About Peter O’BrienWhen it comes to residential property management, there are definitive rules that must be followed in order to ensure landlords don’t end up facing a cantankerous residential tenancy tribunal judge!
One of the areas that can create confusion is lease renewals and termination of tenancies and exactly what rights and responsibilities both the tenant and landlord have. Even though this might seem like a straightforward process, landlords must dot all “i’s” and cross all “t’s” in order to prevent any future complications.
The critical requirement with regard to any rental agreement is to have a thorough understanding of all clauses contained in the lease, particularly those pertaining to the initial term, vacancy date and renewal options.
Generally lease terms will either be fixed tenancies for a specified period such as 6 or 12 months, or periodic agreements which usually “roll-over” on a monthly basis. Essentially if you, the owner wish to officially renew a lease or alternatively end the tenancy for any reason, you need to put your intentions in writing to the tenant, regardless of the type of agreement both parties have entered into.
Landlords also need to be aware of the required timeframes for notice should they wish to alter any conditions of the lease. Whether terminating or renewing the lease or increasing the rental, tenants must be given sufficient notice under the Residential Tenancies Acts that govern most states and territories.
Renewals without any increase in the going rent or changes to terms are pretty straightforward. If a property manager is looking after the property on your behalf, you simply need to advise them that you wish to renew the lease terms, usually before the tenancy ends. They will then notify the tenant, who can decide whether they wish to take up the renewal option or submit their 28 days notice to vacate the premises at the expiration of the lease.
If you intend to increase the rent but still want the current tenant to stay on, you must advise them in writing at least 60 days prior to the increase coming into affect, usually at the commencement of the new lease term. Unless you include an additional clause in the tenancy agreement that states a rent review may occur sooner, you can only seek a rent increase at the end of the lease. In cases where the lease is less than six months or periodic, you cannot seek a rental increase any more frequently than every six months.
In some states there is an official form that you must complete in order to provide the tenant with the required 60 days notice of a rent increase, and tenants have the right to seek a rental assessment from the relevant governing authority, such as the Director of Consumer Affairs Victoria, if they feel the increase is unfair or excessive. They must do so in writing within 30 days of receiving the notice for rent increase and it will then be up to the Tribunal as to whether or not the landlord is justified in putting up the rent.
Other clauses that you might need to consider including in a lease agreement, whether it be a renewal or the initial contract, are as follows;
- If the property happens to be your own home and you intend to move out and lease it for a short period of time, perhaps to travel or for some other reason, you need to ensure you include a clause that states “the property is your Principal Place of Residence”. When you intend to move back into your home the tenant is to be given appropriate notice (this may differ from State to State) to vacate.
- If the premises are considered unsuitable for children to occupy, an order must be obtained from Tribunal prior to leasing the property to comply. A clause stating such would then be written into the lease agreement and you need to attach a copy of the Tribunal Order.
- If there is an open fireplace at the premises that is not to be used, a clause should be inserted in the lease agreement that states the “Open fireplace is for ornamental purposes only”.
- If additional services are being provided by the landlord to the tenants, such as garden or swimming pool maintenance, the terms of these should be stipulated in the lease agreement.
So what if you have one of those tenants from Hell and decide you want to take the opportunity at the expiration of the lease to “kick them to the curb”, in order to find someone who’s more likely to look after your asset? Or perhaps you simply have plans for your premises that don’t involve tenants at all. Well again, there are certain regulations you must follow in order to cover your backside!
If the tenant is on a fixed term tenancy and their lease is coming to an end, you will be required to give them sufficient notice to vacate. The period of this notice varies from state to state, but in Victoria the notice must be in writing in line with the requirements of Consumer Affairs Victoria (CAV).
If the fixed term tenancy is less than 6 months, you must give the tenant 60 days written notice on the prescribed form from CAV. If the agreement is six months plus, you must provide the tenant with 90 days written notice to vacate.
Should you decide to give your investment a little spruce up and need the tenants to move out in order for renovations to commence, or you decide to sell your property, you will need to notify the tenants, again in writing, with 60 days advance warning.
If you simply want an inadequate tenant off your premises for good, you might be pleased to know that you do have the right to issue a notice to vacate without having to provide a specific excuse. In such cases, the written notice must have provision for 120 day vacating period and stipulate that the notice is being given for “no specific reason”.
We’ve all heard the horror stories on current affairs programs about landlords doing the right thing and giving tenants adequate notice to vacate, only to have them remain in the property and force a stalemate of sorts. This is every landlord’s worst nightmare and can often leave investors feeling vulnerable and helpless. Whilst tenants do have legal recourse to dispute a notice to vacate at Tribunal and request the right to remain in the premises, they cannot simply “squat” in your property.
