Comparing Unique Property Challenges in Victoria

How does interstate legislation impact property management in Australia? Join us as we chat to Taylah & Darren from RT EDGAR about property laws between states, particularly in Victoria, with insights in how it affects the landlords, tenants and property managers. Learn about recent legislative changes, including increased loan rates and new safety requirements, and understand how these shifts complicate the landscape for property managers and landlords alike. 

We'll discuss the complex responsibilities that property managers face, focusing on compliance checks and safety standards. Discover why property managers cannot conduct these checks directly and why it’s crucial for property owners to ensure their properties meet stringent safety standards. Additionally, hear from Darren on the complexities introduced by increased land taxes in Western Australia and Victoria, and how these changes affect landlords financially. By comparing international practices, we'll explore how property management varies globally, particularly in how some US offices handle evictions.

Taylah shares insights on the impact of rising costs on property owners and renters, emphasizing opportunities for new investors despite increased expenses. With recent regulatory changes aiming to ensure compliance, Taylah and Darren provide valuable strategies for managing these pressures and the benefits of long-term property investment. 

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Transcript

Speaker 1: 0:30

Thank you everyone for listening in and tuning into today's episode. I have Taylor and Darren and they are from RT Edgar and I am really excited because this is a little bit of a different in terms of content and conversation for our podcast and I want to talk about a little bit more about what's happening in different states and as property managers, we should really have an idea of what's going on in other locations to make.

Speaker 1: 1:03

I guess, at the end of the day, our clients are in different states. At the moment, I think we're seeing a big increase in the interstate buying, and so one of the things that goes through my mind is making sure that we like, if we have a landlord, for example, in Victoria and they're buying in WA, that sometimes what happens is they can assume that the laws are the same when they're not, and so that education, that cross-education, is really important. So if you do get a client that calls you interstate to say, to question maybe a process that you're doing, you are aware that it's actually different where they live and what they're experiencing. So that's what our conversation is going to be about today, and so I'd like to welcome Darren and Taylor to talk to us about Victoria. But let's start off with a little bit of an intro for you guys, so you can tell us a little bit about you, where you've been, where you are now and about the business. Darren, how about you Taylor? Taylor, you start off.

Speaker 2: 2:02

So, yes, my name is Taylor. I'm the Business Development and Leasing Manager at RTA Green Turack, which is about 10 kilometres out of the CBD of Melbourne. So've been in this role for three years and then, prior to that, I was a property manager for seven years. So in total, I've been in the property management for 10 years, which is a long time, and I've worked in Stonington my whole career. So that's a little bit about me, darren.

Speaker 3: 2:30

Yes, thank you. I'm head of property management here at RT Edgar and have been so for a couple of. About me, darren yes, thank you. I'm head of property management here at RT Edgar and have been so for a couple of years now, and my career is long and long and long. I've been around for quite some time, but it just means I've learned a bit. I've done predominantly property management. I've previously owned a franchised office. I'm also a licensed auctioneer, licensed real estate agent, so I get to see a lot of real estate transactions around Melbourne from both sides, whether it be buying, selling and also leasing. So yeah, it's been great, enjoyed so far and continue to do so.

Speaker 1: 3:06

Excellent. And Taylor, you're in business development, aren't you? Yeah, excellent. And just for curiosity, for my own interest, um the market at the moment getting new business is it easy, hard um local investors?

Speaker 2: 3:21

interstate? Yeah, that's a good question. It's mainly locally, uh, local investors and it's probably it's more so people that may have like purchased and they're just not ready to move into it yet. So they only want to rent it out for like a year or two before their permits come in. But we're not really seeing a huge amount of investors out there wanting to buy an investment property. It's kind of like, oh, they've had it for a while and they've self-managed it or it's from Airbnb. So, yeah, we just haven't seen a great deal of true investors out there. Due to the current climate which we'll chat about, yeah, excellent.

Speaker 1: 3:59

Well, let's get straight into it, because I actually, I will be honest, I live in a little bubble in WA and I do try to listen out to sort of what is happening interstate, and all I've heard is that it's crap in Victoria and that it's crap for property managers, it's crap for investors, but I actually don't know all the information, the details. So why don't you start with sort of what you think is sort of one of the biggest challenges that you're facing at the moment? Yeah, perfect, you're a seller at the moment.

Speaker 2: 4:31

Yeah, perfect.

Speaker 3: 4:31

You were so awesome. Yeah, a multitude. Like you said, it's not just one owner or rent provider that's been hit. It also affects renters as well. And then, as you rightly said, property managers are the little piggy in the middle that see both sides of the fence and the challenges they have are to balance both their conversations. So I guess if we looked at the challenges that face rent providers first, there's quite a raft of those that have come in and I'll use over, say, the last two years just to give you a bit of a snapshot of the landscape there.

