Renting your Property

If you own your own home, or an investment property in Australia, then an expatriate assignment can pose a few management issues. If you have decided to keep the property. and we believe that all Australian expatriates should retain an investment in Australian real estate if they intend to return, then the chief issue is whether you intend to rent the property out. In the vast majority of cases the answer to this question is "yes", unless there are particular reasons for retaining access to the property – a common one being the presence of older children in Australia. Even if there is no financial pressure to rent out the property, it is very often the case that expatriates will prefer to have the property occupied rather than deal with the security and maintenance issues associated with an unoccupied house.

Apartments represent a much easier "lock up and leave" proposition and you will find that long term expatriates often have an apartment in Australia, in addition to a family home, which is unrented (at least on a long term basis) and left available for the family. This also addresses, in some part, the problems that an unexpected return from abroad can produce if the family house in unavailable by virtue of a long term let.

In any event, the purpose of this article is to provide some indication of the particular issues faced by expatriates who let their property in Australia.

The Letting Agent
 

If you lived in Australia you would generally have the choice of managing the property yourself or employing an agent. For all practical purposes that choice is not available to you as an expatriate and you need to be particularly careful about your choice of the managing/letting agent.

Your absence overseas means:

• That you will probably need to provide them with more latitude than usual when it comes to meeting repair and maintenance costs, and vetting tenants
   
• You will not have the ability to monitor their performance (on the ground) as easily
   
• It will not be as easy to replace an agent who is not performing effectively, and
   
• The area of tenancy law is also now highly regulated by the States and you rely upon the agent to meet a raft of statutory requirements.

As an aside, the fees paid to agents for letting and managing a property are not regulated and you need to discuss these individually – plus any of the incidental charges that may be levied. However, you may expect to pay a fee equivalent to one weeks rent to the agent for renting the property (and re-renting), and between 5-10% of gross rental (+GST) for management.

Costs
 

These are almost always underestimated by a new landlord and, apart from the agent fees above, include:

• Incidental repairs to the property – perhaps low with an apartment, but consider what generally "goes wrong", on a regular basis, with a large period house and factor in the hourly cost of tradesmen. You may also need to factor in a thorough "refreshing" of the house every five years.
   
• Council rates plus all water and sewerage charges
   
• Cleaning costs – carpets and curtains may need professional cleaning to establish a"base line" for the first property inspection and between tenancies, if not paid for by the previous tenant
   
• Insurance – current building insurance should be checked to ensure that you are protected from a landlord's perspective. Standard building insurance will offer some protection for landlords, but often contains clauses excluding malicious damage by a tenant, accidental damage, legal liability and cover for the loss of income.
   
• Preparation of condition reports, insurance claims and inventory lists by the agent.
   
• Land tax, if applicable, and
   
• The preparation of annual tax returns by your tax advisor or accountant - two per annum if the property is held in joint names - although this is a deductible expense in itself.

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