The benefits of renewing your tenant’s lease
One of the considerations when owning an investment property is the lease terms that are offered to your tenant throughout the duration of the tenancy. There are some benefits to maintaining a fixed-term agreement, especially if they are great tenants and you could keep them for a longer term.
Look at your options
When the current lease term is expiring, there are several options available, and it is important to consider your circumstances before entering into the next agreement. Each state has different requirements around lease terms your property manager can assist you with the right information and advice to make your decision.
You have the choice to renew the lease for a further fixed term, end the tenancy or continue a periodic term with no fixed-term lease in place.
Renewing the agreement
One benefit of renewing the agreement for a further fixed term is the opportunity to maintain a great tenant for a further period of time. This will also mean less wear and tear on the property with the changeover of tenancies and moving furniture in and out of the home.
Your property manager can also provide a market estimate and work with you to determine if the rent should be increased. You may decide to be more conservative when increasing the rent to reward great tenants, especially if they have been maintaining the property well and keeping up with the rental repayments.
A renewal will also mean that there are fewer changeover costs that are associated with finding a new tenant. While there will be a lease renewal fee, you won’t have advertising and reletting costs.
End the tenancy
There are a number of reasons that you may choose to end the tenancy. It could be that you are looking to sell the property and would prefer it vacant, you may need to carry out capital works and major renovations, or you may have a tenant that has not paid rent on time or maintained the property, creating extra challenges.
Should you choose to end the tenancy, talk with your property manager about the requirements under legislation with notice periods and expectations for the vacate. If you are selling the property or renovating it, you may need to organise trades or agents to work with you on a timeline for work to be done.
You may not decide to renew the tenancy for a fixed term, or the tenants may choose to not renew the lease for many reasons. Often there is uncertainty in life, and they may find that it is more beneficial to remain on a periodic tenancy rather than lock into a lease term.
Should a renewal take place and the tenants vacate, there are lease break costs that are associated with ending the agreement early and this is something that should be considered.
Each tenancy and owner requirements are different, and it is wise to talk with your property manager about the best option for you. If you would like to know more, contact our property management team and they can customise a solution for your investment.