this.
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20.2 Types of property utilising strata title

Under residential planning requirements, the R Codes, the terminology used to describe residential group or communal housing is grouped dwelling or multiple dwelling. More familiar terminology may be: duplex triplex quadruplex townhouse row house patio house villa home unit.
Most of these property types are on strata title. Strata titles are not exclusive to residential property and are used in commercial and industrial property, including: shops factory units offices.
Strata plans Strata plans always relate to buildings. The strata plan contains a location plan and a floor plan. The location plan indicates the position of all buildings in relation to the boundaries of the parcel. There is a different floor plan for each floor or level of a building. The floor plan indicates the position, floor shape and floor area of each lot and is noted with the lot number or part lot number. Single-tier strata scheme Is the term given to a strata scheme of any size in which no lot or part of a lot is above or below another lot. It may be two-storey as long as it is the same lot and ownership. Survey-strata plan Survey-strata schemes differ quite significantly from strata plans that relate to buildings. They are used in creating vacant lots with or without buildings and require a formal survey by a licensed surveyor to show all dimensions, angles and areas. Unlike strata plans, the measurements do not relate to buildings and building outlines do not need to be recorded on the strata plan.
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Survey-strata plans may or may not contain common property. They may be restricted in height and depth as for strata plans. In most cases approval from other lot proprietors is not required to build on survey-strata lots. 'The lot' A strata title lot is defined as the portion of a building, group of buildings or land for which a separate certificate of title is issued. This is the area owned exclusively by a strata titles property proprietor. The individual strata lot is defined in terms of cubic space in a strata scheme. It is wholly and separately owned in accordance with the details shown on the strata plan. Common property Land and buildings that are not part of a strata title lot are known as common property. In survey-strata schemes, a lot number with the preface 'CP' in front of it denotes common property. The lot number for common property is always the last lot number within the numerical sequence. Large developments In large strata schemes, particularly those created by the 1966 legislation, common property usually included: common access ways/ passages/ stairs driveways swimming pools parking areas.
These were designed to be used by all persons in the development. A large development may have all of the above common property. Single-tier schemes of any size may be treated differently. Any area that is not designated as a lot or part lot on the strata plan is common property. Common property in a large development usually includes the exterior of the building structure, including walls, floors and roof. This enables the whole development to be properly maintained and insured for the benefit of all proprietors instead of individually. Interest in the common property Each proprietor owns an interest known as a share in any common property. The proprietors are tenants-in-common in proportion to their unit entitlement as reflected within the strata plan or survey-strata plan.
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What does the owner of a strata titled property own? The proprietor of a 'lot' under the Strata Titles Act (1985) owns the specified lot. All land, airspace and buildings within a strata development are either part of a lot or common property. What constitutes the 'lot' of a unit varies in different developments. The only way to establish exactly what an owner owns is to search the strata plan. In a typical large multi-storey development lot proprietors usually own individually only the air space inside the building. The walls, floor and roof are common property owned jointly with other lot owners. Since 1985, the lot may also include the garden area, courtyard and carport Areas not identified as part of the lot on the strata plan are common property. Ownership of the building structure Prior to 1997 the ownership of the building structure was a contentious aspect of strata title ownership. The buildings were most often considered common property in all strata schemes. As a result of the amendments each unit owner in a single-tier strata scheme can now individually own the building structure. An owner of a 2-5 lot scheme may automatically own the building which means they take on all responsibility for maintenance to the building and attachments such as hot water systems, TV aerials etc. A 2-5 lot scheme may only have a shared driveway or not have any common property. These details can be established by searching the strata plan and checking the surveyor's notation on the floor plan page. Where the building structure is common property the legal responsibility rests with the strata company to maintain it. In a scheme where the buildings have a become part of the lots individual owners are responsible for things like: Cleaning the gutters and downpipes. Repairing and replacing rusted out or worn gutters and downpipes. Repainting previously painted exterior surfaces.
This can raise concerns if owners are inconsistent, affecting the overall look of the property and the property's value It can be difficult for other owners to persuade a neglectful owner to maintain their property. Strata Company On registration of the strata plan, a strata company automatically comes into existence by virtue of the Strata Titles Act. All lot proprietors at any one time are automatically members of the strata company.
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A strata company is not a company in the usual sense - there are no shares issued and no directors. It is not incorporated under the Companies Code. Many owners of strata dwellings in groups of two are not even aware that the company exists, but they should be made aware of it before letting their property because tenants may be impacted by by-laws. Management statement (Schedule 2A) A management statement is a document which incorporates by-laws. Schedule 2A has been incorporated to set out headings for by-laws that may be approved for inclusion within a 'management statement'. By-laws are determined by the original proprietor (developer) before any lots have been sold. The management statement is registered at the same time as the strata plan or survey-strata plan. Strata company information The property manager must obtain written permission from the owner to inspect the strata company records. Under the Act the strata company is required to allow a proprietor, mortgagee or any authorised person to inspect the company records including: minutes orders insurance policies by-laws.
The strata manager usually holds all of these strata company records. A strata manager should not be confused with a property manager. A strata manager manages the affairs of the strata company e.g. keeps records and collects strata levies. A property manager manages the affairs of the owner e.g. installs a tenant and collects rent.
20.3 Other types of community ownership

