A combination of a tight rental market, the rising cost of living, and perpetual stories about poor real estate management has led to an increase in tenants' frustration with landlords. But the owner-tenant relationship needn't be fraught.

Knowing your obligations and having a clear understanding of the rental contract can ensure better relations so you can retain good tenants, avoid the tribunal and preserve the value in your property. Here's how.

Have empathy for your tenant

Renting a home and moving home are extraordinarily stressful periods for tenants. Shelter is a fundamental human right and a trigger for the brain that may result in an emotional reaction to scenarios that, in normal circumstances, would result in a very rational response from that individual.

Landlord’s need to be cognisant of the role that they play and the privileged position they hold in the context of their relationship with the tenant.

Good communication supports trust

There are great tenants and not-so-great tenants, great property managers and not-so-great property managers, great landlords and not-so-great landlords, – understanding what each stakeholder wants is the first step to ensuring a smooth relationship.

Tenants want to be able to, and have a right, to quiet enjoyment of the place they're renting, property managers want to be paid for the responsibility of looking after the property and landlords typically have a mortgage to pay and their own financial objectives. Sounds simple, yet friction between these three is common.

As the property owner, take time to get to know both parties. Establishing a rapport and opening the lines of communication will help to ensure trust and more transparent interactions by the time you sign your rental agreement.

At the end of the day, it is your property and the property manager is an extension of your personal brand and values so choose wisely and don’t be afraid to switch.

I learnt the importance of this the hard way. My wife and I once had a property manager looking after an investment property who told us the tenant was struggling to pay rent so we thought we would do the ‘right thing’ and offer some leniency on payments.

What we didn’t know was that the tenant was actually still paying rent and instead, had a broken stove and hole in the roof, but was being told by the property manager that we (the landlord) were doing it tough and couldn't afford maintenance. 

We later found out the property manager had stolen $13K from us via the agency trust account - and over $300k stolen from all client monies in total – because of a lack of open communication between us all. Ever since then I've seen this as a triangular relationship, not just a line from landlord to property manager to tenant.

This realisation catalysed the launch of Hutly, specialising in real estate contract management, data and payment solutions, which provides customers with real-time access to actionable insights about their properties.

By fostering transparency and enabling efficient communication, Hutly aims to prevent scenarios similar to what I experienced and promote trust within the real estate ecosystem.

Set expectations and clarify obligations

Tenancy laws vary between states and territories so it’s a good idea to familiarise yourself with the rules and obligations you have as a landlord, particularly if you own properties in different states/territories. To avoid legal complications, be upfront and honest about them to both tenant and agent to ensure everyone is on the same page. 

Growing up as one of four children of a hard-working single Mum and still renting today, I really came to understand the reality facing renters. This firsthand experience shaped my perspective on the challenges faced by tenants and instilled in me a deep commitment to advocating for their rights and well-being.

There have been cases where tenants are afraid to make repair or maintenance requests because they fear eviction (into a tight rental market) in retaliation for being 'difficult', so it doesn't hurt to mention that you encourage addressing broken fixtures or upholding maintenance requirements because it benefits your property in the long run. It's also an easy way to retain good tenants.

If you're seeking a property manager, ask about their experience going to tribunal – it's a red flag if they've been involved in more than a handful of disputes. For the tenant to bother to go to tribunal means the property manager has done a poor job; if they've selected tenants well, managed expectations and the relationship well, if they've been fair and equitable and open and transparent and have communicated well, things shouldn't end up in tribunal at all.

Understand the risks

All investments have risks and renting out your property is no different.

Many factors may affect the earning potential of your property, we are more attune to black swan risks than ever before including a global pandemic causing economic destabilisation that could affect your tenant's income, a flood damaging your property and making it unliveable, or an unethical property manager stealing from the agency trust account.

Evaluating the risks and mitigating them where possible will help give you peace of mind. Look into landlord insurance and find secure transaction methods as an alternative to agency trust accounts. The fewer people who have access to the account, the more secure it is.

Rental contracts are daunting for both landlords and tenants as both parties take on some degree of risk in the relationship.

Getting to know everyone involved – including the property manager if you hire one – and building a foundation of trust, transparency, and fairness will help you foster a positive relationship with your tenants and avoid legal trouble while maintaining the long-term value in your property.

By Jeremy Hastings, Founder and Managing Director of Hutly.