The Ethical Landlord

Some people will tell you that ethical and landlord are two words that don’t belong in the same sentence. Most of us have heard horror stories about awful landlords with their dodgy properties that are just out to scrape every last penny from their tenants, some of you will have even experienced it firsthand. But the truth is our society will always have a percentage of homes that are tenanted, with the latest statistics showing one third of Aussies are renters, so let’s talk about it.

What is a landlord? 

A landlord is the owner of a property which is being rented to another party. You might own an investment property, or you might live in the property and lease out rooms or parts of the property to other people. 

What are the benefits of being a landlord?

Being a landlord means you are receiving rental income from your tenant/s to reside in the property. This income can help you to pay down your own debt or your investment loan.

You may also be eligible for some tax breaks as a landlord. If your investment property is an income earning asset (e.g. you are receiving rental income) then the cost of maintaining that asset may be tax deductible. This usually applies to things like property management fees, insurance, rates, and interest on your loan. By deducting these expenses from your income, you may pay less tax.

Owning an investment property is a common wealth building strategy in Australia due to the strong and consistent growth in our property values. 

What are the cons of being a landlord?

As a landlord, you have legal responsibilities in accordance with the state or territory laws. You are responsible for maintaining the property in certain respects, paying the rates, and ensuring that you do not encroach on the tenants’ rights.

Some pitfalls of being a landlord include repairing property damage from tenants, being left out of pocket by tenants not paying rent on time, securing new tenants when existing tenants vacate, and being subject to rising interest rates and costs.

Why are landlords controversial?

The conversation about investment properties and landlords has escalated in recent years, with accusations that tenants’ rights have gone too far, or that landlords’ are being left too vulnerable against bad tenants.

As interest rates peaked in 2024, many landlords found themselves with elevating mortgage repayments that they then passed onto the tenants by way of increasing rent.

Renters argue that the mortgage increases are the cost of doing business, and in an age where it is harder to get into the property market and out of the rental market, landlords should bear the burden already having the upper hand.

How to be an ethical landlord?

In answer to the controversy, the concept of an ethical landlord has been floated. So what does it mean, and how can you be an ethical landlord?

Ethical landlords, first and foremost, understand the privileged position of being a home owner in the current market. They do not leverage this position to make the most amount of profit in the shortest amount of time.

Ethical landlords prioritise the well-being of their tenant over profit. They do this by ensuring the property is maintained to a high standard with both security features and environmental factors. This could include appropriate locks, working fire alarms, sturdy fence, insulation and ceiling fans.

Ethical landlords would provide long-term leases for suitable tenants, resulting in stability for the tenants. They would also review rental income on an annual basis, and either keep it in line or below market rent. Just because you can increase the rent throughout the lease, doesn’t mean you should. Annual reviews allow for small increases to be absorbed by the tenants budget without stress.

If a landlord is employing a Property Manager, they are responsible for ensuring the Property Manager is providing the tenants with their rights and education about their rights – for example, scheduling inspections with appropriate notice. For the right tenants, consider if regular inspections are necessary. From a tenants’ perspective, having your home scrutinised every quarter can feel like a privacy invasion.

What are the benefits of being an ethical landlord?

Besides that feel-good feeling knowing that you’re treating a fellow human with fairness and kindness, being an ethical landlord has some financial benefits of its own.

You are more likely to attract and keep the right kind of tenant. A long-term tenant will save you hundreds on property management fees, potential vacancies, and clean up bills.

Being able to set and forget your tenant/s means you’re spending less time worrying about your investment and your asset.