The strata title system is one form of community ownership. There are other types of community ownership in which you may become involved. The most common is known as grouped dwellings. Grouped dwellings If a development has been designed and built as a number of independent dwellings grouped together and there is no common property involved freehold titles may be held. Example: If land has been developed to meet the criteria laid down by the local authority, a developer may build units with their own frontage that are allowed to be subdivided and individual green titles issued for each. A common development is four units side-by-side with individual driveways but with common party walls.
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The R-codes describe grouped dwellings. Common names include townhouses, row houses or patio houses. A separate conventional 'green' title may be held by each owner as an individual dwelling with the land adjacent to it. It is quite separate and identifiable as a lot on a diagram or plan. Strata titles are the same as conventional titles but have reciprocal party wall easements which give rights of support between adjacent units. These easements are shown as small separate lots. Because they are not strata titles there is a general freedom from common ownership matters as the respective front and rear courtyards, gardens and carports are land wholly owned and maintained by the respective proprietors. Three other forms of community ownership are: Leasehold A property is owned by the government and leased to a group such as an aboriginal community sometimes for a peppercorn rent. Company share Title A property is owned by a company incorporated specifically for the purpose. Being a shareholder in the company gives a person the right to occupy a particular portion of the building. Purple title Some retirement villages or multi storey flats (for example) offer residents this type of title it is an undivided share in the complex. The right to occupy certain areas in the complex is determined by the contract with each resident. To determine the type of ownership the title must be searched. The new property manager may need to seek guidance from the agent/licensee if the property has an unusual form of ownership.
20.3 By Laws and Levies

You must understand who is responsible for the repairs and maintenance of the building structure because some of these costs may impact on tenants. Ensure that you ask owners of strata property's for full disclosure of this when managing strata titled properties as it can vary. You must be able to define the lot boundaries and common property for potential tenants so they understand how maintenance such as gardening and cleaning gutters is shared between the strata company and each lot proprietor. You must also understand all by-laws applicable to any strata property you manage There are standard by-laws that automatically apply to a strata company contained in schedules 1 and 2 of the Strata Titles Act 1985 but these are varied at times so again owners must supply detailed disclosure.
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For non-standard by-laws to have effect, they must be registered on the strata plan. You must obtain a copy of these as they may affect tenants. The Strata Titles Act 1985 states that any occupier, including a tenant, is bound by the by-laws even if they are unaware of them because owners have failed to state them in the tenancy agreement. Tenants can make a claim against owners/agents if restrictive by-laws are not disclosed.. House rules issued by a strata company or council are a guide only and are not necessarily enforceable. It is recommended that rental managers encourage tenants to abide by the house rules to minimise disputes. Each owner is liable to pay any contributions for their lot duly raised by the strata company whether by regular payments or a special one off payment (usually in proportion to the unit entitlement stated on the strata plan or survey-strata plan). When levies are not paid on time, the strata company is required to charge interest on any arrears at the prescribed rate unless the interest is waived or reduced. The property manager should establish the amount of regular payments or any outstanding amounts by lodging written enquiry to the strata company manager. If unsuccessful in obtaining a response, the property manager may require the issue of a Section 43 Certificate. A fee is charged for this and is a statutory obligation which provides certified details of outstandings.
20.4 Strata company meetings

