Glossary

Rental applications are submitted to us by prospective tenants so we can assess their suitability for a property. They’re very detailed and include details about how much a tenant earns, their rental history with other agencies, how many children &/or pets they have, references, etc. Our office policy is to process all applications within 3 business days. That way, if the applicant is a strong candidate, we can present their application to the Landlord for their approval before the tenant considers choosing another property instead – which happens a lot with many agencies, though the Landlord usually doesn’t hear about it!

We provide free, no obligation appraisals for both sales & rental properties. They include recent sales / leases of comparable properties close to the property being appraised and the price range in which we believe a buyer / tenant is likely to be found. If you’re buying an investment property, we’ll be happy to provide as many rental appraisals as you like so you can assess the yield potential of different properties.

Tenants are required by law to pay their rent by the day it’s due. We allow our tenants 2-3 business days leeway for bank processing times, and then we start following them up. We contact them every day until they’re no longer in arrears. In fact, we encourage all of our tenants to be (& stay) at least 1 week ahead with their rent so they never hit our arrears list. That’s best for them too, as their rental ledger forms a central part of any application they make for other rental properties in the future. It’s also a key determinant when we decide whether to recommend to our Landlords whether to offer them a lease renewal when their lease expires.

Landlords can require a bond from a tenant who wants to lease their property. The bond offers some protection to the landlord in case the tenant leaves the property with unrepaired damage or unpaid rent, water usage charges, etc.

In Queensland, the maximum amount of bond that can be charged is the equivalent of 4 weeks of rent unless the rent is $700 or more. If the rent is $700 or more, there is no limit on the bond amount the landlord can require.

The bond is paid to the RTA (Residential Tenancies Authority). When the tenant leaves the property, either they claim the bond from the RTA or the landlord/agent does. If the other party disputes the claim, mediation is done by the RTA with the landlord/agent & the tenant. If agreement isn’t reached, the party who disputed the bond claim can lodge an application with QCAT for a ruling. If the amount in dispute is greater than the bond, the landlord/agent can request that QCAT makes orders for the full bond amount to be paid to the landlord/agent & for further orders that the tenant must pay the balance to the landlord/agent as well.

If the tenant doesn’t pay any amount above the bond that they have been ordered to by QCAT, we list them on TICA. TICA offers a national database of tenants & their renting history. When most agencies process a tenant’s application, they check whether the prospective tenant has been listed on TICA. If they have, it’s unlikely the agent will recommend that the landlord offers a lease to that candidate. Being listed on TICA offers a strong incentive for tenants to repay the funds they owe as they find renting through any other agency extremely difficult.

The most common Breach Notices (RTA Form 11 Notice to remedy breach) issued by property managers to tenants are for rental arrears. They can only be issued after a tenant exceeds 7 days in rental arrears - we always issue them on the 8th day. But they can be issued for other breaches of the Residential Tenancies & Rooming Accommodation Act 2008, by landlords, property managers & tenants.

One of the most common clauses in a sales contract is for the buyer to be satisfied with a building & pest inspection report conducted within a few weeks of the contract date. If they’re not satisfied, they will typically request that items they’re not satisfied with be fixed prior to settlement or that the sale price be reduced as compensation. In extreme cases, the buyer might even choose to withdraw their offer and the contract “falls over” or “comes to an end”.

Campaign reports contain statistics on how a Vendor’s/Landlord’s property listing is fairing on internet portals. They show how many people have searched on & explored the listing.

When it comes to investing in property, investors typically have to balance yield with capital growth. It can be difficult to find properties that score highly in both. Put simply, the yield is what you make from your investment now; capital growth is what you make from your investment later.

We provide Comparative Market Analysis (CMAs) for both sales & rental purposes. They provide owners with an estimate of what their property is worth by comparing recent sales/rentals of properties similar to theirs in the local area & in the recent past. We’re always more than happy to provide CMAs for our clients. They’re very useful – and free. We often provide numerous rental CMAs to investment property buyers who want their potential yield calculations to be as accurate as possible. We can provide a CMA for each property you’re assessing to ensure you focus on the one(s) with the greatest potential yield.

Conveyance is the legal process of transferring property from one owner to another. While some Vendors & Buyers choose to do it themselves, we strongly recommend that a solicitor/conveyancer is engaged to do it professionally. Conveyance can be complex, and if any mistakes are made the consequences can be very costly!

Costs for conveyance through a solicitor or conveyancer typically range from $500-800 for both Buyers & Vendors. To be sure they know what they’re buying, Buyers are strongly encouraged to instruct their solicitor/conveyancer to perform a range of searches on the property. Depending on how many a Buyer chooses to do, these searches typically add $600-800 to the cost of conveyance.

Low hanging, exposed blind & curtain cords pose a serious strangulation risk to young children.

Australian legislation requires corded internal window coverings to be installed in a way that ensures a loose cord can’t form a loop 220mm or longer at, or less than, 1,600mm above floor level.

Noncompliant cords can be retrofitted with a cleat to secure the cord at least 1,600mm above floor level, which is what we arrange for our Landlords’ properties every time a new lease begins. Our inspectors also ensure a warning label is attached to each cord.

