Tenants and Government Rent Assistance

[Savanna100]

Hi everyone, I've just had my tenants "do a runner" owing me approx $2400 (they were over $900 in arrears and left a month before the lease ends, so add another $1400 to that). They used to fall behind all the time but then generally caught up. They also failed to tidy up the garden, despite being asked heaps of times. Hopefully the house is ok and I will know by Monday when it gets inspected.

I'm a federal public servant these days (so I can qualify for bank loans to buy more houses but I still run my planning biz on the side) and, as part of my job, I know that there are approx 2,000,000 renters in Australia and approx 1,000,000 of these are getting rent assistance. You need to be either receiving a government payment such as a pension, Centrelink etc or be receiving "Family Tax Benefit A" to qualify for rent assistance. How do people here feel about renting to people who receive rental assistance and do you in fact know if your tenants are receiving it?.

Also, in order to try and protect myself in the future, I plan to add lots of new conditions to my next lease and want my next tenants to pay by direct debit.
Can people here please tell me their experiences of imposing special conditions on leases to protect their interests and also getting tenants to pay by direct debit? I'd love some extra suggestions and am happy to post my completed conditions here for all to try if they wish to. (The property is in Melbourne so you may have to tailor conditions for your specfic state).

Hopefully my landlords insurance will cover some or all of my losses.

I'm happy to publish my tenants names here if you want to avoid them, they cunningly have vacated to somewhere else without using my RE for a reference. They are headed for TICA as we speak !!!!!

 

[RumpledElf]

do you in fact know if your tenants are receiving it?.

You have to fill in part of their rent assistance forms. Or at least I did. I'm amazed mine qualify for rent assistance when paying $55 a week each, but they do

Can people here please tell me their experiences of imposing special conditions on leases to protect their interests and also getting tenants to pay by direct debit?

Tenants on centerlink? Register with centrepay. Get it taken out of their pension. Too easy.

You can always put a direct bank transfer clause in the lease too.

 

[Savanna100]

Thanks so much !!

I have been told that you can have an income (total family income) of almost $100k and still qualify for rental assistance, provising you qualify for Family Tax Benefit A....amazing, no wonder 50% of all tenants in Australia are on it !!!

 

[cadence]

savannah ... what a terrible experience .... very sorry to hear it!!!!

re direct debit
are you self-managing or using a PM?
if using a PM, more and more RE agents in Sydney are requiring direct debit rental payments from the tenants ... I just leased one IP recently and it's a dd arrangement. I didn't have to request it, it was 'standard practice' for that RE agent. However, with my other IP which is managed by a different PM, the tenants signed on about 1 year ago and there's no dd. I'm not sure if the dd arrangement is a new thing ... but I guess if it's something you want, try to find a PM that enforces it.

re tenants
my IPs are negatively geared so it's hard enough when the tenants DO pay rent on time ... it would cause me grief if they were to fall behind especially if it's more than a few weeks (which I've budgeted for) ... so I can totally relate to your concerns ....

what kind of area is your property in? in Sydney, I can sort of guess if a suburb is likely to have more people on rent assistance/centrelink (this is a big generalisation)... I dont invest in those areas but I'm sure a lot of people would and have had no problems.

When you select the tenants, you can ask them to show you all sources of regular income (which includes rent assistance). They shouldnt have a problem with that. But what happens if they are receiving it and choose not to tell you ... Personally, I would make sure they earn more than enough (from the sources they disclose) to pay your rent. Couples may be safer - if one falls out of a job, the other one can still pay.

Hope you find better tenants!

 

[rugrat]

You don't have to fill in part of their forms if they have a valid rental agreement, they can use that. We used to get a whole $14 a f/n rental assistance when we were renting, barely worth claiming it. We did claim it however, because FTB A & B pay a higher amount to those renting as oppossed to those who have a mortgage - even though the mortgage repayments might actually cost more then the rent. But then, since when did centerlink ever make sense...

