Owning rental property in Wagga Wagga is a common investment strategy, the city’s strong rental demand, driven by Charles Sturt University, the defence establishment, and regional employment, makes property investment attractive. But Wagga’s reactive clay soils do not distinguish between owner-occupied homes and investment properties. When a rental develops foundation problems, the landlord has legal obligations, financial exposure, and a tenant relationship to manage simultaneously. For a broader overview, see our landlord’s guide to foundation problems.
Quick answer (BLUF)
Under the NSW Residential Tenancies Act 2010, landlords must maintain rental properties in a reasonable state of repair. Foundation problems that affect structural safety, habitability, or the reasonable use of the property must be repaired within legislated timeframes. Ignoring foundation issues in a rental property creates legal liability, can lead to compensation claims, and typically reduces the property’s long-term investment value.
The legal framework: what landlords must do
The NSW Residential Tenancies Act 2010 imposes a clear duty on landlords. Section 52 requires landlords to maintain the residential premises in a reasonable state of repair, and Section 51 establishes the implied warranty that the premises are fit for habitation at the commencement of the tenancy.
Urgent repairs must be attended to promptly, within a timeframe appropriate to the urgency of the problem. Issues that affect structural safety, a significantly tilted floor creating a fall hazard, an external wall cracking severely, a subfloor collapse, would qualify as urgent.
Non-urgent repairs must be carried out within a reasonable time after the landlord receives notice from the tenant. What is “reasonable” depends on the nature of the repair, but persistent failure to act on non-urgent repair requests can result in the tenant applying to the NSW Civil and Administrative Tribunal (NCAT) for an order compelling repairs or a rent reduction.
Foundation problems sit in a grey zone: most develop gradually and do not reach the threshold of “urgent” immediately. But a landlord who ignores documented foundation issues for months or years is exposed to a claim that the premises have become unfit for habitation or are in disrepair.
Practical risks for Wagga landlords
Rent reduction orders. If a tenant notifies a landlord of foundation issues, cracking walls, uneven floors, sticking doors, and the landlord does not act, NCAT can order a rent reduction commensurate with the reduced amenity of the premises.
Compensation claims. If a tenant’s possessions are damaged by structural failure, a falling piece of cornice, a damaged pipe due to slab movement, the landlord may face compensation claims.
Difficulty re-letting. A property with visible cracking, uneven floors, or known foundation problems is harder to let and may command lower rent than a comparable property in sound condition.
Reduced capital value. See our guide on foundation repair and home resale value. The same principles apply to investment properties.
How to respond when a tenant reports foundation issues
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Take the report seriously. Visit the property or commission a foundation inspection within a reasonable time frame after receiving the tenant’s report. Do not dismiss cracking or floor movement as cosmetic without a professional assessment.
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Document the condition. A professional inspection creates a contemporaneous record of the foundation condition at the time of the tenant’s report. This is important evidence if any dispute later arises about when the landlord knew about the problem.
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Obtain quotes. Commission quotes for the appropriate repair work. This demonstrates that you have acted on the tenant’s report and are progressing the matter.
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Manage the tenant relationship. Keep the tenant informed about the progress of the assessment and repair. Most tenants are reasonable when they see that the landlord is taking action. A tenant who feels ignored is far more likely to make a formal complaint or NCAT application.
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Schedule and complete repairs. Proceed with the repairs within a reasonable time. If a repair involves significant on-site works (restumping, underpinning), ensure the tenant is given appropriate notice as required under the Residential Tenancies Act.
Is it worth investing in foundation repair on a rental?
The financial analysis depends on the property, the market, and the extent of the damage:
Minor issues (restumping 4-8 stumps, minor drainage correction): $3,000 to $10,000. Typically worthwhile even on a purely financial basis, the rent reduction and vacancy risk from a deteriorating property exceeds the repair cost.
Moderate issues (full restumping, partial underpinning): $10,000 to $25,000. Almost always worthwhile on a property with strong rental demand and good underlying value. Consider the capital gain impact as well as the rental income.
Major issues (full underpinning, significant structural repair): $25,000 to $60,000+. Requires careful financial analysis. Compare the cost of repairs against the value uplift, the rental yield impact, and the potential for a deferred or partial repair strategy.
Tax considerations also apply, foundation repairs on an investment property are generally deductible as repairs and maintenance in the year incurred (if they maintain the existing function rather than improve it), subject to ATO guidelines. Consult your accountant.
FAQs
My tenant says the house is uninhabitable because of foundation cracking, do I have to let them break the lease?
If the premises genuinely are not fit for habitation, the tenant may have a right under the Residential Tenancies Act to terminate the tenancy. Whether the foundation condition meets this threshold depends on the severity of the issues. A structural engineer’s assessment is essential to determine this. If the property is habitable but in disrepair, the tenant’s remedy is more likely to be a rent reduction rather than lease termination.
Can I deduct repair costs from the tenant’s bond?
Bond deductions are for damage caused by the tenant, not for maintenance or structural repair obligations of the landlord. Foundation repair costs are the landlord’s responsibility and cannot be deducted from the tenant’s bond.
My property manager says “just patch the cracks and repaint”, is that enough?
Patching and painting cosmetic cracking that does not indicate foundation movement is appropriate. Patching cracks that indicate active foundation movement, without addressing the underlying cause, is not maintenance, it is concealment, and it creates legal risk if the problem later worsens and causes damage or injury. Get a proper foundation assessment before deciding that cosmetic repair is the appropriate response.