Renting out your home while abroad is a cost-effective way to bring in extra income while making sure your home is being cared for at the same time. Being both an expat and a landlord can be a tricky situation to be in, especially if things were to go pear-shaped.
We often hear horror stories in the news and amongst our peers about tenants trashing what used to be a well looked after family home. Trying to deal with any dramas while you're in a different timezone can also be tricky, and do you really want to leave the responsibility to friends or family?
When COVID-19 hit, many families and individuals had to make the early decision to either stay in New Zealand or head overseas to be closer to family. Now that the borders have re-opened, many are looking to make their way overseas for short as well as long-term visits once more.
In New Zealand, we have the Residential Tenancies Act that must be followed by anyone wishing to rent out their property. The Act states that landlords must follow certain rules such as allowing tenants to live in quiet enjoyment at the property, meaning that the landlord cannot harass the tenant or interfere with their privacy and not allow others to do so either. The property must also meet certain building regulations prior to being let out. The landlord must also give written notice of any rent increases in advance. If the landlord decides to sell the property while there is still a tenant living there then the tenant must be informed of this in writing within a stated period. Even if you're looking to rent your house out for a short time, if it is over 90 days duration then you still need to abide by these laws.
Whether you are moving to a different town, over the ditch or to the other side of the world, you are still responsible for your tenants and managing your property. In this article we discuss some important things that you need to be aware of to help make the process smoother, keeping you carefree while enjoying the wonders of the world. We'll also cover some of the benefits of renting out your home, rather than leaving it empty awaiting your return.
Can you manage a rental property yourself on the other side of the world?
As a private landlord, if you leave New Zealand for more than 21 consecutive days, you must appoint an agent to manage your rental property during the time you are away.
Landlords may appoint anyone as their agent, however the agent should be someone who is fully aware of (and able to fulfil) the legal requirements, obligations and responsibilities of managing a rental property.
You will need to let your tenants know who the agent is, and how they can contact the agent (via a contact number and a physical address for service).
It is important to note that failure to appoint an agent and follow the procedure is an unlawful act under the Residential Tenancy Act, and landlords can be liable for exemplary damages of up to $1,000. If you have a property manager, you will need to let them know that you will be leaving the country.
You could have a family member or a close friend serve as the agent and contact person for the tenant when issues arise. But if they are having to deal with a tenant not paying their rent on time, or if the tenant makes too much noise that results in complaints from a neighbour, it pays to think about whether or not you would like them to have to deal with the ongoing issues.
If you're away for a couple of years you may have tenants leave. One of the biggest stresses many landlords face is finding a trustworthy replacement. Will you be managing the advertising of the property while overseas, or will you leave that to your relative or friend? What about dealing with the dozens of calls from people urgently needing accommodation? Making sure you select the right tenant can be crucial.
It is also important that all repairs are made in a timely manner no matter if it is day, night, weekdays or weekends. Before you leave to go on your big adventure it pays to make sure you have established a good network of tradies and contacts that are aware of your situation and that you can rely on.
Make sure you are aware of the legal requirements: One of the most important jobs to complete before you leave is making sure you have the right paperwork in place such as a bond lodgement form, a signed Residential tenancy agreement.
The benefits of renting out your home
While you're away you can benefit from a secondary income which can either support your living expenses overseas or create a little nest egg for your return. Having tenants look after your house also keeps it secure, warm, dry, and if you rent it out fully furnished you reduce the need for storage (a further cost).
Keeping your home, rather than selling it, enables you to have a place to come back to when your stay overseas is done - or keeps your asset available should you then look to sell at a later date.
Benefits of using a Property Manager to manage your rental
Working with a property manager in your hometown will make your life much easier. Not only will a professional property manager help you find the right tenant thanks to their strict screening procedures, but they also check in on your property, coordinate property repairs, manage billing, contracts and keep you informed of news and events going on with your tenants.
Most of all, they will give you the peace of mind to live and work comfortably while abroad. This leaves you to enjoy your trip or focus on work, while still receiving a passive income from your home.
The property management team at McDonald Real Estate can look after all the above for you plus more. Their trusted team will also keep you updated with any changes to the legal requirements of your rental property ahead of time and are there to help work with you and not against you. They also send out monthly newsletters with industry updates so you are always ahead of the game.