You’ve been on the hunt for your dream rental and finally found the right home for you. After the inspection, you love it and want to take steps to rent it – so what happens next?
In this week’s episode of the Talking Tenancies podcast, we discuss starting a tenancy with Sam Galer from the RTA.
Rental law changes around ending tenancies, renting with pets and the introduction of repair orders commenced on 1 October 2022.
Host: Belinda Heit – Communication and Education – RTA
Guest: Sam Galer – Senior Team Leader, Customer Experience – RTA
Host: Welcome to the Talking Tenancies podcast, brought to you by the Residential Tenancies Authority, I'm your host Belinda Heit. Join me as we explore everything you need to know about renting in Queensland with experts from the RTA and industry. We're here to help make renting work for everyone.
You've been on the hunt for your dream rental and finally spotted the right home for you. After inspection, you love it and want to take the steps to rent it. So, what happens next?
Today's expert from the RTA, Sam Galer, Senior team leader for Customer Experience joins us today.
Guest: Thank you for having me.
Host: Can you tell us about your role at the RTA and what you're responsible for
Guest: Certainly, so I am a Senior Team Leader for Customer Experience and I look after one of our teams in the contact centre, taking customer inquiries and that's on bond matters and tenancy matters and our web services.
Host: Yes, and that keeps you super busy. As we all know.
Guest: It certainly does.
Host: Now, we're going to talk about starting a tenancy today and there's a lot for us to cover in this episode. So, if you're a new renter and you're starting out in a tenancy, this is a really great episode for you.
When we're starting a tenancy, rent is one of the key things that we need to take into account each week. Now that needs to be advertised as a fixed rent price on a property along with the rental bond. What is a bond and how much bond can be taken?
Guest: OK, so you've mentioned rent and bond, so I'll cover both. As you said, it is a big topic, but it's a really important one to get right.
So, relating to rent, yes, the rental property must be advertised at a fixed price. That means that a property manager or an owner must not advertise a rent range, put a property up for rent auction, or ask for offers.
On the other side of that though, for a prospective tenant, there isn't anything preventing them from offering more than the amount advertised and the property manager or owner may accept their offer.
With relation to bond, a rental bond is a security deposit paid at the start of the tenancy by the tenant. It's paid back to the tenant when the property is vacated, provided that there's no money owed for rent, damages, or other costs.
For general tenancies, if the rent is $700.00 or less per week, then the maximum bond amount that can be taken is 4 weeks rent. If the weekly rent is higher than $700.00, there's no maximum specified under the Residential Tenancies and Rooming Accommodation 2008 (the Act) on the amount of bond that can be taken. We would recommend that the property manager or owner and the tenant discuss and negotiate the amount of bond that is taken in that situation.
So rental bonds must be lodged with the RTA for safekeeping. If the property manager or owner takes a bond, they must give the tenant a receipt and they must lodge it with the RTA within 10 calendar days. The RTA will issue a receipt once we've received the bond. A tenant can also lodge the bond directly with the RTA and they do that via the RTA's web services, or by completing and submitting a bond lodgement form.
Once, that's received, an acknowledgement of rental bond is sent out by the RTA to all parties in the tenancy. So once the payment is cleared that means that if you do lodge your bond online and pay by card you could actually receive that acknowledgement within minutes, which is greatly reassuring for both tenants and the property manager or owner.
Host: That saves a lot of hassle, doesn't it? The tenant can actually take care of that and doesn't have to wait for the agent or the managing party to take care of it for them. It's quick, easy, and they can do it all themselves.
Guest: Yep, absolutely, so it gives control and responsibility to all parties equally and it means that you can just get it going, whereas you might find the owner or the agent is a bit busy and maybe doesn't have time to lodge it. You can just get it done quick, fast, and safe.
Host: Yeah, and you can also have multiple bond contributors as well. So how do we manage those?
Guest: Yep, so you can have multiple bond contributors in a tenancy. So, we often see for instance a co-tenancy where there'd be two or more people named as tenants on the tenancy agreement, and they each pay a share of the bond and rent the property.
There are also other situations, for instance, such as sub-letting. That's probably a topic in itself, but where a tenant in the tenancy agreement takes on the role of head tenant, they are essentially taking on responsibilities of the property manager or owner to a degree, and that would include if they had a sub-tenant, they'd have to provide a receipt for their bond money paid, and they would need to lodge the bond with the RTA. So, it's about having that level of protection where you've paid money that it's held with the RTA and not held with one of the parties.