Speaker 3: 5:04

If you're an owner of a property, majority of owners aren't rich millionaires. They are generally the mum and dad investors and so on, so they've probably got a loan on the property. In the last 24 months there's been 13 rate increases, so that alone in a sense would just increase the actual holding cost of an investment property for a rent provider. Then again, around about two years ago, the Victorian government initiated a whole raft of legislation changes that came through. The Victorian government initiated a whole raft of legislation changes that came through and they were varying from, you know, notice periods, inspections but there was also legislation they brought in which was minimum standards and safety checks, and that creates a whole raft of work involved in there.

Speaker 1: 5:52

So I'll just stop you there. So, with the changes, do you know how long it had been before since you had the changes previously? Like I think we've just had changes, but it had been about 10 years. Do you know how long it had been since you?

Speaker 3: 6:08

guys had. Yeah, the Residential Tensions Act was 1997.

Speaker 1: 6:12

Yeah, okay, because that was one thing that came up with us. Um, and one thing I just spoke about is like I think changes are okay, but there's a certain time and place to be doing them and like during this rental crisis is not really the right time to be doing. That wasn't for me. That was my thing. It was it wasn't about the legislation, like it wasn't about the changes, it was about the timing. So for you guys, though, yes, I think it would be the timing Is this the right climate for us to be making changes? But number two, potentially the unfair changes as well, I would suggest Is that right?

Speaker 3: 6:47

Yeah, it was almost a perfect storm because the changes were flagged prior to COVID. None of us knew that was going to happen, did we? So then, as COVID hit, they then changed it and delayed it a bit. So, if you look at it, we all had to, personally and professionally cope with COVID and then, at the back of that, when in a sense, it pretty much ended, the new legislation started. So property managers were jogging a whole lot then and, yeah, it's been two years since and there's a lot better understanding of them whether they be fair, unfair or maybe need to tweak again but it was just a whole raft of 130-odd changes that had to be undertaken and understood by property managers. So, like I said, tough gig, absolutely absolutely so.

Speaker 1: 7:36

can you talk about a couple of those changes? I mean, obviously we can't go through 130 of them but talk to us about a couple of the changes that maybe have caused maybe the biggest problem.

Speaker 2: 7:45

Yeah. So the biggest one is minimum standards. So now a property is required to meet 14 14 requirements. So it's such things as like making sure that you've got a heater in the main living area and it's only you're, the owners um only have four types of heating to choose from. So a non-ducted um heating cooling unit, a split system, an open fireplace and a gas heater. If you live in an apartment building where the OC might not be okay with installing a split system, then you are okay to put one of those electric wall panel heaters. Or, if the cost to you know, run duct. So the duct work from an AC unit to the outside is going to cost, you know, an average one's probably the unit's probably $2,000 and the installation's $1,000. If you bought the same unit and then the installation was going to cost $6,000, well then that's a bit, you know, not fair. So that's your only leeway in an apartment. So that's the biggest challenges and in that itself the property manager, like we've had to undergo a lot of um training. We've had to rely on people such as detector, inspector and residential commercial safety compliance to really help us in this sense.

Speaker 2: 9:07

But with all these new laws it comes with with a cost. So, for instance, say I go out, list the property, get the compliance check done, which is about $800, and they'll come back and say there's items that are not safe that you have to get done. And then there's non-compliance issues. So that's like the distance between a stove and a range hood. At that time, when that range hood was installed, it was okay with the regulations. But if that owner went to go upgrade the range hood, they would have to adjust the height.

Speaker 2: 9:44

But this could be anything. When it comes back with the report and the quote, this could be anything from $300 up to $15,000. And that's in itself you haven't even leased the property. So that's then putting pressure onto the owner to fork out more money and also then look like well, I need to recruit these costs, and so they're obviously increasing the rent, which means tenants are then having to pay that money. So it's a bit of a domino effect.

Speaker 2: 10:13

And then at the same time, for us property managers, we really have to be on our game, making sure that you know these checks are being done, because otherwise an owner and an agency can actually be fined, and that can be up to $10,000, and we can also be listed on the public listing as well. So I'm all for like making the property safe and making sure that. You know, a $350 per week property up to $3,000 is all up to an equal standard. But, yeah, it's really putting a bit of a pressure, a financial pressure, onto the owners because there's no way out of it. They can't avoid it because if they don't do that they get fined. And then they're like, well God, this is costing me so much money. I may need to look at my options of going to Airbnb where there's less regulations, or, okay, like I'm going backwards here, I can't hold it, I'm going to have to sell, which means there's that lack of stock coming onto the market and tenants don't have any way to live. So, yeah, okay yeah.