The strata company is required to hold an Annual General Meeting (AGM) each calendar year with no longer than 15 months between one AGM and the next. Two lot schemes are exempt from holding AGMs but the first AGM must still be held by the original proprietor. At the AGM: The annual accounts are considered. The strata company council is elected and is commonly called a management committee. The budget and levy contributions are set. Any other business stated in the notice of meeting.
Other meetings of the strata company are called extraordinary general meetings. Property managers are rarely involved but may occasionally be instructed by owners to attend meetings on their behalf. If doing this property managers should familiarise themselves with strata company meeting procedures as contained in Schedule by-laws, particularly with regard to correct notice of meetings, proxies and voting. The owner is not eligible to vote unless he/she is financial and has paid his/her levies.
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20.5 Utilities
Under the Residential Tenancies Act water, electricity and gas consumption charged to the owner may be on-charged to the tenant if agreed in the lease. This is covered under clause 2.16 of the standard REIWA lease. Special care needs to be taken when charging water consumption and recovering the cost from tenants when the property is strata titled. If there is: only one water meter for the strata scheme, or no separate water meters for each lot.
Water consumption may become a common fund expense and be included in the levy contribution paid by owners in proportion to the unit entitlement for their lot. Again how the tenant is to be charged must be clearly agreed in the lease. Water usage cannot be charged in advance. It is also necessary to find out whether the meters are main Water Corporation meters or private sub-meters which may affect the method of charging and who is responsible for payment.
20.6 Strata company management

Some property managers may become involved in strata management after gaining considerable experience in managing strata companies. This is distinct from property managing a strata titled property. Sometimes there are conflicting areas between the two activities, e.g. repairs and maintenance, insurance, by-laws, etc. A person managing a strata company must fully understand the Strata Titles Act 1985 and how it is applied to: Raising and charges for levy contributions. Repairs and maintenance of common property. Interpretation of lot boundaries and areas of responsibility. Insurance claims and dealings. Exclusive use allocation. Improvements in part lots and common property. Enforcement of by-laws. Procedures for strata company meetings. Preparation of notices and conducting meetings. Preparation of minutes.
It is recommended that all Strata Company managers attend specialised courses such as those conducted by REIWA. If property managers are engaged in strata company management the activities are very specialised and require specific training.
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In summary
There are additional by-laws which need to be addressed exclusively for strata properties. Property managers must clearly understand these by-laws and their duties and obligations when managing a property that is strata titled. It is recommended that rental managers abide by the house rules as they are generally a good indication of how the council views property matters and observance will minimise disputes. The strata company is required to hold an Annual General Meeting (AGM) each calendar year with no longer than 15 months between one AGM and the next. Two lot schemes are exempt from holding AGMs but the first AGM must still be held by the original proprietor. Water, electricity and gas consumption charged to the owner may be on-charged to the tenant as per clause 2.16 of the lease. Some property managers become involved in managing strata companies which is distinct from property managing strata titled properties. It is recommended that all strata company managers attend the strata management and sales courses conducted by REIWA.
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PART 21: Introduction to commercial and industrial property management

Learning Outcomes
This part of the learning materials aims to help you: Explain the conditions for commercial property management. List the recognised differences between commercial and residential property management. Define the following terms as they relate to commercial property management: o Base rent. o Net rent. o Variable rent. o Car parking. Describe the rental arrangements for short term rental/holiday accommodation.
Elements:
CPPDSM4010A/1 Screen tenant enquiries. CPPDSM4010A/4 Complete tenancy documentation and place tenant in property CPPDSM4007A/1 Apply knowledge of property management.
1.4 Factors likely to influence the lease of properties are identified and potential tenant intentions clarified. Required government fees and duty are paid in line with legislative requirements.
4.3
1.6
Ethical and conduct standards and key principles of consumer protection, equal employment opportunity and privacy legislation in relation to property management are identified in the context of legislative requirements and agency practice. Rental moneys are collected and processed in line with lease or tenancy agreement, legislative requirements and agency practice. Procedures for collection of rental arrears are implemented in line with landlord instructions, legislative requirements and agency practice.
1.3
1.6
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21.1 Commercial Property Management

Commercial property management includes management of office buildings that range from small strata titles offices of 50sqm in total to QV1 building with a floor area of 67,000sqm and a height of 261.7m with 51 floors. There are several fundamental differences between managing a commercial property and managing residential property: Longer term tenancies secured by agreement or lease. Lower turnover of tenants. Less personal relationships with more corporate and company tenants instead of private individual tenants. Tenant occupation is often only during office hours and/or retail trading hours. Rental structure differs in base rent, variable rent, etc. Instead of bonds or security deposits it is usual to have guarantors for security. Tenants pay outgoings.
A lease for Commercial Property is an agreement in writing granting exclusive possession of land for a certain period in consideration of the payment of rent. Such agreement sets out the rights and obligations of the owner, or owner of the land, and the lessee, the person who accepts the lease, subject to various mutually agreed conditions. Essential characteristics of a lease are that the lessee is given right of exclusive possession for the period of the lease and the duration of the lease can be clearly determined. Property manager/Owners rights As with the lease of residential properties, commercial properties also require a written agreement between the property manager and the owner and the owner/lessee (see Appendix 29 for a sample copy of REIWA Form 299 Authority to Lease, Sub Lease or Assign Commercial/Industrial Premises and REIWA Form 307 Contract to Lease Commercial/Industrial Premises by Offer and Acceptance (other than Retail Premises form). The property manager or owner has the right to enter the premises at all times and without notice if there is an emergency, otherwise at least 7 days notice is to be given for any of the following purposes:
To view the state of repair of the premises. To ensure compliance with conditions in the Agreement. To maintain or repair the premises. Remove harmful substances.
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Lessees Obligations The lessee is responsible for: Paying the rent punctually. Outgoings or the negotiated share of the out goings. Relevant utility charges. Management fees. Negotiated service fees. Maintenance and repair. Keeping the premises clean and free from rubbish.
The lessee is not to: Make any alterations, additions or demolitions to the premises without the prior written consent of the owner. Sublease or allow any other persons to occupy the premises without the permission of the owner.
21.2 Commercial property rental structure

