Tenant possibly using my BCC property as a residential service, correct precaution?

(BCC = Brisbane City Council)

Hi guys,

Thought I'd get your advice on this.

The basic summary:

  • A few months ago, a neighbour logged a complaint with the Brisbane City Countil against one of my tenants, saying they had way too many people living there.
  • It's rented to a nearby restaurant owner (he was the only person on the lease), who houses five of his staff there (he flys in specialist chefs from Taiwan). So far so good - 5 people is legal in this area.
  • It's a self-managed property, so we investigated, and so did the council, and the tenants came up clean. They didn't have too many beds, everything looked in order etc.
  • It's near a university and some very popular restaurants, and this area is notorious for landlords illegally packing houses to the brim, so these accusations didn't surprise me.
  • Also not helping the temptation...is that it's a 7 bedroom house, but we're telling them they can only have 5 people there as per the BCC zoning rules in this area. They were told this before they even signed the contract, so we were absolutely clear about what they were signing up for. In fact he told me how irritating I was becoming because I wouldn't stop repeating myself about it:)
  • The reason why I don't want to boot him out (other than having no evidence) is because he's paying incredibly high rent - probably $250p/w above market - just so he can keep his employees close by. I suppose it's part of their travel arrangements / agreement...location is killer, wouldn't mind living there myself!

So to make things explicit, as recommended by the BCC we put all 5 tenants on the lease, instead of just the boss, which I think is another reason the council gave us the all clear. I think they were impressed that I was willing to do anything to make sure everything was above board...which is true - I really don't want any trouble.

Anyway I've always been very suspicious of the tenant but I just can't prove anything, so I thought to further protect myself, I've put together the following letter. What do you guys think?

I forgot to forward you a copy of the letter that the council sent me regarding the outcome of their investigation (FORUM NOTE: I'm under no legal obligation to forward this on, I'm just using this as an excuse to open a dialogue). I believe they have already contacted you and / or sent you a similar letter, but just in case they did not I have attached a copy.

As you obviously know by now, they were satisfied that the house was being occupied legally, however I do want to take this opportunity to reiterate your legal obligation - the house can not be occupied by more than the five tenants that are currently listed on the tenancy agreement.

As we have also discussed in the past, you are welcome to apply to have this property treated as a residential service, however you would bear the costs and responsibility of managing this. Again all of this is as per the Brisbane City Council's rules.

If you are ever in doubt about these rules, or if you need to update the tenancy agreement (for example if one of your employees moves out and another moves in), then please don't hesitate to contact me.

Now I'm super paranoid from an insurance perspective (e.g. what if they have too many people there and there's a fire), so I figure the following things should help protect me from a legal perspective:

A) The council inspection that's already taken place
B) The explict rental agreement that we drew up as per the council's advice, and now;
C) The email above that I'm about to send, reinforcing the laws and their obligations
D) Oh and finally, I've had an eletrician install a crap load of wired smoke detectors and I'm going to hire a yearly inspection service

What do you guys think? Do you guys think I've adequately covered myself in case this guy is sneaking in more than 5 people?
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Why are they paying $250 above market? That seems a dead giveaway that something dodgy is going on.

Probably got wind of the pending inspection and temporarily moved out the other 15 or so beds.

Visit the neighbours and hear their side of the story. They will know exactly what is going on.
I'd say the main reason would be the granny flat. When I bought the house the granny flat was done up so nicely with modern rendering etc and was clearly designed for home businesses. He said he was going to use it as his office. Considering how close it is to his restaurant I imagine it would have been a very compelling part of the property. I mean $250 for decent sized office space literally 100m from work is a good deal, far cheaper than any other commercial space. The last owners used to rent it out to a Thai woman that ran a massage parlor. BUT if you're not wanting to make use of the granny flat for business that extra $250 is hard to justify, so at the beginning none of the families that inspected were willing to pay anywhere near they level of rent. The thing is, he never set up that office, so that's what's made me suspicious. So business / office is fine. People living in it...not fine.

Now question is, say he was sneaking in people, and someone got hurt, would I be liable even after all the written warnings and checks etc that I've been doing? Also I did walk around and talked to the neighbors but no one admitted to it as it was an anonymous tip off.
What irritates me is his partner and I got into an argument because he was pissed at me harassing him about the 5 person limit. He said "I know, you only have to tell me once." Yeah...
Not qualified to comment on any legal implications but it certainly sounds like something dodgy is going on why would someone pay $250 per week above market rent even if there is a home office? You can normally pick the houses in the area they have the extended carport with a widened driveway and lots of cars coming and going all the time.
As you are interstate and managing privately it sounds perfect for him IMO
As the owner you will always be at risk in the event of an incident. You have been made aware of a potential misuse of the property.

With the high rental, a local PM would be a good idea to protect your interests.

No one pays so much above the going rate just for the fun of it.