There are different ways to manage multiple bond contributors, so in an existing tenancy you can add or remove bond contributors or change bond contribution amounts online via the RTA web services. You can use our change of bond contributors web service, or you can complete and submit a paper change of bond contributors form to the RTA.
If you're starting a brand new tenancy with other contributors you can lodge the full bond online using the bond lodgement web service, including the details, e-mail addresses of all bond contributors, or you can use the paper bond lodgement form.
For the change of bond contributors process, whether it's online or via paper, the RTA actually only requires the bond contributors who are transferring some or all of their bond to another party to agree to the request. So, property managers or owners, new bond contributors and existing contributors, where their bond amount is increasing or remaining the same, they don't need to agree to the change request.
The flip side of that though, I guess just to provide some balance on that, we want to make it very clear that the property manager or owner must give permission for any new tenants, subtenants, or housemates before they can move in. It does not matter if they are listed on the tenancy agreement as paying a share of the bond or not.
Host: So, the other cool thing with web services and we see scenarios where there's multiple tenants in a property - someone moves out or someone else moves in. We can easily update those bond amounts and contributions through web services, and it's done quite easily online.
Guest: Yep, absolutely.
Host: So, with rent payments, what are some of the ways it can be paid? When it is due? and does rent need to be paid in advance?
Guest: OK, so I'm going to probably get a little bit technical here, so I would generally recommend that people refer to the website for this part of it, but I'm going to go through all the ways that rent can be paid, (the approved ways under the Act).
So, the QLD tenancy legislation lists seven ways that are approved for paying of rent and this includes;
- deposit to a financial institution account, which is nominated by the property manager or owner,
- credit card,
- payroll deductions or pension deduction,
- and any other method agreed on by the property manager or owner and the tenant. So, for example, that could be a rent card.
If the property manager or owner wants the tenant to pay by another method, they must inform the tenant of any costs associated with that method, such as joining, or processing fees and they must offer at least two of the other listed ways to pay that rent.
Moving on to your next point on when rent is due, so the tenancy agreement, the lease, should state quite clearly the day that rent is due to be paid. An important point on where rent is being paid electronically, which is more and more the norm these days, rent is actually considered paid when the tenant has made the payment, not when it's being received.
So that's a really important distinction to make, because for example, if you're a property manager and you're wanting to see the amount of rent in your account for instance on a Thursday, you want to receive that money on a Thursday, you're probably better off requesting that the rent be paid on a Tuesday to allow for bank processing times for instance.
It's important to set those expectations between the parties, otherwise the relationship can really get off on a bad note. For example, a tenant pays their rent on the Thursday because that's what their lease says. It's then not in the property manager or owner's account potentially until Monday. No fault of the tenant, as rent is considered to have been paid on the Thursday, so when they made that payment.
Host: Yeah, so technically that's not a breach of any kind, that's still on time.
Guest: Correct and a really good example of that, that we tend to refer to, is the Easter holiday. So, you might make the payment on a Wednesday for instance, but then you've got Good Friday, Easter Saturday or Sunday to Monday. No fault of the tenant, they've made the payment, but due to potentially the banks processing times, it may not appear in the account until further the next week.
Getting onto the question on paying rent in advance. So, this is another tricky scenario at times, or one where there's some confusion. A tenant will often be asked to pay rent in advance. Rent in advance simply refers to the first rent payment that the tenant makes to the property manager or owner, usually before or on the day that they move in. It's unlawful for the property manager or owner to ask the tenant to make another rent payment until that rent in advance has actually been used up.
Host: Yep, OK.
Guest: So, I’ll give a bit of a scenario there for rent in advance just to make sure that we're clear on that point – so, you've got a tenancy agreement that states that the tenant pays $400.00 per fortnight. So, before they move in, they pay $400.00, which is their rent in advance. They move into the property, and they live there for two weeks. At the end of that two weeks that's when their next rent payment is due. The rent in advance has essentially been used up.
In terms of tenants offering to pay a number of weeks or months of rent in advance, and I guess this is relevant at the moment potentially to stand out from the competition, they can make that offer to the managing party. So, there's nothing stopping them from offering that, but the managing party cannot require the tenants to do that.
Host: And can they be stopped in doing that? Like if they want to pay couple months in advance they can just go ahead and do it, can't they?