The commercial property rental structure is broken into three main areas: 1. Base rent. 2. Variable rent made up of variable outgoings. 3. Car park rent. Base rent Base rent is the rent paid by the tenant to the owner for the leased area. The base rent is payable in accordance with the formula and manner specified in the lease, i.e. monthly in advance monthly in arrears on the 1st day of the month on the 15th day of the month etc.
Example 1: A legal firm leases 800sqm at $250/sqm. Calculate the base rental per annum (pa) and per calendar month (pcm). 800 x 250 = $200,000 pa 12 = $16,666.67 pcm. Example 2: A legal firm leases 1000sqm at an annual base rental of $250,000. Calculate the rental paid per calendar month (pcm). $250,000 12 = $20,833.34 pcm.
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Example 3: A legal firm leases 1500sqm at a calendar monthly rental of $30,000. Calculate the annual base rental and the $ per square metre paid by the legal firm. (i) $30,000 x 12 = $360,000 pa base rental (ii) $360,000 1500sqm = $240sqm pa Variable outgoings the total costs associated with the running of the property, which may include rates and taxes are specified in the lease. Variable outgoings may include:

water rates land tax air conditioning security cleaning common area electricity
council rates water consumption lifts repairs and maintenance gardening insurance
management fees (except if the property is retail premises)
The lease defines the variable outgoings payable by the tenant and how the outgoings are to be collected by the owner. It is normal for a variable outgoings budget to be prepared prior to the commencement of the financial year. This allows the owner to prepare for all budgeted expenditure. Tenants are advised of the budget and their proportion, which is based on their proportion of the total net lettable area of the building. 2. Variable rent The tenants proportion of variable outgoings are payable in accordance with formula and manner specified in the lease, e.g. monthly in advance, annually in arrears. As with base rent, variable rent is expressed in terms of $ per square metre per annum. This rate is achieved by dividing the total lettable area of the building into the total amount calculated for the variable outgoings for the year. Example 1: The variable outgoings for the financial year for the property at 1 Hope Street, Bondtown have been calculated at $268,000. The nett lettable area (NLA) of the property is 2680sqm. Calculate the $/sqm for variable rent. $268,000 2680sqm = $100sqm variable rent.
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Example 2: A legal firm who leases 85sqm at 1 Hope Street has asked for the cost of their variable rent for the year. Calculate the amount payable pa and pcm. 85sqm x $100sqm = $8,500 pa 12 = $708.34 pcm It is normal practice for the lease to account for the variable outgoings to be audited at the end of each year. Calculating the actual monies paid out against the amounts budgeted for will inform the tenants of any overpayment requiring credit, or for under payments by the tenant for owner recovery. Example 3: After auditing the actual expenditure for the year, attributable to variable outgoings at 1 Hope Street, Bondtown was $260,000. Calculate the refund due to the legal firm in the above example. Budgeted (and collected) Actual expenditure Surplus of collection over expenditure $ 268,000 $ 260,000 $ 8,000
Proportion to legal firm $8,000 2680 x 85 = $ 253.73 3. Car park rental The rent paid by the licensee to the licensor for the use and occupation of the car bay is usually paid monthly in advance. Car bays may be leased on a temporary basis, e.g. monthly, or on a permanent basis, usually by a licence document which may be tied into the lease term. Activity 63 Commercial property
a) List the differences that exist between leasing Commercial/industrial property and residential property.
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Government fees and duties GST Under the terms of a commercial lease, the lessee pays the owner any GST payable by the owner in accordance with the GST Act. Such payments are made by the lessee prior to the date of payment of the GST by the owner or on the dates for the payment of rent, outgoings, services or managing agents fees, whichever is the earlier. The lessee hereby indemnifies the owner in relation to the payment of any GST. If registered for GST, the owner must provide the lessee with a GST tax invoice as required under the GST Act. Leases under the Duty Act Lease duty is not usually chargeable under the Duties Act 2008. There is no duty payable unless a consideration or premium