There is no denying that this is a difficult situation to find yourself in to say the least, but rest assured that there are steps you can take to resolve such a deadlock. If the tenant will not cooperate with the parameters of an eviction notice, application is made to the Tenancy Tribunal for possession of the property.
Once Possession has been granted, the tenant and landlord/managing agent is issued with a warrant for possession, which the agent will organise to be executed by the police in the relevant jurisdiction. The police then contact the agent to arrange a time to go to the property, see the tenants off the premises, change the locks and formally take possession.
I understand that this can pose a daunting prospect for landlords, particularly given the seemingly endless amount of bureaucratic red tape you need to cut through in order to regain what is rightfully yours. But under no circumstances should you take matters into your own hands and confront belligerent tenants. Going through the legal motions might seem frustrating, but you will see results eventually and most tenant evictions never reach such an impasse.
The important thing to understand is that you will face penalties should you decide to take the law into your own hands at any point and fail to do the right thing by your tenants according to the relevant legislation in your jurisdiction.
If you or your managing agent neglect to issue the correct notice to vacate for instance, the tenant may take you to Tribunal to claim compensation. In that case, you will have to issue a correct notice to vacate with correct time frames in place, which of course will delay the vacate process.
If you instruct your managing agent to give the required notice to vacate to your tenants and they fail to do so, you have the right to take the managing agent to Tribunal for neglecting to fulfill their obligations to you and they may be fined.
Of course the one thing all of us landlords really want is a reliable rental income without any extended vacancy periods. From this perspective, it is important when it comes to lease agreements to feel that the law not only protects the tenant but you, the landlord, as well.
In Victoria, should a tenant decide that they wish to move on, they must issue the landlord or managing agent with a 28 day written notice of their intention to vacate. If they are on a fixed term agreement and wish to vacate prior to the lease expiration, they are in effect “breaking the agreement”. In taking such action, the tenant will be liable to pay re-letting fees, advertising costs and rent up until such time as the property is re-let or their lease officially expires, whichever occurs first.
Ultimately, the law pertaining to tenancy agreements is in place to make the process of renting a property, for both the tenants and landlords, as straightforward and painless as possible. In most cases and in my own experience, I find that nine times out of ten, if you do the right thing by the tenant, they’ll do the right thing by you, and everybody wins.
NB. The above information is based on Victorian regulations. Landlords are advised to confirm the rights and responsibilities they have to the tenant within their own jurisdiction.
Good article, thank you – I want to add you should also try to insert a clasue that they pay water charges – I’ve been stung by this. And also that you should try not to see your tenants as products that “Look after your asset” – but as real people who need a home, a good that you are providing, and it can be a great relationship, if you choose a nice person from the outset.
I am a tenant in a property with a 12 month fixed term contract. The letting Agent has contacted me halfway through my tenancy to say that they sent me an email (which I have not recieved) 2months ago to give me the option of renewing my tenancy, as I did not reply they are now conducting viewings. I have not yet decided whether I intend to stay on and renew my tenancy. Are there any rights I have to stop them renting the property to anyone else in the mean time? It seems to me a bit soon to be asking me to not only make a decision but to pay an £80 admin fee to renew.
Hi Shirin, I would welcome the opportunity to speak with you regarding your situation. The information you have supplied in your comment does not give me enough insight into your specific situation so I can provide you with an accurate answer specific to your situation. I also noticed that you are quoting fees in another currency. Are you located in Australia? You may contact me during business hours on (03) 9591 8888 to discuss. I look forward to speaking with you. Cheers Peter O’Brien Metropole.
I am a landlord and my tennants lease is up. He is refusing to sign another year and wants only a month by month basis.. As I have a mortgage on the property I need to know if I can count on him committing to the next 12 months.. The agent is telling me the tennant has every right to remain on a periodic lease… What can I do?
Lofri
It depends in which state you live, but in general your property manager is correct.
You can’t force the tenant to sign a new lease.
However, with the low vacancy rates at present and rising rentals, it’s not likely your tenant will move if you keep your rents fair
You can have your agent place a notification of termination and commence looking for a new tenant who is agreeable to your terms.
We are looking at purchasing a property that is rented by a large company in WA.
The lease in place is a fixed term tenancy lease that a sneaky lawyer has drawn up for them, that was initially for a 5 year period, this is now up. This lease however has an additional clause in it that states the owner grants the tenant the option to renew the term of this agreement for successive terms of 1 year each and that unless they give notice to the owner 15 days before the expiry of the initial term or option then it will be treated that they have exercised their option…..
