Rental stress: what is it, and why should investors be aware of it?
Rental stress is on the rise in Australia. Data released earlier this year detailed a big shift towards renting—31% of Australians now pay a landlord, which is more than the number of Australians who own their homes outright. With this shift towards renting comes a sobering statistic—according to the same study, a third of tenants are experiencing extreme rental stress.
As investors and landlords, it’s important that you are aware of the things that can contribute to rental stress for your tenants. Below, we explore four common areas of stress experienced by renters, and what you can do to help mitigate them:
Cost of rent
As a landlord, it’s only natural to expect rent to be paid on time; however, with 23% of renters regularly paying their rent late due to financial strain, this fundamental requirement of the rental agreement isn’t always being met.
While this issue may seem like something that is beyond a landlord’s control, there are ways to help ensure your tenant/s are capable of meeting the basic financial obligations of renting your home. Start by having a robust selection process for your tenants to avoid creating unnecessary stress. Choose tenants who have sufficient income or savings capacity to pay the rent—the general rule of thumb is to look for a tenant who earns over thirty times the weekly rent per annum. For example, if monthly rent is $1200, a tenant’s annual income should be above $36,000.
Ensure any rent increases are reasonable; remember that a vacant investment property could be your biggest cost, and good tenants are worth keeping. If your investment portfolio is being managed a rental agency, a good property manager will ensure you select a tenant with the right financial profile for your property.
Uncertain lease terms
While flexibility is attractive to some renters, for others the certainty of a set lease period is important for their housing stability, sense of security and emotional wellbeing. Housing disruption is highly stressful, so try to remember that while it may be your investment property, it’s your tenants’ home.
Enter your lease contract with transparency and clear communication to keep both parties feeling safe and secure. Keep the conversation open, and if anything is unclear make sure it’s ironed out immediately. Consider adjusting your minimum and maximum lease terms according to your tenants’ needs.
Repairs and maintenance
Living in a home that is in desperate need of repairs is stressful, especially when the issue involves a facility that is used every day—like a blocked toilet or a leaking tap in the kitchen.
Under the terms of your lease, tenants can expect a property in good maintenance, and a landlord that is committed to upkeep and responsive to repair needs. Tenants have a responsibility to report issues promptly, and as a landlord you have a responsibility to react efficiently. This ensures small problems don’t turn into big ones. Endeavour to respond to requests for repairs within 12–72 hours, depending on the severity and urgency of the issue.
Don’t employ the principle of “out of sight out of mind”—try to maintain the property regularly to avoid unnecessary repairs. This eases rental stress with the assurance of a safe, well-maintained home, and encourages your tenants to do their part to look after your property too.
Bond returns
With bond generally equating to about one month’s rent, the possibility of not getting their bond back is an enormous stressor for any tenant, particularly if they are under financial strain.
Many tenants are unsure what defines “reasonable wear and tear”, and this uncertainty is the source of many disputes. As a landlord, it’s important to remember that wear and tear is inevitable. Be clear and open with your tenants from the get-go; let them know you’re aware that wear and tear is a given, but be firm about the difference between that and substantial damages. This reduces stress by ensuring you are all on the same page from the get-go.
To avoid any problems, conduct periodic inspections and keep on top of documenting the condition of the property. Select tenants with good rental history, and be reasonable with your claims. If damage has occurred, you will need to present a case for non-return of a bond, which could include a condition report on move in, or quotes and receipts for damage repaired.
Remember that your tenants are people too—be respectful and compassionate, and if you see any issues arising then address them immediately to avoid them snowballing.
Keep these tips in mind to try to ease your tenants’ rental stress as much as possible—happy, stress-free tenants mean low tenant-turnover and positive tenant-landlord interactions, which means less stress for you in the long run.
It’s a win-win for your tenants’ well being, your rental property, and your wallet.