over and above the usual rent is paid for: the grant of a lease (i.e. a premium) the transfer of, or an agreement for the transfer of a lease the surrender of a lease. If there is not a dutiable transaction documents should not be presented to the Office of State Revenue for endorsement. When there is consideration paid for the grant, transfer or surrender (in the case of a surrender, consideration paid by the lessor), there is a dutiable transaction on which transfer duty is payable at the general rate of duty. The dutiable value is the amount of 'consideration' paid for the grant, transfer or surrender. If the grant of a lease includes rent that is in excess of the fair market rent, that amount is included in the dutiable value for the transaction. The transaction record for any of the above dutiable transactions must be lodged with the Office of State Revenue within 2 months of date of the transaction. Further information on the payment of duty can be obtained from the website of the Department of Finance: http:// www.finance.wa.gov.au Permitted use The permitted use of the premises will be stated in REIWA Form 400 Standard Commercial/Industrial Property Lease (Part B) document with the condition that the premises cannot be used for any other purpose. Restrictions to the use of the premises must be acknowledged by the lessee.
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Rent review clauses On each rent review date, documented in the lease, the rent can be determined by the following methods on the rent review date: Market rent review determined by a registered valuer. Consumer Price Index. The rent applicable immediately before the date being increased by an agreed percentage. Option to renew clauses An option to renew a lease is usually granted providing: Notice is given at least 3 months prior but not 6 months before the expiry of the term of the lease. No default has occurred which has not been resolved or waived. An option of renewal clause in the contract for lease will state the renewal term. Disputes Commercial leases are governed by the laws of Western Australia. There are four options available to resolve a leasing dispute: informal negotiation mediation the courts; and the State Administrative Tribunal. Retail shop lease Retail shop leasing is governed by the of Commercial Tenancy (Retail Shops) Agreements Act 1985. It is a requirement that a REIWA Form 156 Disclosure Statement and a REIWA Form 158 Tenant Guide should be sent to the proposed tenant at least 7 days before the lease is entered into by the tenant. All sections of the Contract to Lease Retail Premises by Offer and Acceptance must be completed. Compared with a Residential Tenancy Agreement, the operating expenses are more clearly defined, particularly as to who will be responsible for their payment. It includes additional items such as: Water drainage and sewerage rates. Local authority rates. Land tax. Interest charges on outstanding rates and taxes. Fire services. Cleaning windows and rubbish removal. Building and plate glass insurance. Common area, lighting and power. Air conditioning running, repairs and maintenance. Lift running repairs and maintenance.
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Retail shop lease rent review The period for rent review will be negotiated and documented in the contract and will date from the commencement date of the term of the lease. All rent reviews will be based on market rental unless otherwise stated in the contract. These will be calculated in accordance with the Retail Shops Act provided that the reviewed rent takes effect from the appropriate review date. Option for renewal of lease The lessee has the option to renew the lease provided they are not in default of any conditions. The renewal will have the same terms and conditions except for the rent. The option can be exercised not more than 6 months and not less than 3 months prior to the expiration of the initial term. Refer to Appendix 30 for a sample copy of REIWA Form 403 Contract to Lease Retail Premises by Offer and Acceptance.
Activity 64
Commercial property management
1. The property manager /owner has the right to enter the premises. How much notice is required for the following situations: a) where a suspected break in has occurred: b) to service the air conditioning vents: c) to conduct a pest control spray: d) damage has been caused to the premises due to a small fire? 2. State the ways rent can be reviewed for: Commercial premises
Retail premises
3. What government duties are payable on commercial leases?
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21.3 Short term/holiday accommodation

