Advice on first trip to VCAT

So after renting to tenants for nearly 15 years across 3 properties this could be my first trip to VCAT.

I'm looking for advice/experience on whether to take the risk of the cost of going to VCAT.

Short summary:
Great tenants been in for last 3-4 years. My philosophy is to promptly attend to tenants needs - look after tenants and they look after you/your property. Property is managed by a PM but I occasionally do some maintenance myself so I had met the tenants once or twice, nice young couple with a new kid. They actually offered a couple of times to buy the house.

Tenants signed a 12 month fixed re-lease 2 months ago. All good.

Then, 3 weeks ago, tenants said they are having a new baby, need a bigger place, and want to break the lease. Lease doc says tenants to pay for re-leasing fees unless they find someone. This was signed and initialled by tenants.

We agreed they could break the lease providing they covered the costs. They agreed verbally with PM.

We re-advertised straight away and accepted the first application we received. It was a good application and it has limited the cost to tenants of lease while finding new tenants.

So, as soon as we signed-up the new tenants, the old tenants informed us they would not cover the $900 re-letting fees, just the $99 lease doc. In addition to this they have left some gardening work undone which will require $600 from the bond.

My PM has advised me that VCAT rarely find in favour of the landlord in cases where tenants are on a repeat lease. From my view we have a signed contract where the tenant is bound to cover costs if they break the lease. But apparently this is rarely upheld!! Anyone had any experience with this?

I need to decide this week whether to take it to VCAT. My gut would say that we pretty clearly have a case. However my PM says their recent experience with this has not been successful.

If this doesn't stand up at VCAT then what is the point of a signed lease if we can't mitigate these costs or recover bond?

Possible VCAT outcomes:
Upside $900 + $600 awarded - ~$450+ costs
Downside Nothing awarded (-$1500) - $450 costs

Any advice whether to go to VCAT or not?
Any tips to improve our chances if we do? (I am currently o/s so can't go in person)

McBrain

 

All the hassle for $1k. Travel to/from the hearing ? Preparing submissions. Getting annoyed about it. Maybe paying someone to attend for you.

Ive wasted 1k on many things in life.

I wouldnt bother. Its one small negative in a lot of positives. Dont sweat the small sh**t

 

I agree to not sweat the small stuff.

It's not $450 its $1500. ($450 will be the cost of PM attending, lodgement fee, etc)

Also it's the principle - but that's emotional and probably not good to make decisions on.

 

$900 is a pricey reletting fee. I’d dispute it too.

What is the cost breakdown for the amount?

 

How many weeks lease are they breaking?
Regardless, I would just let them go, shake hands and wish them all the best. It's good karma.
- they have been long term good tenants
- you know their intention and capacity to buy
- $900 Let Fee & $600 Gardening is a bit hefty. How these come about? If I'm the PM, I'll give discount....

 

Is there any chance of coming to some sort of compromise short of VCAT?

Can you go into more detail about the $900 let fee and $600 gardening?

 

I'm not sure of the breakdown of the $900 resetting fee, it's usually 2.2% of the annual rent, which would be about $650. I would definitely be questioning my long term PM on what their actual cost was regardless.

$600 gardening I would just not pay and do it myself when I am back in Nov. So, you are right, its not really a big deal. Maybe I'll let it go. Does't seem 'fair' though

 

So what was the actual cost to you from the PM for re-signing the current 12 month lease?

That is the lease being broken after all.

 

$600 in gardening fees seems very high. If things were so bad, surely this issue was raised by the PM earlier?
Marg

 

VCAT will normally award pro-rata costs for break leases on the out of pocket expenses for said lease. Ie. If rent were $500 pw, leasing fee was $1,000 and the tenants were 6 months' in, VCAT would normally award $500 towards the letting fee as that's deemed a "loss".

If you've renewed the lease and the cost was $99 VCAT would pro-rata this amount. So you'd get a grand total of $90.75 assuming they're 1 month in.

$600 in gardening does sound excessive, how bad was it?

You can't claim your PM costs to go to VCAT, sometimes insurance will cover this - but in this case it looks like your claim is well under the bond. So you're effectively going to VCAT to claim $690.75 (application costs should be free for a bond claim) less $450 for the PM = $240.75 benefit, assuming you win full costs. But since the $600 is an invoice, you're literally paying $450 to claim $90.75.

The PM should only be charging the cost of the renewal to the tenants, plus gardening. Hopefully this should keep you out of VCAT and then you're not out of pocket at all. Unfortunately you'll have the cost of the letting fee to the PM, but at least you're not spending money.

 

After deducting tax the net cash amount is even less. Nowadays landlords are all thought of as greedy, selfish multi-millionaires who are blocking people from achieving the "Great Australian Dream".

If it wasn't for the great Capital gains in Melbourne recently I don't think keeping investment properties would have been worth the hassle

 

The $600 gardening fee does seem excessive. This was the quote that the PM got to remove vines that have grown up across a pergola and into the gutters and under the roof covering - the tenants were reminded a few times throughout the tenancy to keep it under control after it was cut back for them but they didn't.

The $990 releasing fee is 1.5x weekly rent.

Sounds like the consensus is that it's not worth going to VCAT.

 

Is this even a tenant's responsibility? I suspect it isn't. Generally a tenant wouldn't be responsible for anything except the most basic of garden maintenance - mowing the lawn and watering it etc.

Yes but why is the tenant liable for this at all? Legally the answer can't be "because they signed that they would".

 

Twas a break lease so some of the reletting should be covered, but not the whole thing, probably just pro-rata based on duration. Each state calculates this a bit differently.

 

I suspect its just the pro-rata'd portion of the renewal fee though, as Lil Skater mentioned. Which was the $99 fee?

 

Good luck with that gardening claim. I can’t see cutting back vines from over a pergola and into the roof is the responsibility of the tenant.
Suggest you get rid of the vines if they are so rampant and destructive.
Marg

 

Sorry to say, but VCAT won't (I am truly confident in this) pay out on removal of vines. They believe anything that requires more than the basic or the tenant getting up on a ladder is not their responsibility. Next time I would just add this to regular maintenance every 6-12 months, or just poison them so they're no longer an issue.

So your break fee would be $90.75 - perhaps with the vines you could try to come to a amicable solution. Not perfect, but say if you can get half the cost of the vines, or even $300 for the vines and the lease fee you're doing better than you would at VCAT... And you're not paying $450 for the privilege.

 

Your PM let vines grow under the roof while managing the property?

I would be looking for a new PM