Initial Rent, Bond and Fee
On signing the Tenancy Agreement, the new tenant is asked to deposit to our Trust Account, the initial rent plus the bond. We usually require the first 1-2 weeks rent to be paid in advance together with three weeks rent as bond. That’s a total of 4-5 weeks rent, overall.
We make it a condition of all our Tenancy Agreements that these initial sums be received in full by the agreed time and date of possession. This means that should the funds not be paid then the Tenancy Agreement will automatically become null and void and any part funds that may have been paid to us will be returned to the tenant in full.
It is our company policy to never release the keys to the property (and thus grant possession) until these issues have been satisfied.
On-Going Rent Payment Facilities
The most common arrangement that we make with tenants for the on-going payment of rent is by Automatic Payment through the tenant’s bank. At the time of signing the Tenancy Agreement we also have the tenant complete the Automatic Payment form which we then lodge with their bank. In certain cases we can make arrangements with WINZ for the direct payment of rent from Social Welfare benefits. We do offer ‘eftpos’ facilities for tenants to make their initial payments and water usage payments.
Wherever possible we do not collect on-going rents at our office preferring to maintain the clear audit trail that direct banking procedures provide and thus ensuring that all rents are properly accounted for.
A Bond Lodgement form is completed with the tenant at the time of signing the Tenancy Agreement and the bond itself is collected prior to the tenant taking possession of the property. A Bond of up to four weeks rent may be collected. The money is held in our Trust Account until the agreed possession date at which time we lodge it with Tenancy Service where it is held until the end of the tenancy.
When the tenancy comes to an end, we will carry out a final inspection of the property and authorise the release of the bond or request that amounts be withheld. Bond may be withheld if the tenant leaves the property without fully paying up their rent, or if cleaning, gardening or repairs to damage is required.
If there should be a dispute in respect of the bond then the matter will be referred to Tenancy Services for mediation. If this is unsuccessful then the matter will then be referred to the Tenancy Tribunal for a judgement ruling.
Bonds are held by Tenancy Services until the end of the tenancy at which time it is refunded either in full or in part to the Landlord or the Tenant depending on circumstances. Both parties must be in agreement for the bond to be refunded and both the Tenant’s and the Landlord’s signatures must appear on the form before it will be released by Tenancy Services. There are usually only two issues that we have to consider when agreeing to release the bond – (a) that the rent is up to date on the repossession date and (b) that the property and its contents are in substantially the same condition as at the beginning of the tenancy (less any fair wear and tear).
We normally regard the end of the tenancy as the date stipulated in the vacation notice or when the tenant hands over the keys having removed all their belongings and cleaned and tidied the property for return to the Landlord, whichever is the later. At this time we carry out what we call our ‘final’ inspection using the ‘Property Inspection’ report signed by the tenant at the beginning of the tenancy as our guide. We do not produce a separate inspection report at this time.
We look for any significant changes to the property such as any damage or any ‘unfair’ wear and tear or if any of the Landlord chattels are missing. We also check that the premises are in reasonably clean and tidy condition, that there is no rubbish in or about the property and that the lawns are mown and the grounds are also reasonably tidy and well presented. If there are any issues, then we ask the tenant to either remedy them immediately or we make an agreement with them that either part or their entire bond be used to remedy the problem. Once we have satisfied these outstanding issues we can then sign the bond off accordingly and the funds are normally remitted within four to seven days.
Should there be a dispute in respect of the bond then the matter will be taken to either mediation or the Tenancy Tribunal for resolution. Experience has shown us that by keeping accurate property inspection records and dated photographs of the premises prior to the commencement of the tenancy, we are able to avoid most of those situations where tenants vow and declare that a certain problem was pre-existent when they moved in.
Keeping complete tenancy records is one of our most important functions as a Property Manager. Some records, such as rent records and rent receipts are mandatory, and indeed failure to keep such records is an unlawful act. Many of our records are computer-based including rent records, inspection records, and Trust payment records. All such records are held in the ‘cloud’ through our software provider and we have access to these 24/7.
In addition to computer records we also keep a variety of hard copy records such as the signed originals of all Tenancy Agreement documents, Agency Authority forms, Bond acknowledgements, copies of Automatic Payment forms. All other documents or correspondence are either scanned and stored in the cloud or, are held in email accounts within our software packages.
Rent Collection, Rent Receipts and Audits
The Residential Tenancies Act (RTA) requires Landlords to keep accurate records of all rent payments made by tenants and furthermore has made it an ‘Unlawful Act’ (Section 30 (2)) should the landlord fail to keep proper records! The act also requires landlords to issue rent receipts for certain moneys (Section 29) and again failure to issue such receipts is an unlawful act.
As a protection for home owners our Trust Accounts are regularly audited by a registered auditor, as required under the Real Estate Agents Audit Regulations 1976. Each month we forward a copy of all Trust transactions to the auditor.
As a ‘systems’ based organization we operate a state of the art computer software programme (Palace) which keeps track, on a daily basis, of all the rent payments received from the tenancies under our management. Should a tenant default then we are immediately alerted and can take the appropriate action. (See ‘Issuing Notices’)
Monthly Accounting to Owners
Historically it has always been the practice of Property Managers to account to owners on a calendar monthly basis however, we have set our Trust Accounting system so that payments can be made mid-month, or even weekly.
Throughout the month tenants make their regular rent payments to our Trust Account and then on the first working day of the following month we print out our ‘Owner Statements’ and make a direct credit of available funds to the owner’s bank account. The statements detail all moneys received into our Trust Account for the previous month including rents, bond refunds and any compensatory payments. It also details outward expenses such as tradesmen’s payments, regular outgoings such as rates or insurance premiums and the deduction of our agreed management fee.
The statement is then posted or emailed to the owners wherever they may be in the world or to their nominated accounting agent. Original copies of Tradesmen’s tax invoices are kept on file at our offices and are available upon request. Statements also contain explanatory notes regarding anything that may have been pertinent to the rental property during that particular month.
Should the owners or their tax consultant require further copies of rental income and expenditure for the year, we are able to reproduce the required monthly statements for the property dating back to the time of our appointment.
Rates and Insurance Payments
Owners can arrange with the Auckland Council to have their rates demands sent to our office for payment from rents collected. Likewise owners can arrange with their insurers to have their insurance premium demands sent to our office. These payments will be made in the same month in which they arrive at our office providing of course that there are sufficient rental funds for the property in our Trust Account. Should there not be sufficient funds then we will hold back the monthly payment to the owner and pay the account in the following month.
Under section 39 of the RTA, tenants are responsible for water usage charges (rates) provided the premises have a separate water meter. Property owners are responsible for the ‘fixed’ water charges to a property. For premises on tank water it is the owners responsibility to provide (and pay) for one fill of water, thereafter it is the tenant’s responsibility.
Owners can arrange with the Auckland Council to have their water rates demands sent to our office for collection from the tenants. Retrieving water charges from the tenants includes ‘receiving accounts, perusing the water accounts (questioning any glaring discrepancies with Council), paying the same, creating and sending an invoice for the account or part thereof to the tenant (often splitting the account between tenancies), collecting and banking the funds and crediting the owners account.