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Early one summer morning in 2008, a house fire ripped through a three-bedroom rental house in Footscray. What began with an overheated monitor ended with the tragic loss of three young university students.
Why didn’t they escape the blaze?
The coroner was unable to determine whether or not the house had a smoke detector. The tenants who survived the fire were unable to even identify what a smoke detector looked like.
This property, which may have had faulty wiring, had not been inspected by the property manager for two years prior to the fire.
Unfortunately, this disaster is not an uncommon scenario.
Spend some time perusing the records of tenant organisations and you’ll hear plenty of horror stories. Our key responsibility as landlords is the safety of our tenants.
Not only is it our legal responsibility, it’s our moral duty to ensure that their homes (our properties) are in good repair.
So what are your maintenance responsibilities as a property investor?
- If necessary repairs are a result of wear and tear (age) you are responsible to pay for them.
- If the tenant, their housemate or guest, damages something the tenant is liable for the repair costs.
Problems can arise when property managers don’t do routine inspections. When maintenance is not done (or is not done in a timely manner) small problems that might have been an easy fix quite often evolve into big (and expensive) problems.
The result can mean lower property values, cheaper rents and periods of vacancies, which obviously eat into your profits.
Repair or Maintenance?
Repairs are often a result of poor maintenance.
According to the ATO, “repairs” are items that have been damaged due to deterioration of a property (e.g. damaged fence). This kind of expense is 100% deductible.
Activities such as mowing the lawns, inspecting the plumbing, electricity and air conditioning is an example of maintenance. This type of work is preventative in nature and is often less expensive in terms of both cost and time.
These kinds of expenses are also 100% tax deductible.
Poor money management can decrease the funds available for maintenance, but this is no reason to let your investment property deteriorate.
Granted, sometimes we’ve got to repair our homes because of destructive tenants, however if our properties are being routinely inspected any potential issues should be caught early on.
Once you let maintenance slip because of cash flow reasons then you’ll be faced with even higher costs of repairs – especially if they are emergency in nature.
Finally, the failure to maintain your property to a good standard can injure or destroy a human life. No amount of money is worth such a cost.