Guest: They can. There's nothing stopping a tenant from offering to pay a certain amount of rent in advance, above the requirement. But it is a very clear distinction that the managing party cannot request this of them.
Host: Yeah, got it. So, at what point should the lease be signed?
Guest: OK. Prospective tenants, so they should have inspected the rental property in person or virtually via video. And then they should be given a copy of the proposed tenancy agreement or the lease, as it's commonly called, for them to consider before committing to the tenancy. A lot of these things are really just about being well prepared and reading through terms and conditions, making sure you're understanding what the requirements are.
The tenant should take time to read through that agreement carefully to see that the details such as the rent amount and the tenancy start date for instance, are as agreed and that they understand any special terms that are included.
For instance, if the rental property is a unit or an apartment, or anywhere where it's a body corporate, then a copy of the body corporate bylaws should be provided, as they are considered to be part of the tenancy agreement. They will often include items such as parking, for instance – the number of car parking spaces or where someone can park. We do find that if those bylaws are not provided it can immediately lead to confusion at the start of the tenancy.
Host: Right, yes.
Guest: Tenants should read through the terms of the rental applications in detail. In some of these applications we do hear that if the property is offered to the tenant, they must accept it, and often that's put on the application itself.
That needs to be taken into consideration because in a competitive market it's common practise for tenants to apply to multiple properties. So yeah, it's a bit of a tricky one sometimes. But once you've read through all of the information provided, it gives you an opportunity to ask questions about any of the rights and responsibilities outlined in the agreement and make sure that you fully understand what's involved.
After you've read through the agreement and you're happy with the details. That's when you can sign the lease and pay the bond, committing you to the tenancy. So again, it's an important consideration - making sure you're understanding all the terms and conditions and taking a proactive approach, so asking questions, not just being passive and signing and accepting.
Make sure you understand what's involved because the tenancy agreement is a legally binding contract, so there can be consequences for people who don't comply with terms and conditions such as the lease where they align with the QLD tenancy laws.
Host: Right so when does the entry condition report need to be completed and returned to the managing party? So, when you're actually going into the property for the first time, usually before you move all your stuff in. When do you need to have that completed by?
Guest: Entry condition reports are probably one of my favourite events. Not that we should have attachments necessarily to documents, that might speak more about me than anything else, but it's a critical piece of information for a tenancy.
For property managers, I guess talking through how it would be done, because you're absolutely spot on, as a tenant you want to complete your side of it before you move all of your possessions and furniture into the property. But the way it's supposed to work is that the property manager or owner must prepare, sign and give a copy of the report to the tenant at the start of the tenancy.
And that's where they've gone through and indicated from the property manager and owner’s perspective, each item on the list being clean, undamaged and working so they note down any minor damage or anything there. It's to give an accurate depiction of the property from their perspective.
That's then given to the tenant, who then takes their report to the property and goes through page by page of the same report noting whether they agree or particularly disagree with the condition of the items by including their own comments. Taking photographs or video at this point can help support what's written on the report potentially further down the track, but again from a keeping accurate records perspective, it’s really important to do.
From that, the tenant then returns the completed signed report to the property manager or owner within 7 days. Once the property owner or manager has received that completed report, they then have to send a copy of the signed and completed report back to the tenant within 14 days. (note - the time frame for a tenant to return an entry condition report was increased from 3 days to 7 days on 1 October 2022.)
Now, if the tenant doesn't complete and return that report it potentially means that the version that the property manager or owner has put forward is hard to argue with. It's one of the reasons that we look at it with a short time frame, for instance, so we sometimes get tenants saying, “well, why do I only have three days to complete this?”
It's supposed to be an accurate record of how the property is right at the start of the tenancy, when you've first taken it on, so the longer you leave it, the less accurate it's potentially going to be, and the more contentious that it makes it.
So absolute best practise, is to complete it. Get it back to the agent. Be comprehensive. I know I would. I would generally get my partner to do it on my behalf because I tend to gloss over things and go, “oh no, that's fine.” My wife is far more diligent.
Host: And this is the thing - I think we need to take the time to, you know, look at the details when it comes to this particular report because, you know you’re probably really excited, you want to move in, you want to get your stuff and you just want to get on with your life, but you can't wait around for weeks to submit that thing. It's 7 days, get it done and just move on and the more detail you can put into it the better because it'll help you at the end of the tenancy when you need to do the Exit Report.
So, one other thing to consider with the entry condition report is it's really important that we get off on the right foot when we start a tenancy, so making sure that we keep the paperwork and we keep everything safe and we don't rely on the managing party or the agent.
