Two real estate agents were discussing the Australian share market over coffee. “It’s going so well I’ve got to buy into it. There’s no sign of a slow-down and the returns are terrific.” Much like frogs croaking before the rain you can clearly predict a share market slump by the number of people from the property industry joining in! The above would be the start of a great joke if it hadn’t been us sitting at that table 10 days ago….and with the All Ords down 6% in a week we’re reminded that with any boom in any market there’s hidden dangers.
In the booming inner Brisbane rental market one of our basic dangers is being ignored. Property managers, puffed out from busy rental open homes and piles of tenant applications, are slowly ignoring routine maintenance inspections on rental properties. There’s no pressure from landlords – they just got a $30 rent increase with no vacancy. And often tenants with a lease renewal in the near future won’t whinge about repairs for fear of being slugged. We’re aware of one resident manager who’s done no routine inspections on a property in over a year! So if what we’re witnessing is as widespread as we believe, thousands of Brisbane homes and apartments are going for extended periods without any inspection to check on their basic condition.
One southside landlord was recently forced to cough up $56,000 when their tenant slipped, and their agent’s failure to inspect the property sealed their fate. This is one of the smaller claims in recent times. Agents aren’t qualified builders and landlords would be wise to have annual inspections, especially in houses. But having your agent do their regular checks can prevent problems developing, and even new property’s not immune: one of our property managers found termites in a fifth storey brick apartment! Landlord insurances like AON are great risk management – but without regular internal inspections by agents all the healthy rent rises and low vacancy rates will be little compensation if a liability claim occurs.
At least this is one danger we can plan for…