An electrical safety switch is a device fitted to an electrical circuit that quickly switches off the electrical supply if it detects an electrical fault. It minimises the risk of electrical fires & shocks.

In Queensland, all homes built since 1992 have been legally required to have safety switches installed on all power & lighting circuits.

Queensland legislation requires all Landlords to ensure all electrical equipment in their rental property – including electrical safety switches – is safe.

Penalties for not adhering to the current legislation include fines up to $200,000 and 3 years imprisonment.

There must be a regular maintenance program to ensure all electrical equipment continues to be safe, so we arrange electrical safety switch checks for our Landlords’ properties every time a new lease begins.

Our end-of-month pay run to landlords & rent roll creditors is on the 1^st day of the month (or the next business day if the 1^st day is a weekend or holiday).

When Vendors & Landlords engage a real estate agent to represent them, an official form is used – a Property Occupations Act 2014 Form 6. All of the particulars relating to the agreement between the Landlord/Vendor & agent are contained in that form. Once both parties have completed, dated & signed the Form 6, the agent is responsible for providing the Landlord/Vendor with a copy. The agent is then authorised to act on behalf of the Landlord/Vendor in the management or sale of their property.

A lease is an agreement between a tenant & a landlord. With Queensland residential leases, the landlord is responsible for making the property available to the tenant in accordance with the Residential Tenancies and Rooming Accommodation Act 2008 and the tenant is responsible for paying rent & maintaining the property in accordance with the same act. In Queensland, residential leases are called General Tenancy Agreements & are prepared using an RTA Form 18a.

Residential leases are typically for a fixed period of time, such as 6 or 12 months. But they can also begin as periodic agreements with no fixed time period. Fixed period leases automatically revert to periodic agreements when the fixed period has expired.

Fixed period leases don’t automatically expire when the fixed period expires. They expire when either the landlord issues the tenant with a notice to leave, or vice-versa. When the notice period has elapsed, the lease ends.

When assessing a loan, this is the percentage value of a property that a bank will offer to lend a Buyer. An LVR of 80% on a property the bank values at $500,000 would mean the bank would be prepared to lend up to 80% x $500,000 = $400,000 as a mortgaged loan against the property.

Our mid-month pay run to landlords & rent roll creditors is on the 15^th day of the month (or the next business day if the 15^th day is a weekend or holiday).

If a tenant wants to issue a landlord (or their property manager) a notice to leave, they only have to give 14 days’ notice. If a landlord wants to issue a tenant a notice to leave, they have to give 2 months’ notice - unless the tenant is on a period lease & the property has sold, in which case they only have to give 4 weeks’ notice.

Leases are usually for a fixed period of time, typically 6 or 12 months. If the lease expiry date is reached without the landlord or tenant issuing the other party a notice to leave, the lease continues on a periodic basis.

If you lease a property in Queensland with a pool or spa, you must get a pool safety certificate from a licensed pool safety inspector before a lease is signed.

You must also register the pool with the QBCC (Queensland Building & Construction Commission). If you don’t, you risk a fine of up to $24,380!

We arrange for both the certificate & the QBCC registration for our Landlords. If the pool safety inspector identifies issues that must be rectified before the certificate can be issued, we can arrange for the repairs & re-inspection as well.

Smoke alarms warn people in a building that there’s a fire before they can be overcome by smoke or toxic gasses from the fire. Smoke alarms save lives.

Landlords in Queensland must comply with both federal and state legislation relating to smoke alarms.

All Landlords in Australia must ensure that their rental property is fitted with the required number of properly functioning smoke alarms that comply with the Australian Standard (3786:1993), and that they’re installed in accordance with the Building Code of Australia (BCA) part 3.7.2.3.

On July 1^st 2007, changes to the Queensland Fire and Rescue Service Act 1990 came into effect requiring every smoke alarm in a Queensland rental property to undergo specific ongoing maintenance. Under this legislation, Landlords must test and clean every smoke alarm within 30 days prior to the start of each new lease. They must also replace all smoke alarms and batteries before their expiry date.

On January 1^st 2017, the Fire and Emergency Services (Domestic Smoke Alarms) Amendment Act 2016 and the Building Fire Safety (Domestic Smoke Alarms) Legislation Amendment Regulation 2016 came into effect. They require Queensland Landlords to provide an even higher level of safety in their rental properties by January 1^st 2022 (immediately for newly built properties & properties with work being performed that requires a council building permit):

• Smoke alarms must be installed in every bedroom of a home
• All smoke alarms must be powered by either 240 volt or 10 year lithium battery
• All smoke alarms must be interconnected to each other
• All smoke alarms must be photoelectric rather than ionisation

We arrange smoke alarm checks for our Landlords’ properties every time a new lease begins. We also coordinate the required smoke alarm upgrades to their rental properties.

In a sales contract, there are many standard or general conditions contained in the normal pro forma contract most agents & solicitors use. Special conditions are those that may or may not be in a contract at all or may vary from one contract to another. Examples include the sale being dependent on successfully arranging finance for the purchase, satisfaction with a building & pest inspection, the sale of another property, vacant possession provided at settlement & various types of sunset clauses.