Guest: Yeah, I would always recommend that you don't rely on anyone else. Keep your own records. Keep good records. These days we keep electronic records, which means that we still have access to them. They don't get water damaged, or lost in a drawer somewhere, or thrown away.
Just to summarise on that, so the entry condition report is recording the condition of the property and any inclusions, so that can include furniture, for instance, at the start of the tenancy. It's a critical document. It must be completed and signed by both parties.
Completing the report properly and taking photos, videos along the way as evidence, supports the information in the report. It's what we would recommend to avoid future problems, especially with the bond refund process and also with the dispute resolution process. So, it's one of the key documents that we would look at if there were a dispute regarding the condition of the property at the end of the tenancy.
At the start of the tenancy, as you mentioned, it's very easy to get swept away with “everything's fine” and dismissing things as “oh, that's not a big deal”, but when it comes to the end of the tenancy and then finding that it's not actually been documented at the start, there's a potential that you are held responsible for existing damage.
I always recommend treating these tenancy processes like business transactions, and that includes keeping records and copies of all correspondence and documents. We recommend keeping the record for at least a year after the tenancy finishes, so as a property owner or a manager that's a requirement, but for a tenant, you may still want to keep those records for a period of time. And again, not relying on the other party to have all the documentation. And if they do have all the documentation, probably not relying on them to help you out in the dispute against them by providing that information to you.
Just finally, an Entry Condition report can be considered at QCAT as strong evidence. It can be really hard to convince a tribunal, or a judicator at a tribunal of your position if you don't have the Entry Condition report.
Host: So that's just another reason why it's so important to hang on to it and make sure it's really accurate.
Guest: Yeah, absolutely.
Host: Alright, so sometimes we might actually not be able to see a property beforehand, which probably is not a great idea. You know, make sure you look at a property first and the condition of it. What would you do if you arrive at a property and it's not fit to live in?
Guest: Sure, this this can happen. Whether it's being a sight unseen for instance or not. Often you will go and look at a property and it's got current tenants in it. You assume that it's all going to be clean and everything fixed when it comes to your turn to take the tenancy on. But sometimes that's just not the case. It's a requirement, regardless of the circumstances, it's a requirement for the property to be clean and fit to live in and to be in good repair.
So, if you turn up to the property you're moving in to and you find it's not in that condition, it’s really important to be clear with communication. You should document it with the Entry Condition report and request to the owner or the manager that the property be cleaned or fixed. Otherwise, it's a potential breach of the agreement right from the start.
The level of issue or action required will depend on the condition. Is it just dusty and needs someone to clean? In that case, if you do clean it yourself, make sure this is documented as you have to return the property in the condition you first received it at the end of the tenancy. I'd just like to make a little note that returning it deliberately dusty and dirty because that's the condition you received it in, may not go down well.
But if it's so bad that you feel you can't even move into the property, there are processes to follow, and they would generally tie in around compensation and the potential that you might need to request QCAT to make a ruling on the tenancy. Those are for really serious properties that are not able to be to be lived in.
We always recommend inspecting the property in person before you commit to the tenancy. Understanding there are more and more situations where that may not be able to happen, but wherever possible you want to be able to view the property in person. But if you don't and you then want the tenancy to end early after you've moved in. Potentially that could work against you if you apply to QCAT for a ruling and they may determine that you didn't exercise due diligence.
Host: So yeah, really getting in and having a good look before you sign up for anything is a great idea.
Yeah, so access to the property. Obviously, we need keys, we need things like security codes, remotes, those all need to be collected from the managing party. So, when can you expect to get those?
Guest: OK, no worries. Usually, the keys or the access to the property will be provided after the bond is received by the managing party or when they've been notified that the bond has been lodged directly with the RTA via our web services. So, when we’ve notified them, essentially, they're likely to have confidence that the money has gone through and then be able to hand the keys over.
Just a note on that, so the property manager or owner must provide each person named on the tenancy agreement with a set of keys for entry to the property and one full set of keys should be provided to the tenancy for all locks on the property. So that's including building locks, security gates, rooms, sheds, lockable cupboards, mailboxes.
