The relationship between landlord and tenant could be set for a shakeup with the arrival of rental apps, with at least three launching to the Australian property market in the coming months. Much of the focus is in on how much better these platforms will make the application process for tenants. But key to the process is how much easier they will make life for the landlord. It may not be all that much at all.
Rental apps Rentberry, Live Offer and Rentwolf are all intent on disrupting the rental market.
The common theme among all of these platforms is that they directly connect tenants and landlords, bypassing property managers to make the application process more transparent. Tenants can offer their own lease terms directly to the landlord, including rental amount and length of lease and start date. They will also be able to see offers made by their competition.
Landlords would pay $14 per month to use Rentwolf to manage everything from leasing the property to maintenance, akin to a “Netflix style approach” said CEO and founder Chris Martino.
According to Martino there are approximately 3,000 people signed onto the waiting list to use Rentwolf when it launches at the end of May. Of those subscribed, approximately 260 are landlords.
A landlord should seriously consider how much work is involved in managing their property if they choose to do so through a rental app.
While it remains to be seen as to how these apps will be received by tenants, NPB Senior Property Manager Ivonne Di Perna believes landlords will need to be prepared to do a whole lot more work if they manage their property through an app.
“These apps could basically turn landlords into private property managers. Doing all of the open for inspections, assessing all the applications, answering questions from applicants, negotiating the lease terms, checking employment and rental histories and references. All that can be a lot of work on top of their day job.”
“If you’ve got a really popular property it’s going to take a long time to properly vet applications. Or if you’ve got a property that doesn’t have a lot of interest it’s probably not going to be too fun turning up for open for inspections weeks on end.”
Di Perna also has concerns for inexperienced landlords when it comes to dealing with the any number of potential issues that come with managing a property.
“What happens when a tenant is in arrears and the landlord has to take them to VCAT (Victorian Civil Administrative Tribunal)? Do they know how to submit an application for a hearing? Are they really going to have time to represent themselves to resolve an issue?”
“Then there’s knowing and keeping up to date with changes in legislation, bond lodgement processes, doing all of the routine inspections and dealing with maintenance issues themselves. It’s a big can of worms for someone who doesn’t know what they’re doing.”
The competitive offering system can have pitfalls for both tenants and landlords said NPB Senior Property Manager Tracey Farrell.
“If someone puts an offer in for a higher weekly or a longer lease term, it could deter other prospective applicants from submitting an offer” says Farrell.
“They may think they have no chance of getting the property and withdraw. The landlord is just losing out on a better selection of applicants in that case.”
“On the other hand, tenants could put in a high offer and hope that a landlord overlooks their history. Getting a bad tenant is the worst thing that can happen to a landlord, no matter how much they pay.”
With all offers on the table during the application process landlords could find themselves in a difficult situation when they need to reject applicants. They may have to justify and defend their decision to applicants who feel they put forward the most competitive offer but still missed out.
National Property Buyers Senior Advocate Rob Di Vita also had concerns that investors will miss out on claiming tax deductible expenses if they use an app to manage their property.
“Investors can obviously make more deductions going through a professional property manager. An investor might save a bit of money in management costs but they miss out on deducting all of those expenses.”
“At the end of the day, I don’t think you can put a price on having the comfort of knowing that a professional is managing your best interests and doing everything they can to get you the best results for an investment. A good property manager is worth their weight in gold.”