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2 Tenants becoming 5

Discussion in 'Property Management' started by cheekykoon, 20th May, 2016.

  1. cheekykoon

    cheekykoon Well-Known Member

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    I have a 4 bedroom town house in coopers plains rented to 2 taiwanese tenants. They signed for a 6 months leased extension. Comes inspection time, all bedrooms are full. They had another 3 occupier. I suspect they had illegally rented out the 3 bedrooms and earn extra cash. Supposedly they can rent out 200 per week for one bedroom, they would be staying for free. In this case what can I do? Is there any compensation I can get from them?

    a. I can chase them out of the house and issue a termination notice? for breach of tenancy agreement? Considering the market is not strong, I may have to wait 1-2 months for tenancy.

    b. I can make all of them to sign on the lease. Which considering they are students, would I incur more wear and tear? what kind of compensation is justifiable? the current rent is $575 per week, just renewed. I am thinking, why not I take over all of them and renegotiate the terms again?

    c. I can force chase out the extra tenants citing they are not in the lease in the first place and only allow the original 2 tenants. Can I do that?

    What other course of actions do I have? I want to quickly resolve this and not let the tenants profit on my property.
     
  2. datto

    datto Well-Known Member

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  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    Breach notice for subletting. If they deny it, take it through to tribunal. If they fess up, add them to the lease as then they'll be jointly and several liable.

    Note that subletting is a breach of your landlords insurance with most providers, so need to show you've not condoned it.
     
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  4. Joynz

    Joynz Well-Known Member

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    I can see why you are unhappy about this situation, but, unless you discounted the rent because there were only two tenants, I can't see the sense in increasing the rent for more tenants, as long as there are enough bedrooms for them and you are getting market rent for the size and type of house.

    You feel they are profiting off you, but they may just be splitting the rent five ways because they are poor students.

    You definitely need all the tenants on the lease, though.
     
    Last edited: 21st May, 2016
  5. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    I've had this happen before. Just did what DT suggested - issued a breach notice and the were gone within a week. They knew they'd done the wrong thing - and complied with the breach.

    Man did they manage to make a mess of the property in a short period of time though :-(

    Jamie
     
  6. Sonamic

    Sonamic Well-Known Member

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    Do what @fullylucky does and rent by the room to students. $800 a week rent then. But self managed, which is a PITA.
     
  7. TaylorChang

    TaylorChang Well-Known Member

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    If your property didn't get any damaged and they are still paying the rent on time all the time. I don't think you have any reason to be worry or upset.

    Unless your rent is under market value, then you can increase the rent. otherwise, if I were you, I would not worry too much. Because if you kicking them out, call tribunal, it's only increase your own cost and headache, plus finding another tenants may do the same. May as well spend the energy on finding next investment property to buy or enjoy some other things in life :)
     
  8. Marg4000

    Marg4000 Well-Known Member

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    You 'suspect'.

    Without evidence, any attempt to kick them out will probably end up at the tribunal. The tenant will argue that the other people are simply friends visiting. As it is a four bedroom house you cannot cite overcrowding.

    If they deliberately chose a house for subletting, you can bet your bottom dollar that they know tenancy laws inside out.

    Don't renew when the lease expires, but be meticulous with notice period etc.
    Marg
     
  9. wylie

    wylie Moderator Staff Member

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    ... what Marg said. ;)

    You could increase the rent at next renewal so you are effectively putting all of them on the lease but if the original tenants subleasing so they get free rent themselves, they will more likely move on to the next unsuspecting landlord.
     
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  10. cheekykoon

    cheekykoon Well-Known Member

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    Thanks for the suggestions, data, D.T. , Joynz, Jamie, Sonamic, TaylorChang, Marg4000, Wylie.

    Anyway, they fess up during the inspection saying they had not informed me earlier and will incorporate the new tenants in. Do i get to choose the tenants and insist on 4 which were original and now its 5.

    I think the tenants are ok but as they are students, I tend to be a bit more careful.
     
  11. Ed Barton

    Ed Barton Well-Known Member

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    I think a lot of these situations are tenants simply not being aware of their obligations. They have a friend who's looking for somewhere to live, they have a spare room, let's share the rent amongst more people. They don't realise they should ask permission.

    Not everything a tenant does has some sinister motivation.
     
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  12. Ed Barton

    Ed Barton Well-Known Member

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    Was there originally 2 in the house as per your first post or 4 as per this post?

    Is there a couple in the mix?

    You can vet/choose the tenants but as you've discovered it doesn't mean there won't be others living there. Get as many on the lease as you can so there's more people to go after if there's a problem.
     
  13. Marg4000

    Marg4000 Well-Known Member

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    Make it crystal clear to the tenants that 5 is the maximum number of unrelated people allowed. Brisbane City Council is strict about this.
    Marg
     
  14. Joynz

    Joynz Well-Known Member

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    Isn't this to do with rooming houses only?

    If it is one lease ( rather than tenants being rented individual rooms with separate agreements) then surely it would be OK to have more than five (e.g. For an extended family)?
     