Short term/holiday accommodation constitutes premises ordinarily used for stays of no more than three consecutive months at a time. This includes, but is not limited to, hotel rooms, holiday houses, (including private houses), resorts, caravan parks, hostels and backpacker accommodation. Legislation states that the agent must be appointed before any services for the owner are performed. Therefore, a written agreement between the property manager and the owner must be completed. A copy of the Exclusive Authority to Act as Managing Agent for Residential Premises for Short Term/Holiday Accommodation appears at Appendix 31. When longer term applicants apply, the property manager has similar responsibilities as they would for a lease of a residential property, i.e. Advertising for tenants. Showing tenants through properties. Assisting with the selection of a tenant. Lodging bond. Collecting rent and issuing receipts. Conducting property inspections. Arranging for repairs and maintenance (with the owner approval.) Forwarding accounts/collecting payments (e.g. water consumption costs.) Issuing breach or termination notices to the tenant.
Should holiday properties be let without a lease property managers must still comply with the Real Estate and Business Agents Act and consumer protection laws such as the Fair Trading Act (and contract law). Holiday letting does not come under the Residential Tenancies Act and does not normally involve leases due to the length of time of the letting. However if an owner wanted to draw up a lease to let their holiday home for a longer than normal period it would then revert to the requirements under the Residential Tenancies Act. In November 2005, The Real Estate and Business Agents Act was amended to allow non-real estate agents to legally undertake holiday letting in Western Australia. A Holiday Accommodation Manager seeking tourism accreditation must complete all requirements of the National Tourism Accreditation Program (WA) which addresses Holiday Accommodation Managers who: Enter into an agreement with property owners to manage short stay accommodation premises, and Collect payment from customers on behalf of property owners for the letting of accommodation and take a commission or fee for this service.
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Holiday Accommodation Managers may also: Hold and hand over keys to customers for the occupation of short stay accommodation premises. Receive and refund bond monies for the occupation of those premises. Arrange for the cleaning and maintenance of those premises. Interview potential occupants of those premises.
Non-agents must: Operate a separate owners bank account for the purpose of achieving higher standards of financial accountability. Comply with a new Code of Ethics. Operate under a dispute resolution process modelled upon the best-practice benchmarks of accessibility, fairness, independence, accountability, efficiency and effectiveness. Abide by orders made by a new Dispute Resolution Panel with the authority to levy fines, and revoke or suspend accreditation. Be subject to a new naming policy where, should a holiday accommodation manager have their accreditation revoked, the Commissioner for Fair Trading (the Executive Director of Consumer Protection) may publicly name the business.
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In summary
As with the lease of residential properties, commercial properties require a written agreement between the property manager and the owner. The permitted use of the premises will be stated in the Standard Commercial/Industrial Property Lease (Part B) document with the condition that the premises cannot be used for any other purpose. The commercial leases are governed by the laws of Western Australia. If there is a dispute, it will be determined by a single arbitrator under the provisions of the Commercial Arbitration Act 1985. Rental shop leasing is governed by the of Commercial Tenancy (Retail Shops) Agreements Act 1985. It is a requirement that a Disclosure Statement and a Tenant Guide should be sent to the proposed tenant at least seven days before the lease is entered into by the tenant. The property manager has the same responsibilities for managing a short term/holiday accommodation as they would for a lease of a residential property.
Self-check questions 1. What are the legislations which affect commercial leases? 2. What are the government charges and duty which can be charged for commercial leases? 3. How is the management of commercial leases different from residential leases?
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Part 22: Property Management Systems

Learning Outcomes
NB: Part 22 is not a compulsory part of your course and is not assessable. It is an 'optional extra' designed to give those who have not worked on a property management system some familiarity with the types of activities that are performed on property management systems generally. Learners are welcome to complete the activities and if they do so should learn to: Identify the features of the property management systems. Describe the functions of the system within an agency.
22.1
Introduction
Software systems are available for property managers to manage their rent roll electronically. The features of these systems include: Provision to advertise rental properties. Document management facility. Electronic banking. Maintenance. Rent Arrears. Rent Reviews. Lease Expiry. Bank Reconciliation. Cash Book. Owner, Property and Tenant ledgers and cards. Routine inspection letters and reports. Record of owner charges. The running of at least one End of Period (mid or end of month.) Additional options customised for the agency.
There a number of property management systems used in WA. The two main systems are: GeeDee Realty Systems www.geedee.com.au REST Professional www.rockend.com
Note: REIWA does not endorse any one system. Each agency will use the property management system they deem most suitable.
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The information which follows will highlight some features of the two most popular systems.
22.2
REST Professional
This system has been developed by a company called Rockend who supply and support strata and property management solutions. They cover Australian and New Zealand property businesses. The program featured eight main functions: Web advertising Owner management Tenant management Owner/tenant online access Property Maintenance SMS messaging Arrears management Management reporting End of month processing.
Each of the functions on their website has a video which explains how to use its features. There is provision in the activities below for additional notes to be written during the demonstration.
22.2.1 Web advertising