Speaker 1: 11:16

So I've got lots of questions in this because I genuinely am curious about it. So what throws me with heating, for example, is that it's and and there's a thing with aircon and I know, like with aircon uh, I'm assuming is aircon one of the minimum standards as well, if heating.

Speaker 3: 11:35

It's one of. It's one that's um, there's a lot of groups that are asking for it to be yes, so that's probably you know in the discussion in behind closed doors at the moment, but yeah, we.

Speaker 1: 11:44

We usually have winter and summer here in victoria, so it's like with with aircon, I sort of get because it's really hard if you're hot, if your house is hot, it's really hard to pull it down, but with heating you can put six and a half boots on and go get an audio stick on. Like that you can, you can physically warm yourself if you need to. Um, the other thing is that throws me with when it comes to air con and obviously heating, that like you can get some really awesome portable heaters. So why would that pressure be put on a landlord when a tenant is able to go down to Harvey Norman and go get a really good, you know, fan controlled oil heater, which is what I've got for, like, my kids rooms, which is really good.

Speaker 1: 12:30

So I sort of because it can be sort of somewhat rectified by a tenant like I find that that's my first thought like why enforce that into a, into a property? My second thought is and I think that that's very true you know people putting their property onto the airbnb because there's less, um, you know going to be less conditions there, but has it transferred the heating, for example? Has that transferred through to the selling of properties and affected the way properties get sold? Like if someone was buying it as an investment. It doesn't have to be sold with heating or anything, does it?

Speaker 2: 13:08

No.

Speaker 3: 13:09

No, but what it has done is just probably raised a little another tick box on a buyer's checklist to say that if they're going to buy a property for investment, is it compliant now with minimum standards and the safety checks? Because those safety checks, without going into it too much yet, relate to switchboards. There's also about privacy being block out, blinds and curtains in bedrooms and living areas, disclosures about mould and all those things. So I guess a buyer would go, hey, I'm going to make sure this ticks the boxes here, because if not, I've got to factor that in. If I buy this place before I can rent it and give it to Taylor, hopefully to lease out, I need to spend A, B and C to make sure it is compliant. So yeah, it would be factored in A, B and C to make sure it is compliant.

Speaker 1: 13:53

So yeah, it would be factored in. Yeah, okay, and so then my other question is is it possible for a property manager to do the compliance check, or is it having to be formally signed off by somebody?

Speaker 3: 14:04

Yeah, the property managers don't do compliance checks in any way, shape or form. One, possibly for their knowledge and, if they did know them, two for the liability of it. A landlord or a rent provider is required to sign a disclosure statement to any ingoing renter and on there it's all signed off, that it meets minimum standards, and it's also the safety checks when they were done, the dates for gas, electrical smoke detectors and that. So, yeah, it's the owner's responsibility and every property manager should make sure that the rent providers do sign out, not themselves.

Speaker 1: 15:21

Yeah, and how often would they have to get that done? Is it just like the first time you rent out the property, or is it on a regular basis?

Speaker 3: 15:30

Smoke detectors are annually and gas and electrical safety checks are every two years.

Speaker 1: 15:36

Yeah, it's hard putting so much pressure like you said before like on property managers. It's another thing that they've got to add to their repertoire. It's when I went travelling over to the US a couple of years ago, we went to some offices. When I went travelling over to the US a couple of years ago, we went to some offices. One thing that stood out in what was happening in America and I sort of I really talk about it a bit because I think it's a great concept that as time goes on and the longer you're in the industry it's higher we're expected to be experts in so many fields and it just keeps on piling on. And so when I visited some offices over there, what happens is if there was a tenant that you had sent a termination notice out to, at that point it actually goes to a lawyer and the lawyer is the one that does the eviction or the bail of place for court, all of that, and the landlord pays. I think it's like $1,000. It's a bit of a set fee for $1,000. When it got to that stage and then the lawyers took over and I thought you know what that makes sense. That's really good because it's taking the pressure off the property manager now having to be an expert in court and law and eviction and things like that.