  15. JacM

    JacM VIC Buyer's Agent Business Member

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    It is tricky to prove. You could say well there is a bed in this room it looks lived in and they could say their brother visits occasionally and sleeps in that room.

    Finding mail addressed to someone that is not on the lease is an example of proof.

    More people means more feet trampling the carpet, more wear and tear on the cooking facilities and Hot Water Service, and often constant wet towels on the floor in the bathroom causing damp trouble. I would be looking to receive more rent for this scenario for sure.

    Also remember that 5 unrelated people each have their own set of friends that will visit. That can amount to a lot of people always in the house.
     
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  16. wylie

    wylie Moderator Staff Member

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    Not rooming houses. There can be a maximum of five "unrelated" parties on the lease.
     
  17. fullylucky

    fullylucky Well-Known Member

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    4 bedroom house and rent to 2 people...? of course they will sublease and be second landlords.

    doubt they can afford or would want to rent 575/2 = $287.5 each, that doesn't include internet and electricity and water when they can rent $130/week that includes all bills.

    You sound very narcissistic and doesn't want anyone else in the world to earn any profit only yourself. They are adding value by contacting and arranging internet, electricity and advertising for tenants and property managing so they feel they should get some reward.

    but if your original lease stated maximum number of people is 2 and you feel they lied to you and is a breach then you should issue a breach notice.

    if they are good second landlords you can consider keeping them. if they are cowboy should try to get rid of them.

    “I very much doubt the anecdotal stories about the horror houses where alleged slum lord owners rent to large groups. Where is the evidence and how many are affected, honestly? Any fire or accident could bankrupt the owner. What owner could risk a total loss? Because no insurance company will touch group tenancies over five persons. Read the common insurance conditions. The only cases I have heard of are where sitting tenants have sub-let or invited a number long-stay 'friends' without the owner's permission. Such subletting by tenants who wrongly convert the leased property into their 'own' little earner of a boarding house is not uncommon. The sitting tenants are able to make money out of someone else (the owner) taking the risk and ponying up for very high repairs and maintenance. It is how houses become completely run down by tenant approved over-occupancy and by partying students for example. Worse, through lack of income and escape clauses through Tribunal interpretation (always tenant friendly) of 'wear and tear' they can escape responsibility for rectification, leaving the owner with a financial and emotional catastrophe.”
     
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  18. wategos

    wategos Well-Known Member

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    This is normal for a share house, couple of people on the lease and they find flatmates to fill the other rooms. They're not going to leave the other bedrooms empty and are unlikely to be ripping them off. In the 4 share houses I was in when younger I was only on the lease in one of them.

    Now as a landlord lve three people on a lease but I know they rent out the fourth bedroom to someone else.
     
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  19. wylie

    wylie Moderator Staff Member

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    I think there are a couple of issues here. One is the original tenants lying to the landlord, putting the landlord at risk if they decide they'll have six in the house. Insurance implications of that are high on the list of problems.

    We had a house where there had been five unrelated parties for more than 15 years. The house had been renovated by us after purchase and before renting it, and being a high set queenslander, there isn't too much anyone can damage.

    As the years went on, the uni students would leave and replace themselves with another. Each time my mother updated the lease. They were always nice young men and polite, studying and not really partying (initially). The house got worse as the years went by, but my mother knew when they finally left (or when she finally decided to renovate it), it would be a large job and that would mean no more uni students.

    So it was left with maintenance done as required but no refreshing.

    When we finally decided to sell, we had a big cleaning and painting job but as we knew it would, it polished up beautifully and we got a good price for it.

    The rent was also too cheap and my brother kept renewing without increasing until it fell behind.

    I put it up, to have my brother back down when they questioned it. They didn't question why it hadn't gone up in five years, just why it was to go up in one jump. Another problem with not creeping the rent up regularly...

    They were renting a room each in Annerley for $100 each. That is just crazy, but the job to be done if they left was major, so when I put it up $20 per room ($120 still very cheap per room) he knocked it down to $5 increase per room.

    So the rent was low because of the way these young men lived. Like a dog chasing its tail, we couldn't rent for more to anyone with any pride, and they had no pride so it looked like a brothel. They were nice young men mostly though, polite, so we lived with the status quo.

    I don't think the toilets had been cleaned for years (guess who got to do that job?). Shower, bath and basin the same. We didn't do inspections, because we knew what it was like.

    The wear and tear from five young men (uni students but any five young men would be the same I reckon) isn't pretty to see. They lived like... well, like young men with no women or parents to push for any cleaning at all.

    In the beginning this house would have been fine to rent to a family, but once the revolving door of uni students had lived there for a while, it limited its appeal completely to more uni students.

    So, for me, having each one on the lease gave us some knowledge of who actually was in our house. If they had wanted to, they would have tried to have just one on the lease and then could easily have charged $120 or more for the other four. I'm sure that happens all the time.
     
  20. Ed Barton

    Ed Barton Well-Known Member

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    That's kind of my approach to houses. Rent them to families (or whoever's going to look after them) till they become too run down to appeal to families and then rent them to 'uni students' till they totally wear out the place. Renovate and repeat.