Property details Screen Photos and full property descriptions, complete with floor plans can be posted.
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Vacant property screen This function also has the ability to display current or future vacant properties which can be searched by property manager or type of property.
Activity 65
Web advertising
Refer to the two screen shots above and list the items in each. a) Property photos and descriptions.
b) Vacant property screen.
Additional Notes:
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22.2.2 Owner management
Owner categories All property owners, tenants and properties can be grouped into specific categories of choice. This enables communication with each separate category.
Owner customisations Further flexibility is available when managing property owner relationships, e.g. withholding funds, additional statement copies.
Activity 66
Owner management
List items which can be recorded on either of the two sites.
Additional Notes:
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22.2.3 Tenant management
Action and conversation diary This is a tracking and reminder system to ensure that no tasks are left incomplete and that all interactions with clients are recorded. It can also relate to owners, properties, tenants and trades people.
Activity 67
Tenant management
Record below a feature that you, as a property manager, will find valuable from this function.
Additional Notes:
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22.2.4 Owner/tenant online access
iREST Online Access
With a direct link from the website, owners and tenants are able to securely log into their personal site to view information such as statements, and payment ledgers.
Activity 68
Owner/Tenant Online Access
What specific information can owners/tenants view through this feature?
Additional Notes:
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22.2.5 SMS messaging
SMS Text Messaging Owners, suppliers, tenants and property managers can be sent a text message automatically from within REST. This message is kept on record as proof of being sent.
Activity 69
SMS messaging
What are some uses and benefits of SMS messages?
Additional Notes:
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22.2.6 Arrears management
Arrears Management This feature integrates with Microsoft products to enable easy communication with customers. Using the mail merge facility, all arrears letters, emails and text messages can be distributed quickly.
Activity 70
Arrears management
Identify Microsoft products where you can store letters to manage arrears.
Additional Notes:
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2.2.7 Management reporting
Management Reporting Management reporting can be provided for a rent roll showing key performance indicators such as gained and lost managements. Statistics such as monthly management fees can also be viewed. Statistics reports can be exported to excel to convert into graphs.
Activity 71
Management reporting
What items would you, as a property manager, like to include in the management reporting?
Additional Notes:
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22.2.8 End of month processing
End of month procedure This feature guides the users through the procedures step-by-step from the bank reconciliation to files update and automatically perform the required backups
Automated electronic banking Tenants are able to make rent payments electronically while the Tenant Direct Debit module allows rent to be collected electronically from tenants. The download of receipt information from the agencys bank automatically presents cheques drawn on the trust account in dealing with creditors and owners thereby eliminating the need for cheques.
Activity 72
End of month processing
What are the advantages you see of this feature for an agency?
Additional Notes:
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22.3 GeeDee Realty Systems
This system has been developed by a Western Australian company. It handles residential property management, trust accounting, strata management, commercial management and property sales needs. Its main features for residential property management include: Owner menu Property menu Tenant menu Trust account menu Creditor menu Bonds menu Banking menu Period end
Each of the functions on the main features is divided into relevant topics and each topic has either a movie or notes for view. The movies provide a demonstration of how to use the functions. There is provision in the activities below for additional notes to be written during the demonstration.
22.3.1 Owner menu
Owner receipts Allows to receipt funds into the owners account, directly from the owner used for paying maintenance where there is insufficient funds in the account to pay for the maintenance
Owner payment This feature allows a cheque to be issued and printed or the funds paid by direct transfer.
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Owner charges/refunds Charges/refunds can be entered and when processed the program will either journal the charges (if sufficient funds in the owners account) or will hold on file until funds are available e.g. Lease Fee, Property Condition Report, Title Search etc. Current statement Owners Current statement can be printed or viewed at any time. It will contain data and transactions for the current period of processing. The most frequent use of a Summary statement is as an End of financial year statement for residential properties, as it summarises individual transactions for accounting purposes The main purpose of this item is to be able to reproduce a copy of a previous statement of the owner.
Summary statement
History statement
Owner reports Owner trial balance Process charges New owner Allows information for a new rental property to be entered in the order of OwnerPropertyTenant. Prints a list of owner balances and fees.
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Activity 73
Owner menu
Make a list of the features in the Owner menu and identify when these will be used.
Additional Notes:
22.3.2 Property menu
Property receipts Allows the generation of receipts for funds received from a third party for an owner, e.g. insurance claim.
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Property Inspection report