Speaker 1: 16:46

I love just exploring different options because I think that would be something amazing to come into Australia, things like that. Like, I, I'd love just exploring different options because I think that would be something amazing to come into um, into Australia, and so, um, I, you know, I, I hate when we just keep on getting piled and piled with more and more stuff, um, because it affects everybody. So it's um, yeah, that's the. That's a crappy change. And one thing that, like, bring it back to WA without changes. What you'll find is that a lot of property managers will actually say, well, yes, those changes have come in, but they've always been best practice anyway. And from the sounds of it, a lot of the changes don't necessarily sound like that. They were best practice and potentially being done anyway. They are a very one-sided situation. So that's something very important, I guess, to keep in mind whenever, yeah, different laws come in place, so well, that's a crappy one. I'm sorry you guys have to deal with that.

Speaker 3: 17:48

It's one of those ones that the legislation is good in a sense of. Every property should be safe. No one will ever question that. That's exactly what it should be. But it's almost like that unintended consequences that happens and unfortunately we live in a society where if you want something done, it's going to cost money, and so if it's all costed on one side of the ledger, then they're going to look at how they can recoup their costs and look at, you know, and balance it out. But yeah, the legislation was good. We support that.

Speaker 3: 18:13

It might yeah another couple of years, we might have a different situation where it rolls around.

Speaker 1: 18:20

Yeah, did I. Now this could have been a rumour, so correct me if it's wrong. It was a landlord that was over in Victoria and he told me that something about potentially the compliance or something was done by had to be done by the government, and so that that fee went back to the government anyway and it was like a money making. Is that?

Speaker 3: 18:42

no, okay so no, no, no, I was just curious, because I remember him telling me that, so yeah. I love a good story. Yeah, absolutely.

Speaker 1: 18:53

Absolutely, and being bored of a good story if it was true, but that's all good, all right. So give us another idea of something else that's sort of happened that's really affecting you guys.

Speaker 3: 19:02

Again, if we're still talking on the rent provider or the owner's side of it. Victoria property owners just had their land taxed increased as a result of our longstanding COVID debt. So for the next 10 years they've lowered the tax-free threshold, which means all owners of investment properties now in their mail are getting an extra large tax bill. So yeah, and that's not going to end anytime soon. Again, another little layer of a holding cost. That just makes it a bit challenging for owners. Having said all, that.

Speaker 1: 19:38

But what would be an average like from a cost point of view? What would be like an average land tax?

Speaker 3: 19:43

bill Because it's based on property values and whatever else they own. Some might own one property and some might own three or four, but I did some checking on here. On an average basis, the extra cost could be anywhere from fifteen hundred dollars extra per annum to thousands, depending on what their their tax.

Speaker 3: 20:02

You know, situation is let's just kick you while you're down, hey, yes, yes, um, and then you've got which is pretty much around the country is just the overall cost of living that everyone talks about, the pressures of things, so owner's insurance, owner's corporation fees, even arranging those trades that we just talked about. Trying to find a trade is hard because there's so much going on and then material, so it almost seems like everything you touch just keeps on adding up to more money, doesn't it?

Speaker 1: 20:31

Yeah, absolutely. And what? So you've talked about, sort of like, the landlords and how they've been affected. What are you seeing as an industry with property managers? You know feelings like getting out of the industry, wanting more money. What's happening in that space?

Speaker 3: 20:53

Yes, both of those two. If COVID didn't, you know, thin out the numbers in property management legislation, certainly when that came in straight after it thinned it out a bit further. So now we've got a big shortage of property managers. What levels of skill? From the juniors beginning to the ones that are senior. But yeah, the numbers are very thin. But then also we have to balance out their wellbeing, of course now, because mental health is a big issue in the workplace.

Speaker 3: 21:23

So those conversations that they're having now are not necessarily just property-related anymore. They're talking about a financial conversation that they've got to have with two parties that may feel a bit of pressure. You've got an owner who's going hey, all these costs are adding up, I'm only getting X amount of rent, I need to put it up, what's a fair level, and of course they're going to try and push the needle a little bit to their advantage. That property manager's got to balance that conversation, then possibly get off the phone and pick up a renter who might be in a situation, of course, similar to other people, where we've got pressures on them, and discuss that their rent's now going to go up.

Speaker 3: 21:59

So they're not good conversations and if you managed a a reasonable portfolio. You could do that a couple of times a day. You know it'd take a bit of metal to stand there and have those conversations and still come out with a smile on your face. It's just probably more taxing. So I think what you'll see is, yes, some people getting out because it is too hard. You might see portfolio numbers having to be reduced to manage the numbers that you can manage. Then you're going to have to look at introducing, if they haven't already, some mental health support, whether it be further breaks and so on, more training to catch up with the legislation. So there's a whole lot that rolls along, which always happens in property management, somehow, doesn't it?

Speaker 1: 22:42

Yeah, but I just can't see how that can work sustainably, because if you have to reduce the portfolio sizes to manage all this extra workload, but you need to increase the property manager's wages to you know, the responsibility, the increase in responsibility as well, then it's going to be another hit on that landlord.

