Fact 1: You want to attract and keep long-term tenants.
Fact 2: Long-term tenants are good for business
So, how do you attract and keep long-term tenants?
You can entice long-term tenants and encourage existing tenants to renew their lease by allowing tenants to make alterations to the property.
Yes, this sounds risky.
Sometimes, tenants will request to make alterations. They’ll want to customise the rental to fit their needs. Some will even commit their own money to pay for the changes.
Your response to such a request can make or break your relationship with the tenant.
There are state-specific guidelines to help you grant your tenant’s requests and protect your property.
What Guidelines Apply to New South Wales (NSW) Tenants and Landlords?
NSW offers comprehensive guidelines for alterations on rental properties. You and your tenants should follow these laws to avoid conflict.
In case of a dispute, either of you can go to the NSW Civil and Administrative Tribunal (the Tribunal). They will listen to your issue and resolve the matter.
The Tribunal listens and resolves tenancy disputes on several issues:
- Payment of the rental bond
- Rental increases
- Unpaid rent
- Tenancy agreement termination
- Repairs and alterations to the property
How Do You Accommodate Tenants’ Requests for Alterations?
Your response to a request for alterations will depend on different factors, such as:
- The length of their lease.
- The extent and nature of the modifications.
- Their willingness to pay for the modification.
An Alterations Guideline for Your Tenants
Since these requests might come up repeatedly, you should create an ‘alterations guideline’.
You can create this as a separate document or include it in the lease agreement.
This way, tenants can customise the property to their needs and you can protect it from extensive alterations.
On the alterations guideline, you can cover a myriad of things, namely:
Seeking Consent for Alterations
Here, you can demand tenants prepare a written request before making any alterations.
Make sure tenants know you will only accept written requests that:
- Offer a detailed plan for the alterations (e.g., a pay television installation might need access to the roof for the satellite).
- Give you the request early enough so you have enough time to review the plans. You can provide a specific timeline (e.g., tenants must send the request seven days before the work begins).
- Provides information on whether they will hire a tradie or DIY the work.
- Abide by NSW tenancy guidelines.
- The schedule for the alterations.
Creating an Agreement for Each Alteration
Make sure tenants understand they must sign an agreement for every alteration.
The agreement will cover important details, such as:
- Who pays for the work and any damages that might occur during the installation.
- What happens to the alterations at the end of the tenancy.
- Your willingness to chip in for alterations that might improve the value and appeal of the property.
Make sure you have everything in writing before the alterations begin.
Changing of Locks
According to NSW tenancy laws, neither you nor your tenant can change locks or alter security devices on the property. Either party must seek consent from the other.
The exception only applies in cases where either party provides a reasonable excuse.
Reasonable excuse applies in specific circumstances, namely:
- In an emergency
- When following an order from the Tribunal
- At the end of a co-tenancy
- If the tenant presents an Apprehended Violence Order (AVO) that prohibits another occupant or tenant from accessing the property
In such a situation, the tenant must give you a copy of the key or access to the new security device within seven days.
Make sure your tenants understand these guidelines when handing over the keys at the beginning of a tenancy.
Painting the Property
You can decide whether to accept or deny a request to paint the property.
On matters of paint, the tribunal cannot overturn your decision.
If you do grant a request to paint the property, the tenant must prepare a written request for the same. The request should provide details such as:
- The brand of paint
- The colour of the paint
- The cost of materials and labour
- The desired end result
If you don’t like the colours, you can ask the tenant to commit, in writing, to repaint the property to its original colour when moving out.
A Guideline on Costs
In most cases, your tenant handles any alterations they make to a property.
You can decide to pay for a percentage of the costs or discount their rent for a couple of months.
Make sure you agree on this before any of the work begins.
The Tribunal accepts requests for refunds from tenants to landlords for improvements. Be sure you agree on costs and financial responsibilities beforehand.
Removal of the Additions at the End of a Tenancy
Your tenants can remove any home improvement fixtures they pay for at the end of the tenancy.
In such a case, they only need to notify you of any damages to the property resulting from the removal. In case of damages, the tenant can choose to fix the property or reimburse you the estimated cost of repairs.
If you contribute to the cost of the fixtures in any way, the tenant cannot remove them without your consent. You can apply to the Tribunal to stop the tenant from removing the fixtures.
If the tenant vacates the property at the end of a lease without removing any fixtures they pay for, they cannot claim them later.
At the end of a lease, you immediately regain control of the property including any new fixtures added by the tenant. Legally, it becomes part of your rental.
Increase your cashflow by self-managing your property.
Can You Refuse a Tenant’s Request?
If a tenant follows the above guidelines, it becomes hard for you to deny a request.
In most cases, you cannot deny a request for alteration or minor changes.
NWS laws provide a list of scenarios where it is acceptable for you to deny a request:
- Changes that involve a structural change, such as taking out a roof or knocking out a wall.
- If the change will make it difficult for you to remove, rectify or repair the property after the lease.
- If the alterations will change the style of the house, such as installing a modern lighting system on a vintage property.
What Do NSW Laws Consider Reasonable?
Under the law, you cannot deny your tenant’s requests for minor alterations.
But the definition of minor alterations is wide and vague. The definition is circumstantial and changes from property to property.
You and your tenants have the freedom to define minor alterations. If you cannot agree on what constitutes minor changes, you can escalate the matter to the Tribunal. They will help you resolve any disputes that arise.
Some of the general changes the law considers reasonable include:
- Adding safety devices on windows for children.
- Alterations to increase security in the property.
- Getting a phone line connected or connecting to pay television.
- Adding a reasonable number of hooks on the wall for pictures and artwork.
- Planting flowers or vegetables in the garden.
- Adding alterations to help an elderly or disabled person in the home.
- Replacing a toilet seat.
Disputes Over Unsatisfactory Work
After giving your consent, inspect the property. Make sure the alterations meet your standards.
If the alterations do not meet your standards, you can file a complaint to the Tribunal. The Tribunal will give an order to the tenant to request modifications or reimbursement for removal if:
- The work does not meet NSW building standards.
- The alterations compromise the safety of the property.
- The new fixtures are likely to affect your ability to rent out the property in the future.
You can apply for such an order even if you gave your consent for the alterations.
Considerations for NSW Landlords
As a landlord, you are looking to make your tenant feel comfortable. This might mean accepting alterations to the property from time to time.
You can prepare for the inevitable by anticipating the requests for alterations.
While preparing your lease, include a clause with guidelines for alterations.
As a self-managing landlord, you can prepare a legally-binding lease on Lodge. Our digital lease platform helps you include your alteration’s guidelines into the lease.
You can also share your alteration guidelines on Lodge. It will be legally binding and you’ll be able to share it with your tenants instantly. You can both sign the document digitally.
What are you waiting for? Sign up today!