Inspection report information can be entered, modified and stored in the data base using this option. This function allows you to enter two types of property reports the Property Master Report and the Rent Roll Valuation. This report lists the details of vacant properties available for rent. This function is found in the Property drop-down menu and is used when an existing property that belongs to one owner is sold to another owner and the property is still being managed. The tenant remains in the property and is also transferred to the new owner.
Property report
Vacancy report
Change of ownership
Activity 74
Property menu
Select two of the reports above and identify the information which would be relevant to an agency.
Additional Notes:
COURSEWARE
449
22.3.3 Tenant menu
Tenant receipts Allows receipt of rent to be recorded.
Tenant accounts This form shows a list of tenant account items. Here new items can be added and outstanding items can be edited, or cancelled.
Tenant water consumption The GeeDee Systems water consumption calculator follows the method of calculation as set out by the Ministry of Fair Trading. This method allows for consumption to be charged to the tenant based on a usage by period basis.
COURSEWARE
450
Activity 75
Tenant menu
What other information relating to tenant receipts can be included in this menu?
Additional Notes:
22.3.4 Trust Account Menu
COURSEWARE
451
Trust Account Menu Trust account ledgers can be searched for by either their name or ID number. There are seven types of accounts that can be recorded in the system: System These accounts are required for transaction processing within the property management system. System accounts cannot be edited or changed by operators. These accounts are designated for the accumulation of various property management fees. During the Period end processing, any funds in these accounts are paid to the business account, and the balance returns to zero. These accounts are for funds that are held externally for various purposes. The balance can never be in credit. These accounts are used to hold funds for various purposes. The balance can never be in debit. These accounts are specialised Credit accounts that are used to hold funds for sales deposits. These accounts are specialised Credit accounts that are used to hold funds for Vendor paid advertising. These accounts are specialised Credit accounts that are used to hold funds for variable outgoings if the Commercial system is used.
Fees
Debit
Credit
Sales
Vendor
VO
Activity 76
Trust Account Menu
What items would you deposit into the Trust Account menu? In which system would you record these?
Additional Notes:
COURSEWARE
452
22.3. 5 Creditor Menu
Creditor accounts from owner funds Details of creditors, such as plumbers and maintenance contractors, can be maintained on this menu and a history of transactions printed. Electronic payments can also be made from this menu.
Activity 77
Creditor Menu
Name additional creditor accounts which could be used with this function.
Additional Notes:
COURSEWARE
453
22.3.6 Bonds Menu
Tenancy bonds The system for tenancy bonds provides a complete record from initial collection from the tenant to final disbursement upon vacating. The Tenant bond details page shows the location and amount of bond funds for the currently selected tenant.
Activity 78
Bonds Menu
List the actions you would perform to register bond monies paid into this function.
Additional Notes:
COURSEWARE
454
22.3.7 Banking Menu
Bank statement reconciliation Each time a cheque, deposit, or journal is made in the system that affects the bank account, a record is placed in the Bank reconciliation system. This program allows the operator to check off the items appearing on the bank statements as they are received from the bank.
Dishonoured cheque A dishonoured cheque can be reversed on the system provided the receipt is in the current period and the owner has not been paid the funds. Once the funds have been paid to the owner, the receipt cannot be reversed.
Cheque toolbox This lists all cheques that are currently unpresented.
COURSEWARE
455
Activity 79
Banking Menu
Which entries in the screen shots above identify dishonoured cheques?
Additional Notes:
22.3.8 Period End
Period end processing Month-end or Period end processing is not accessed from the main GeeDee Desktop. It has a separate program icon that appears as a pile of gold coins.
COURSEWARE
456
Period end processing Before commencing this procedure, it is necessary to complete certain functions in the main GeeDee System. These functions are detailed below: Complete a balanced Bank reconciliation report. Process all Owner charges. Process all Creditor accounts. Close the Daily banking. Print Owner tax invoices.
The program screen is set out with three groups of buttons. Each button in each group accesses a separate program item which must be carried out in the order on the screen.
Activity 80
Period End
How do you think this function will benefit your agency?
Additional Notes:
COURSEWARE

Property Management Sect 2 Mod 2 Parts 4-22 V2.7 PDF

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PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

Elements and performance criteria covered:

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

Evaluate and implement promotional activities for gaining new managements

Prospecting for New Management Listings

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

Business and personal referral networks

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

Additional methods of prospecting

Evaluation of promotional activities

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

Prospecting for new Managements

c) How would you measure the success of these strategies?

Compare your response by visiting the Model Answers

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

PART 5: Establish client requirements using interpersonal skills

Elements and performance criteria covered:

CPPDSM4007AA/2 Develop knowledge of property management process

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

People skills and business relationships

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

Communication strategies and skills

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION

Verbal encouragement e.g. asking questions or saying 'go

Showing interest by listening and giving the speaker your

PROPERTY MANAGEMENT REGISTRATION

LEARNING MATERIALS MODULE 2

Using open questions to encourage people to open up

Using closed questions to follow up helps to focus the

Using probing or follow up questions clarifies important

LEARNING MATERIALS MODULE 2

PROPERTY MANAGEMENT REGISTRATION