Speaker 3: 23:08

Yes, and yeah, that's right, because then it'll be a hit on the business, obviously won't it, which then affects the profit. And then they go well, how can we maximise it? And then it looks at fees. And then there's another conversation that Taylor has to juggle with when she discusses owners out in the competitive market space as to what fees you pay, because the fees of yesterday certainly don't match what they should be or could be today with the amount of work that's included. I also know some larger companies. They've employed a title role of a compliance officer just to do it. We also know that a lot of real estate agents around the country use VAs. That's another affordable way to try and get some of the admin out of the way. But yes, like we said at the outset, I guess we initially started off thinking we're going to manage a property, but there's so much more, isn't it, than that?

Speaker 1: 24:00

Yeah, can you give us one more? And then I want to go into a little bit of the business side with you guys and yeah, I guess more the business and staffing side. But like just one more example of another change, that's been a bit of a problem.

Speaker 2: 24:16

I think we've pretty much covered it. I would say it's a change. But yeah, we're just seeing. I guess this kind of will wrap up and we'll probably go into what you're saying. It's this like, with all these kind of costs and everything, we're just seeing clients be like, wow, like you know, I've started to go a bit backwards.

Speaker 2: 24:33

Here isn't time for me to sell the property um and which we're seeing an influx of um, your owners sell up, which are coming onto the sales market, which means those properties don't come back on the rental market because there's no investors out there that are wanting to buy it, so they're going to only occupy it. So then there's less properties on the rental market, which is, and then there's this high demand, which then, you know, when there's high demand, the, the rents go up and then the tenants have got the inflation and then having to increase their you know rental range. It's just a massive domino effect and it's really tough for both parties. But you know, if there was anyone that was looking to invest, it is a good time to enter into the market because you can get those high rent as well.

Speaker 1: 25:24

As you know, it's leasing off market or, within two weeks, with low vacancy and, yeah, you're getting more than 10 in some cases more than 10 percent return than what was previously rented so if I guess, if you're a landlord looking to buy, then yeah, as long as you are aware that there's maybe going to be like potentially, um you know, a couple of thousand dollars extra per year in expenses, but you may actually recruit that in those rents as well.

Speaker 1: 25:55

So maybe it's probably more for the newer investor in the market as opposed to the seasoned investor who has had experienced it a lot differently and probably would be a little bit more bitter towards the changes. But then I guess you've got some new people, new investors, that probably have never experienced all of the good stuff before so maybe won't be as bothered by it. And then I guess what I would like to see with our changes is ultimately getting more people first-time buyers into the market. So like that I think would be a good outcome if you can reduce the number of renters and increase the number of first-home buyers, so that you know, so that helps the market a little bit. I don't, but I don't. I think that's a generational thing. I don't know whether the younger generation are into owning property these days. That's a generational thing. I don't know whether the younger generation are into owning property these days.

Speaker 3: 26:54

That's a good theory, and one that is happening a little bit down here, because the flow-on effect if an investor does sell out here for whatever reason and let's say, for instance, an investor isn't looking to buy back in it's creating opportunities for the first home buyers, which is great. The downside again, though good, tick the box. The first home buyer's got a home Great, let's celebrate. But that's one rental property that's now out of the rental pool, which shrunk it even smaller. And then the other difficulty, of course, is that the aspirational buyers, the first home buyers, if they're not living at home, they're probably renting, which means their savings are going to be impacted because they've got to pay such a higher rent. It's going to impact their ability to get a deposit ready to buy that.

Speaker 2: 27:44

And we're seeing from, like our current tenants are in place. They're seeing in the media, like you know, 30 groups outside and open for inspection. So they're like you know what? I'm just going to take on the rental increase and renew my lease for 12 months. So again, that stock's not coming up because people are so scared to see what's out in the media about that one.

Speaker 1: 28:07

And it doesn't help when you've got, you know, purple pingers and all of that on TikTok, scouting everybody to find some content you know for their website.

Speaker 2: 28:16

Hopefully, we don't end up on there after this.

Speaker 1: 28:21

I've had that Rachel McQueen and purple pingers. People have like tagged them into my TikTok and I've just been waiting for the day that they do it. So I'm strategic, I try to balance out my content so it's like slightly safe but not too exposed. But I mean, that's the truth, unfortunately, is that we are not only exposed like internally in our offices. We've got people out there just wanting to have a little bit of you know, content and love, finding opportunity to do that, like with one of our changes which is not a big drama in WA, but it's just been brought in where we can't encourage rent bidding and, to be honest, most decent property manager probably wouldn't have really encouraged rent bidding anyway. So if we get an application and there was someone that we liked but someone else who offered $50 extra per week, we can't call up the application.

