Breaking new lease

[simonjulie]

From: Simon and Julie M


A question for you landlord gurus.

We just finished a reno in Sydney, found a managing agent and he in turn found us a tenant. The tenant signed a lease and we thought all was going smoothly but tenant now wants out. Tenant was due to take up premises from next Monday so has not paid full bond etc or received key yet. Agent says tenant is liable for, and has agreed to pay expenses ie advertising and re letting costs to find new tenant to continue existing lease. Firstly, I don't know how likely it is that tenant will pay and whether it is worthwhile pursuing. Secondly, being the week after Xmas we accepted tenant's offer of $20 per week less than the rent we wanted. Now we would like to raise the rent again by $20 to original price but if we pursue compensation from tenant we are obliged to re advertise property at lower rental. We are fairly confident house will relet as it is a good product and price is in line with market.


Any suggestions on best approach to get best result?

Julie

 

[Michael Croft]

Reply: 1
From: Michael Croft


Hi Julie, I'll be happy to stand corrected on this one but I think you're snookered. You should be able to get the tenant to pay rent and expenses up until the day you advertise it at a higher rate - after that I think the tribunal would find in the tenants favour.

The tenant also has the right to advertise the property and to source a suitable (to you) replacement but will obviously do so at the original rate.

Good luck.

Michael Croft

 

[WebBoard]

Reply: 1.1
From: Roderick Aguilar


Good advice Michael,

Julie, I differ from Michael's approach as from experience the headache caused by chasing the money owed to you is not worth it to my liking. I figure life is too short to be worrying about my mistakes.

For me, I would cut my losses, kiss my money goodbye and learn from the mistake, part company with the managing agent (and not even seek compensation as they will merely stuff me up again) and start a relationship with another managing agent. Having cut all ties, I start anew in the brand new year and advertise it at the higher rent. This is because to me as a serious investor, I am after the highest rental yield from all of my properties as this affects my borrowing capacity, my ability to raise the rent even higher some time in the future...etc. There is a limit as to how much you can raise the rent by so if the rent is already higher then it makes my task easier in the future.

But that is just my humble opinion.

Cheers,

Roderick Aguilar.

 

[simonjulie]

Reply: 1.1.1
From: Simon and Julie M


Michael and Roderick

We have not come up against this type of scenario before. That the property is over 3 hours drive away makes it a little more challenging. We were in Sydney this morning so we fronted the agent. I requested he seek a compromise with the tenant being loss of her $100 deposit and one week's rent to get out of lease. I agree with cut losses and move on approach. Agent will now re advertise at higher rent. Fingers crossed.

The learning curve never stops. Thanks for your input.
Julie