Host: Right, so here's one for you - can a tenant change the locks of the property
Guest: Locks can be changed, but there are requirements around it so they can only be changed if the tenant and property manager or owner agree in an emergency or by QCAT order. So, if a tenant is experiencing domestic and family violence, for instance, they can change the locks to their rental property without consent, but they must provide copies of keys or access codes to the property manager or owner as soon as practicable. That's a rule, basically, or a condition that’s applicable until 30th of April 2021 under the temporary COVID regulations (at the time of recording).
Host: OK, so we've been talking a lot about web services and how it plays a part in starting a tenancy. Can you just break that down for us, Sam?
Guest: So as mentioned before, the RTA web services is an online channel for essential tenancy transactions. You can lodge your bond directly with the RTA using the bond lodgement web service. You can add or remove bond contributors and or change the way the total bond is distributed among contributors via the change of bond contributors web service, and you can update your details on file at the RTA, through the update your details web service.
Host: It's so much easier from when I last did a tenancy, can I just tell you. Oh my God, so much easier
Guest: That's excellent, very pleased.
Host: Now, another thing to consider when we're starting a tenancy, we have bond, we have rent. What about things like holding deposits?
Guest: Holding deposits can be a source of contention at the start of a tenancy. So, a prospective tenant can be asked for a deposit to reserve or hold a property that they intend to rent. If that's happening, then the tenant must be given a copy of the proposed agreement, which includes any special terms or by-laws, before money is taken.
There is a specific process to follow and again I would recommend people read up on the website before going into these situations, but you're looking at providing a signed receipt when the deposit is paid. That receipt must include details such as time frames of opting into the tenancy.
If you don't specify a time period on that, then the period defaults to 48 hours. If the tenant doesn't notify the property manager or owner within the agreed timeframe, then the property manager or owner can actually keep that deposit.
If the tenant notifies the property manager or owner within the agreed time frame that they don't wish to proceed with the tenancy, then the holding deposit must be refunded within three days.
Host: Right, OK? So, let's say we've gone “alright, got my dream house. I’m going to sign this lease. I'm ready to go for it,” but then I don't know something goes wrong and I change my mind. So, when one of the parties changes their mind at the start of a tenancy, last minute, what's the process to not enter an agreement?
Guest: Look, things do happen. We understand. And I think everyone understands that sometimes circumstances can change suddenly.
Communication is always going to be the key. As much as you might want to just avoid the situation because it can be embarrassing or awkward. It’s really important that you notify the other party as soon as you possibly can and essentially starting negotiations.
A lot of the time you might see these situations treated similarly to a break lease situation or ending the tenancy early. There are multiple factors affecting how this could be approached though, and that's dependent on whether it needs to go to conciliation through the RTA for instance, through our dispute resolution process.
This could be as a dispute over the bond, or even whether QCAT needs to be involved. But some considerations that you would reasonably look at would be when did the prospective tenant make this change of mind known to the other party? Has the bond been paid or lodged? Has there been a tenancy agreement signed?
If the tenant changed their mind and the managing party could easily find someone else who applied for the property who's ready to move in around a similar time, they may not need to necessarily charge the re-letting fee or advertising costs again. A lot of it comes down to compensation for legitimate losses.
So, question on when the agreement actually comes into play. There's no cooling off period in tenancy legislation in Queensland, but the question could be - have the tenants actually taken possession of the property? have they collected keys? have they signed the agreement? or have they just given an indication that they would take the property?
If a bond has been paid, or if it hasn't, it can be a difficult process to claim compensation, and there may be circumstances where the property manager or the owner would be better looking at trying to find someone to replace the prospective tenants as a priority.
You might even find that it's down to personal circumstances changing and there is provision in our legislation for ending a tenancy due to excessive hardship. That's a matter for QCAT to rule on, but these are all factors that the prospective tenants and the property owner or manager need to take into account on what action they would take.
Host: Yeah, so you do have some options if you find yourself in that situation.
Thanks, Sam, for helping us to navigate what we need to know when we're starting a tenancy. So, in summary, it's beneficial to know your rights and responsibilities when you decide to rent a property.
Make sure you ask questions and do your research. All of this information is included in the information statement, which is required to be provided at the start of the tenancy, also known as the Pocket Guide. For more information visit rta.qld.gov.au.
Thank you for listening to the Talking Tenancies Podcast. For more information about the residential Tenancies authority, visit rta.qld.gov.au.
Note: While the RTA makes every reasonable effort to ensure that information on this website is accurate at the time of publication, changes in circumstances after publication may impact on the accuracy of material. This disclaimer is in addition to and does not limit the application of the Residential Tenancies Authority website disclaimer.