Get your Property Condition Reports correct: Real estate industry bulletin 175

Disputes relating to the condition of a property at the end of a tenancy are not uncommon.

Mandatory Property Condition Reports (PCRs) were introduced in July 2013 in order to minimise the number of bond disputes, as accurate incoming and outgoing PCRs provide a solid basis to assess how the condition of the property has changed during the tenancy, allowing for fair wear and tear.

There still appears to be some confusion about how the PCR process works and in what circumstances PCRs are required. Complaints received by Consumer Protection show us that when PCR requirements are not followed, there are issues with disputes at the end of tenancies. These issues could potentially be avoided if there was an accurate PCR in place.

When to issue a PCR and to whom

A lessor is required to prepare a PCR within seven days of the tenant entering into occupation of the premises and to provide two copies of the report to the tenant. PCRs can be sent via electronic means if there has been an agreement to do so. The PCR must be signed by the property manager or lessor. If a tenant takes over from another tenant, you are required to issue an outgoing PCR for the departing tenant and an ingoing PCR for the new tenant.

Get it right to avoid future hassles

Complaints show us that if PCRs are not completed or if tenants do not clearly state any areas of dispute on the PCR, there can be disagreements. This can cost your business valuable time. We encourage you to make the small step of getting your PCRs completed correctly as required, rather than end up resolving a dispute afterwards.

At the end of the tenancy

A full PCR, using the prescribed content, must be used to create the exiting PCR. Some property managers use a summary to identify the areas of concern; however, this can only be in addition to the standard PCR, not as a substitute for it.

An outgoing PCR is required even if the tenancy was entered into prior to 1 July 2013, and/or there is no ingoing PCR.

Tenants should be given a reasonable opportunity to be present at the final inspection.