Therefore making the lease for no fixed term !
It also says that no new lease will be drawn up, and that only CPI increase can be applied to the rent….
It dosn’t any anything however about the owner being able to give them notice … Can the current owner give them notice now that at the end of the current option the lease will not be renewed as the property has been sold with vacant possesion?
Cheers
In general the option to renew is with the tenant – the landlord cannot force the tenant to renew or terminate the lease is the tenant wants to take upt heir option.
What happens if the tenant does not take up their option in time varies depending on the documentation = This is really a legal question for your solicitor who needs to read the lease
My husband and I are tenants of a large unit (2 others in complex) in Melbourne. We have been in this property for almost 4 months. We have been with the current RE agents for 9 years and rented the previous property for 8.5 years and are considered excellent tenants. We only left that property due to landlord selling property.
In this current dwelling, the neighbour has complained about noise at odd hours with inconsistent descriptions and times. This has caused a great deal of anxiety and bafflement for us and the RE property manager who knows us to be class A tenants. The adjoining unit is inhabited by a very nervous elderly lady with a sick husband. We are professionals and out all day so were at a loss to what this complaint was about. We do not have visitors or animals or children at home – the noise was described as industrial/bowling balls/gushing water/whirring usually about 10.30 – 12 midnight. We bought a new washing machine, changed our washing habits to only use WM between 7.30 when we get home to 10 pm all to no avail. We have welcomed the RE property manager and plumber all looking for evidence of some kind of industrial activity – obviously nothing was found.
We have now realised that the noises complained of are brief (less than 3 mins) vacuuming at night (I have allergies and must vacuum daily) and the normal noise of the shower and exhaust fan. We have now been assured that we have done all we can and that we should just get on with our lives (by RE property manager) and he will handle it from the office now. The problem is that we feel that we have been persecuted without any evidence (letter sent of warning and notice to evict if noise didn’t stop was the first we knew of the problem – we received a sort of apology for this) however my level of anxiety is very high and I find myself feeling creeping about feeling fearful now.
My questions is: we have obviously been given the green light by the RE property manager (but not in writing) and I am concerned that to keep the peace when our current lease is up in 8 months time we will be asked to leave when we have done nothing that doesn’t comply (and indeed over and above – no music, no visitors, out all day,etc – we keep the place immaculate and the garden pristine) with tenancy rules and in fact feel quite traumatised by this whole business. Would we be able to challenge this if it was to happen? Or can the landlord ask use to leave regardless although we have done nothing but look after the property and then immediately rent it out again. We feel a little unsettled
Hi,
You cannot choose your neighbours!
It depends on what sort of notice to vacate the Owner send you. The only notice you maybe able to argue is a notice to vacate for no specified reason…. All other notices have an actual reason to vacate, such as Owners moving in etc….
We dont know what sort of relationship the Owner of your property has with the next door neighbour, however if we were managing this property we would advise the neighbour to contact the police in the first instance should there be an issue with noise.
Life is to short to live “On ice” , however who is in the position to say that your next neighbours will be “nice”!
Good luck
Hi,
You cannot choose your neighbours!
It depends on what sort of notice to vacate the Owner send you. The only notice you maybe able to argue is a notice to vacate for no specified reason…. All other notices have an actual reason to vacate, such as Owners moving in etc….
We dont know what sort of relationship the Owner of your property has with the next door neighbour, however if we were managing this property we would advise the neighbour to contact the police in the first instance should there be an issue with noise.
Life is to short to live “On ice” , however who is in the position to say that your next neighbours will be “nice”!
Good luck
I have a 12 month lease that is up in a month, and i have not had any notification from the letting agent on whether my lease is going to be renewed. We want to stay here. How much notice should i be getting from them about it being nenewed or not.
Hello Jill, A good property manager should commence negotiations and discussions concerning a new lease agreememnt about three months before your lease expiries! However, some agents may not be this organised!
There is no time frame in which an agent/owner needs to have this conversation according to legislation, and many tenants roll onto a month to month tenancy after the intial term.
If you want a new lease, I suggest you contact the agent direct and request one.
Hi Peter, LIke Jill above, my lease now ends in two weeks, I contacted the agent two weeks ago to say I would like to renew another 12 months. I have made two phone calls, and one visit recently, but still no definate whether I can. What are my rights? The landlord said she will email the owner, but said that two weeks ago. I still havent heard anything. I am losing sleep over whether I have to move myself and my two kids again. What are my rights in regards to renewal of lease.? Jodie