A sunset clause in a sales contract defines a point in time when, if a particular condition of the contract has not been met, the Buyer &/or Vendor have the option to end the contract – just as sunset marks the end of the day.

There are many types of sunset clauses, but the most common we encounter relate to the sale being dependent on the sale of the Buyer’s home. If the Buyer’s home doesn’t sell and settle by a certain date, the Buyer has the option of ending the contract.

A tax depreciation schedule is a statement of all of the long term assets in an investment property that qualify for tax depreciation benefits under Australian tax law. The statement lists all of the assets that qualify, their assessed cost, effective life, & the rate at which they depreciate.

TICA is a national tenant history database. It’s used by real estate agencies (& others) to check where & when people applying for a Landlord’s rental property have leased properties in the past & whether there are defaults against them for damages, unpaid rent, unpaid charges (such as for water usage) or tribunal orders against them (QCAT).

The database contains unique identifying features such as name, date of birth, and driver’s license details.

Obviously, we don’t look favourably on any prospective tenant’s application if they’re listed on TICA!

Real estate agencies operate trust accounts to manage funds on behalf of their Vendors & Landlords. Funds collected from tenants & buyers are kept in the trust account until they’re dispersed at mid-month, end-of-month or settlement (for sales).

Most sales contracts have conditions that must be satisfied before the contract becomes binding. They can exist for the benefit of the Buyer, the Vendor, or both. For example, finance and building & pest inspection conditions are typically inserted for the Buyer’s benefit, while sunset clauses are sometimes inserted for the Vendor’s benefit.

Once all general and special conditions have been satisfied, both the Buyer and Seller are legally obligated to complete the sale unless the other party agrees not to.

With the standard sales contracts most Queensland real estate agents use, the general terms & conditions make it the Vendor’s responsibility to ensure their property is ready for the Buyer to take possession of when settlement occurs. That’s essentially what “Vacant Possession” means – the property is vacant for the Buyer to take possession of.

We find that the most common obstacle to a Buyer being able to take vacant possession of a property is a difficult tenant. If a tenant is on a fixed term lease that extends beyond the settlement date, both the Buyer & the Seller are reliant on the tenant vacating early voluntarily. But even if a fixed lease expires before settlement, or the tenant is on a periodic agreement, and the tenant has been given the appropriate notice to leave the property, they might choose not to. Following standard legal procedures to force them to comply with their legal obligation to vacate the property can be a lengthy process through QCAT, taking weeks if not months. Both Buyers and Vendors need to be aware of such possible scenarios & ensure the contract protects their interests appropriately.

But it’s not just tenants that can affect the Vendor’s obligation to provide vacant possession to the Buyer. Other impediments such as rubbish, furniture, and other unwanted personal effects can substantially prevent or interfere with the Buyer’s right of possession of a substantial part of the property. Vendors must do their utmost to ensure such obstacles don’t exist at settlement or they may face penalties pursued by the Buyer.

In Queensland, tenants can be charged for the water they use in a rental property if:

• the property is individually metered (or water is delivered by vehicle), and
• the property is water efficient, and
• the tenancy agreement states the tenant must pay for water consumption

To be considered “water efficient”, the property must meet these standards:

• Internal cold water taps, single mixer taps & showerheads have a maximum flow rate of 9 litres per minute
• Toilets have a dual flush function not exceeding 6.5 litres on full flush and 3.5 litres on half flush and a maximum average flush volume of 4 litres (based on the average of 1 full flush and 4 half flushes)

Most modern houses are already considered water efficient. You need only keep the receipts, packaging, warranties, manuals, etc, to prove it. To eliminate any doubt, we can arrange for a plumber to provide a compliance certificate for around $100 (assuming it’s already compliant).

We also pay Landlords’ Unity Water bills on their behalf. Landlords simply need to notify Unity Water to send their invoices directly to us & we’ll pay them on their behalf in the next mid-month or end-of-month pay run. Not only do Landlords not have to worry about paying the bills themselves, the bills are then included in their end-of-year financial statement, ready to use for tax return preparation. And having us pay the bills on our Landlords’ behalf means we can invoice the tenants as soon as possible for their usage component of the costs.

The basic or gross rental yield of an investment property is calculated by dividing the expected yearly rental income of the property by its value. The “value” used is typically its purchase price, though it’s often better to use its current market value. If you were considering buying a property for $400,000 and expected it to rent for $430 a week, its expected gross yield would be ($430 x 52) / $400,000 = 5.59%. Gross yields are of limited use to investors because they don’t factor in many purchase & ongoing costs, so they don’t tell you what overall return you can expect on your investment. But they can be useful to assess how attractive potential investment properties are relative to each other.

When it comes to investing in property, investors typically have to balance yield with capital growth. It’s usually difficult to find properties that score highly in both. Put simply, the yield is what you make from your investment now; capital growth is what you expect to make from your investment later.

Units & other strata titled properties typically have higher yields than freestanding houses. But their prospects for capital growth are typically lower than freestanding houses. Why? Because the general rule of thumb is that buildings depreciate, while land appreciates. The value in units tends to be in the building, not the land.