 

[Savanna100]

Thank you Jiggly, the house is in what was a good area when buillt in 1959 but its now pretty much a first home buyers area (Forest Hill, at the Vermont end) in Melbourne. It was my family home growing up so I dont really want to sell it. Its negatively geared (I bought it off my Father in 2003).

I will definitely insist on direct debit from now on. I am also thinking that I should try to get a family in, its really close to two primary schools and even has a bus stop opposite and shops are a 5 min walk. Its just a 1950s cream brick 3 beddie with a large garage and is on a 588 sqm bloc so not much to mow.

The reason for considering a family is that it may be harder for a family with kids at local schools to do a runner... what do you think?

Any other special conditions anyone can think of would be very well received.

 

[rugrat]

Curious, why do you even care if they get rent assistance or not? It is just an added extra some people may get on top of a regular government payment if they rent - but it is never much. I can understand why you would be interested in whether or not they are receiving a government payment, but not why you would want to distinguish if they are getting rent assistance.

 

[Savanna100]

Rugrat, I am mainly comncerned with getting input on conditions and also other peoples experience of this. I mentioned the Rental Assistance because I work at FaHCSIA who control RA and I was very suprised to learn that 50% of all renters get it...I wanted to let others know, because I think that is an amazing fact !!!

Jiggly, I forgot to add that I do use a PM, she is pretty good but I will be tightening up the letting criteria to give her more guidance in the future.

 

[RumpledElf]

You don't have to fill in part of their forms if they have a valid rental agreement, they can use that. We used to get a whole $14 a f/n rental assistance when we were renting, barely worth claiming it. We did claim it however, because FTB A & B pay a higher amount to those renting as oppossed to those who have a mortgage - even though the mortgage repayments might actually cost more then the rent. But then, since when did centerlink ever make sense...

I have borderline illiterate tenants so I just filled in all the forms that got pointed in my direction. At their previous house they had a tenant's advocate to do their paperwork. I did give them a photocopy of their lease too ...

I used to get an obscene amount of FTA/FTB/rent assistance back in the dark ages when I was a single parent renting and working. I got $5 a fortnight in parenting payment single, which entitled me to the absolute maximum rate of FTA/FTB/rent assistance and a pension card - which is like gold. It gives you so many discounts and things it isn't funny. If I was single and on centerlink now, I'd get far more as ONE person - plus the juicy concessions - from them as I do with a partner ... and they wonder why people rort the system

Have to admit that my mortgage is less than renting so I'm still ahead

 

[lura]

To me as an investor, I don't worry about where they get their income from...just as long as I am comfortable that they can pay the rent and look after the property.

To me as a property manager - having commonsense about putting the right tenants into the right property and putting all the stop gaps in place to protect the income and actual property. Because that is what I would do for my owner property.

Centrepay - can be set up easily with Centrelink. It costs you 99c per transaction that you cannot pass onto the tenant.

Direct Debit - not sure about in Vic, but in Qld - you can only use DD if it is agreed to by the tenant as part of the Special Terms and Conditions of the Lease and it doesn't cost the tenant to do so...eg. some companies use thrid party gateways like Rentpay - this costs tenants $3 per transaction....the tenant does not have to use this method to pay rent. The new law that came into place last year in Qld last year is that you have to provide two other alternate methods to pay rent that do not cost the tenant. So you can enforce DD as long as it doesn't cost the tenant to do so.

 

[tobe]

IMO she cant be that good a rental manager if they fell that far behind and left owing you money.

You have to ring the agent as soon as they are behind, and ask them to set in train the process for getting the tenants out. Not ring them, not take their word they will make it up next week, the agent needs to send them a registered letter or whatever and book a time in court. You will generally only have to do that once, and the tenants will either move on, or get in front.

If you let them pay late once, you will always be behind, the agent will assume your a charity, and it will be a continual headache for you.

Whether they pay by DD, receive centrelink, or attach shiny beads to a carrier pidgeon, it makes no diference if you dont stand firm with your contract/lease.