Speaker 1: 29:24

We like to say, hey, we really like the application, but someone else has offered $50 more per week. Are you happy to match? So we can't have that conversation, but people can still offer more and we can still accept more. So for me it's like still pretty good, like I don't mind that. But there has been advice from, like our governing body, um, where they um sorry, there's been um from our governing body where they're saying that they're going to get, like mystery shoppers, out to go and, um, keep an eye on us, and I'm like that's just wrong. That's just creating an untrust um in the industry between the public and real estate agents. When whether it's someone on TikTok doing it or whether it's someone on you know, with our governing body saying, oh, we're going to go and check on property managers and make sure they're doing the right thing Like that's wrong and I hate seeing that in the industry.

Speaker 3: 30:25

Well, in Victoria just announced only a short while ago, they're going to form a taskforce for rental and this taskforce is from Consumer Affairs and they're going to go out and about to make sure they crack down on any owners that don't comply with those minimum standards and real estate agents for all the compliance requirements, advertising everything. So they're going to be out there. So that's just been announced and I think they're employing people now. So again another layer for a property manager to worry about who's coming through the property next or who's coming through the office doors.

Speaker 1: 31:01

To call it a task force. You know, like I hear task force and I'm picturing and I'm picturing.

Speaker 3: 31:12

The SWAT team coming in.

Speaker 1: 31:15

And I'm picturing, like you know, people with you know shields on them and you know all of that. So that's terrible. So then, in turn, so in the office, what I guess I'm worried about is the business owners. Are we seeing an increase in people wanting to sell their rent rolls, or do you think that's to come?

Speaker 3: 31:41

I think we're in the middle. The first initial thoughts were that's exactly what's going to happen. Owners are going to go no, no, no, I'm out, I'm done. It didn't really happen. But then, as time is rolling on, with those tax increases this year that came in, we're starting to see probably more than we normally would have selling. And then the question is now whether that's going to continue.

Speaker 3: 32:07

I guess it's like what you mentioned before as to what sort of investor it is. Real estate has always been a great investment long-term, and should be seen that way. Short-term investment is certainly not what real estate is about. So I guess the long-termers understand that this is, you know, a change, and a lot of the changes are good and the costings might not add up at the moment with the economic situation we're in. But we'll see this out, because if the property continues to have capital growth, you know all ends well, in the end, somewhere they might lose a bit down here or cost a bit more to hold it, but at the end there's going to be, you know, an asset-rich growth there at the end of it.

Speaker 3: 32:51

For them, the other ones who might be in it, financial capacity is now tested and probably the capacity that's tested. The most probably wouldn't be the extra cost that they're paying here. It's probably going to be interest rates, because across the board we know that there's a lot of mortgage stress out there and if that continues to bite, they can only juggle it for so long and then sooner or later they'll cut it loose. So yeah, the story is still evolving at the moment, but there is definitely more selling out now than there was before.

Speaker 1: 33:20

Yeah and yes, it depends on, I guess, what stage they are in their business as well, whether they were at the end of their career you know their business career, you know what? Like I'm not going to do that for another five years and then there will be younger business owners that are like no, there's still potential. This is just a hiccup in the road. Do you guys in your office have a plan for the short term of how to deal with it? Like, are you going to be looking at increased fees or is it going to be better education for the landlords? Or like, is there anything that you are going to do or do you think you'll just ride it out, just watch the space for a little bit and then sort of have a plan?

Speaker 2: 34:02

No. So that's a good question. So obviously I deal with a lot of new business. So you know, firstly, I'm working with the sales team. So you know, if they've got a person that's come through their open that they know is going to rent it out, that's where I'm calling them and telling them about minimum standards and everything like that and offering a service to come down and just you know, say about heating, for instance, is something that they will have to look into getting in. But as for fees, at the moment, like look, I, when I'm going to my appraisers, I'm really showing the client of the value service that they will get and obviously really educating them around the compliance and how important it is to have a property manager and what's involved and everything, and really showing that value. And that is how I'm still able to obtain that high um management fee.

Speaker 2: 34:52

Um, but at the same time I'm still getting a lot of people coming back being like, hey, like can you do any better on your fees? Because you know we've had such and such through. But we really liked you because you were across all the laws they didn't know. You know a few people didn't even mention about minimum standards. But you know, is there a chance of, uh, reducing your fees? So it's challenging at this the same time, because you know you don't want to work with. Like you know, we've got costs involved with the business that we have to pay. Um, so I think, as things go on, that's going to become a more and more um question that I will get asked um, but at the moment we're just trying to educate the client, show how much value we can provide them in looking after their most important asset. So, um, so, time being it's okay, but, um, yes, it will be interesting to see you know, with all these costs involved, whether things change.

Speaker 1: 35:47

Yeah, the fee thing is interesting. My long-term thoughts about these different laws coming in. I feel like that they're there to create longer tenancies in properties. So the idea is that and this is probably like a general overview of all states but the idea is that we have the long-term tenants who treat the property as their home and get that long to new in the property. So for that reason I don't actually think that we need to stress too much. But in the long term, about letting fees, ingoing reports, outgoing reports because I don't think I think they're going to reduce naturally as people stay in properties longer because of these new laws. So this is the way, like my mind thinks. So, where I can, the management fee stays the same. And also like do you guys do routine inspections regularly in Victoria?

Speaker 3: 36:41

Yes, we do yeah.

Speaker 1: 36:42

Yeah, so keeping the routine inspections, you know, price those two consistent. But when it comes to the leasing ingoing, outgoing if I feel the need to offer a little discount, they're the ones that I will do the discount. Only because I don't think that they're going to be that common long term. And quite often owners ask well, in WA they ask as like it's like saying how are you? Like they just ask that question, they don't really care for the answer, but it's just a standard question they ask for it's like a psychological thing and sometimes as well, just by offering them a little discount on, like maybe the in-going report or the outgoing report is enough to keep them happy. Well, the ones in WA anyway, it's enough to keep them happy. Well, the ones in WA anyway is enough to keep them happy that they've had that little win. So that would be sort of my thoughts and feedback around. You know, property managers that are listening or BDMs that are listening, yeah, just thinking of that. Long-term, you know, is that going to be a long-term problem? Probably not.

Speaker 2: 37:44

Yeah, another thing that I've been doing, and like I said when I've been going to the appraisals, is really kind of saying to the owner like you know it's um, letting them know that you know it's really good that you are becoming a rental provider and we understand that there's, you know, some cost involved. I've actually been trying with every property, doesn't matter what price range it is. I've actually been doing an off-market campaign for seven days just to reduce that cost, because obviously realestatecom is like $480 plus GST. So I've been really making sure that I give every owner an opportunity to save some money in their current climate too, which just helps with the overall cost.

Speaker 1: 38:25

Oh, and is that how much realestatecom charge for a rental listing?

Speaker 2: 38:30

Yeah.

Speaker 1: 38:31

Holy moly.

Speaker 3: 38:34

You should see how much they charge for a sale.

Speaker 1: 38:35

No, Can you tell me how much they charge for a sale on average it?

Speaker 2: 38:41

depends.

Speaker 3: 38:42

They've got a pricing model that goes on activity per suburb, but it could be, you know, up to a couple of thousand to 3,000.

Speaker 1: 38:50

No, and some Wow In WA. We're a lot cheaper than that.

Speaker 3: 38:55

Yeah, holy moly there you go.

Speaker 1: 39:00

That was the biggest thing. That's blown me away, this conversation.

Speaker 3: 39:06

I think, one thing that all the tailors mentioned and you've discussed yourself, Ashley I don't think that the competitive rush to offer low fees will be around anymore, if it's not already stopped. Because practicality property managers fully understand the workload they do. And then I think, business owners also now look at the bottom line and go, hey, we just can't afford to do it for that lower percent. It's just not viable. And if you do, then you'd be concerned because the only way you can provide a service that you need to do you have to cut corners, which is not what you want to do for your biggest asset. And with the task force that could walk in your door, you wouldn't want to risk it either for the fines and non-compliance.

Speaker 1: 39:47

No, that's right, and what a great reminder for business owners to be speaking to their BDMs and property managers about what that bottom line is for managing a property, so that they're going into appointments knowing that. Because, yeah, like you said, why would you take on a property that's going to cost you money to manage, like it's absolutely not viable and definitely not worth having it?

Speaker 2: 40:12

Yeah.

Speaker 1: 40:14

But yeah, the whole business side of things I find super interesting. But I guess this goes for personal or professional. I always say we shouldn't make any decisions when you're angry or upset about something. So people that maybe could be upset about the changes or whatever it could be, whether you're an employee or whether you're a business owner I would say don't make any rushed decisions. Like it's a little bit of a learning curve now, but don't make a decision while you are feeling upset about the changes or what's going on. Just give it a little bit to ride it out, so that then you're making a decision whether it's to get out of the industry or whether it's to get out of the business with a clear mind and not in the middle of the whirlwind, if that makes sense.

Speaker 2: 41:04

Yeah, definitely.

Speaker 3: 41:05

Yeah too true and we always have our weekly meetings and discussions in our group itself that when you're speaking with a renter or a rent provider, they may have external pressures that we're not aware of and they might let off a bit of steam, which is unfortunate there's part and parcel of being a property manager but hopefully it's never really personal. It's just them venting about a situation that they can't control and then having a debrief when they get off that phone that hey, it wasn't a good conversation, but it was nothing personal. You know, that's just the way it goes and move on because you don't want to carry too many of those around and just wear you down and then, yeah, then you become grumpy and, yeah, it doesn't need to be. So hopefully we always still have a positive face.

Speaker 1: 41:48

Yeah, be so. Hopefully we always still have a positive face. Yeah, um, last question I just thought of is we didn't actually talk about tenants. Are tenants happy? Do they have this like new entitlement personality because of the changes, or have they, have they been affected negatively or positively?

Speaker 3: 42:03

yeah, I'll go, I'll go one, I'll let tay, let Taylor take over. I think some of the legislation changes were terrific for renters and one of them I'll give you an example of is the, I guess, the non-resistance for pets. So they're allowed to have pets. They ask the owner, of course, but then the owner's not allowed to have an invalid reason to say no. So they can have pets and they're also allowed to make some small changes, minor changes, to make it more homely, and I think that's great because it's their, their place, they live in their own space. So I think all that's been positive.

Speaker 3: 42:36

I just, I just feel for renters in regards to they're in a storm at the moment that they they didn't create, they're just part of it that higher rents, low vacancy rates. They've either got to stay and pay a higher rent or vacate and run the risk of minimal properties or, which is what we've seen, also to make it more affordable, they're moving out of the area that they may have had their roots in there and move out to a further area, moving further out. So, yeah, challenges all around. But I'll let taylor say some more um I just think as well now.

Speaker 2: 43:07

so, like um, I think, with the pms, and what they've spoken about is that, um, you know, now that tenants are popping these um rent increases, they're kind of making sure that if they're the maintenance island, that it gets dealt with, because that you know they're paying for it. So I think once upon a time, you know a lot of uh renters would let it go. You know loose store handlebars, they're paying for it. So I think once upon a time, you know a lot of renters would let it go you know loose store handle Whereas now they're getting $100, $150 rent increase. They're like, no, well, you put my rent up, I want this fixed and it's fair enough, like they're living in their paying rent for a property to have everything working and everything.

Speaker 2: 43:49

But again, it's a very domino effect on the owner and renter side. Um, so we just we really do hope that the government, you know, steps in and provides some leeway for, um, you know, some incentives for people for investment properties or um relate, uh, some rebates for the safety checks, everything that will just kind of help to balance everything out on the owners and renter side yeah, yeah, I, I had this discussion actually with um, with owners, when you just mentioned about like the loose door handle.

Speaker 1: 44:17

If an owner wants to put up the wrench. You know a significant amount and I know that the tenant has before asked for little things. I always say to them, just so you know, if you put the wrench up, they're going to be expecting that door handle to be fixed or that kitchen to be fixed. So just giving you the heads up that that's going to happen and I always just say it's not against your tenets, it's just a natural. You know a thing that people do and it's sort of fair enough as well. But it's, yeah, same problems in, yes, I think, with that it's. It's been really, really great to find out a little bit more about victoria, so thank you so much for sharing that, and definitely it helps me personally when it comes to my victorian landlords who are buying in wa um, to understand, um, where, what they're experiencing and how it'll affect their opinions and their thoughts.

Speaker 1: 45:06

I, I feel like we're really lucky in WA. Do you know why? Because, like, our laws are so easy, so our owners are just expecting that they have to do all that. It's like, no, you don't have to, so they. That makes us probably look a bit better, to be honest, because we don't have to worry them for all that stuff. But if you are a, if you're listening to this and you are a property manager or a business owner in another state and want to sort of have those same discussions like Taylor and Darren and I have had today, we'd love to have you on. So just make sure you send me a message after listening to this and reach out and we'll get you on the podcast and have those same conversations for other states. Taylor and Darren, it's been a pleasure. I appreciate your time and filling us in with sort of all that and it sounds tough, but I feel like there's some positivity there in the long term.

Speaker 1: 45:56

Just to ride it out, so I hope you guys can have the stamina to do that.

Speaker 3: 46:01

Thanks very much for your time.

Speaker 1: 46:02

Thank you so much for having us. Thanks, guys.

Speaker 3: 46:04

Bye.