End of lease, notice to leave

[fisherman]

Do property managers routinely issue a notice to leave at the end of a fixed term lease?

Do they routinely include a new lease for signature? Or do they instead invite applications without including a lease and committing to an offer?

What is said in the covering letter?

Just to add, our insurers insist on a fixed term lease in any event.

 

[DaveM]

Some agents will only have tenants on fixed leases, and at end of lease will send a termination notice with a new lease they can sign if they want to stay on, at a new rate if applicable. Tenant can then choose if they stay or go.

I personally dont agree with that method, but thats just me. I know if I was given a "move out or sign here" letter, even if I was happy where I was, I would check out the market and see what else I could get for my money. Depending on the location and vacancy rate, the tenant may just take you up on your offer to vacate, leaving you with vacancy and reletting fee.

 

[fisherman]

The problem is caused by the tenancy regulations that require that a Notice to Leave be issued or else the lease can automatically lapse into periodic, despite the conclusion of the term of the fixed term lease.

Just to add, the formality and legalese of the tenancy forms is off-putting. I would feel as you do but it is not the owner nor the property manager who is at fault. It is the tenancy regulations and procedures.

 

[Ideo]

Do property managers routinely issue a notice to leave at the end of a fixed term lease?

Do they routinely include a new lease for signature? Or do they instead invite applications without including a lease and committing to an offer?

What is said in the covering letter?

Just to add, our insurers insist on a fixed term lease in any event.

I've tried to get our current place we are renting onto a new fixed term lease.

PM couldn't be bothered. After the fourth follow up we will just stay on the periodic lease.

 

[Luv2Travel]

Do Just to add, our insurers insist on a fixed term lease in any event.

I'd change insurance company.

 

[fisherman]

Why change insurer?

An insurer that might cover periodic would also reduce the sums payable for tenant default for example.

It is in the owner's interest to have fixed term. Many tenants prefer fixed term too. The problem is that a fixed term tenancy can lapse into periodic without conscious decision and action. That is a tenancy regulation problem of somewhat recent introduction.

 

[Luv2Travel]

Why change insurer?

What happens if a tenant refuses to sign lease and also refuses to leave? Take them to tribunal and hope you can evict them, in the mean time you are uninsured as it's lapsed into periodical. It's hard enough to remove a tenant who has caused major issues, let alone who just won't sign a fixed lease because you asked them to.

What happens if you have a tenant who becomes problematic in the last few months and also refuses to leave. Would you really want to sign a new lease to be covered by insurance? I'd rather leave them on periodic and get them out ASAP.

There are insurance companies out there with good policies who cover fixed and periodical, I'd stick with that. From my experience you can't always control the lease fixed term or whether a tenant will leave your property when they are supposed to. That's what I pay insurance for, and I want to be covered for everything.

 

[fisherman]

What happens if a tenant refuses to sign lease and also refuses to leave?

You have already given a Notice to Leave.

Take them to tribunal and hope you can evict them, in the mean time you are uninsured as it's lapsed into periodical.

No you are not uninsured. As I understand it, the insurer would regard any difficulties that arise as arising from the fixed term lease.

What happens if you have a tenant who becomes problematic in the last few months and also refuses to leave. Would you really want to sign a new lease to be covered by insurance? I'd rather leave them on periodic and get them out ASAP.

It is not suggested that one would accept an application for a new lease from a tenant who is problematic. One has to be realistic.

Why is it not better to issue the Notice to leave under general grounds as proposed. Periodic does not appear to present any superior problem solving options.

From my experience you can't always control the lease fixed term or whether a tenant will leave your property when they are supposed to. That's what I pay insurance for, and I want to be covered for everything.

Insurance cannot manage the problem of seasonal peaks and troughs in lettings. In some areas if the sweet period for lettings is over-run, losses are likely.

While it is agreed that there can be problems concluding a tenancy and containing losses, it is the Notice to leave that is the remedy not insurance.

Maybe I am missing something obvious here.

 

[fisherman]

bump

This issue should be of key concern to lessors and PMs. I am wondering why there have been so few replies.

 

[mattysavager]

My office sends out lease renewal offers just over 2 months before the end of the fixed term lease.

We send a new lease agreement (unsigned) which is pre-filled with the owner's preferred terms and rent. We also send a Form 12 Notice to Leave without grounds (with 2 months notice), and also include a Form 13 Notice of Intention to Leave.

The letter wording I don't have on me, but it offers the renewal as per the attached unsigned lease. We ask the tenants to sign the lease if it's agreeable, or to make changes to the lease and send it back as a formal counter offer.

The letter informs the tenant that the Form 12 Notice to Leave will be enforced if we are unable to contact them prior to the end of their lease.

Most tenants either just send back the signed lease as it was sent, or phone and we explain that they are able to make an offer on rent price, or change the lease dates and send back the lease.

We do not extend leases without having a signed Tenancy Agreement (it is legal to extend a lease in writing without it being on the prescribed form in QLD, however this does not satisfy many insurers).

I would also personally not take out landlord insurance that does not provide cover for periodic agreements. I have found there to be no major difference in premiums or coverage limits based on periodic or fixed term agreements, and it seems that some just do and some don't.

 

[fisherman]

A comprehensive reply thank you. Your office is businesslike, which is commendable.

How do you get on with the tenant who might drag his feet to the very last? If I was the tenant I would not think it unreasonable to be requested to make my intentions known by a certain date so that the new lease can be signed a minimum of two weeks before the conclusion of the existing tenancy.

How to reduce the loss of rent between tenancies is what I am concerned about. That and giving necessary predictability to a prospective new tenant.

 

[mattysavager]

We give tenants a deadline of 4 weeks before the end of their tenancy to have made a decision.

Naturally most haven't, so we start to chase them up daily until they get the signed lease in our hands.

Lots of tenants will convey verbally that they intend to renew their lease, but have many and varied excuses as to why it hasn't happened. Around 2-3 weeks before the end of their lease, we start advertising and sending them entry notices for new tenant inspections. That usually motivates them to send back either their lease, or confirmation that they'll be moving out. If they do go, we have a 3 week lead time to get it rented, which is fairly easy for our office.

It would be easier to just enforce the notice to leave earlier (say the deadline is a firm 4 weeks) but we find that most of the slack tenants actually do renew. Perhaps if 10 leases are due within 2-3 weeks, 7 or 8 will end up renewing, so persistence is key.

 

[fisherman]

Matty

Thanks you for a detailed and informative reply. Perhaps I should be re-locating my investments to properties where you can handle them.

Risk identification and risk management have become far more important, crucial even, to property management.

I have never seen it said on here, but it is a very serious consideration that professional property management is available within easy reach of the investment property.

Of course property managers can change in staffing. However we have found that where there is churn in staffing and new young staff continually being appointed there likely wasn't adequate training and support of the property management staff anyhow.

Food for thought.

 

[Peterw]

With issuing the Notice to Leave form, at the same time as offering the new tenancy, and doing so the required 2 months prior, we find that is probably the biggest incentive for the tenant to sign. As with most agencies, we do try to go for greater than 6 month leases, and have them end in the more traditionally high rental periods. With 6 month tenancies, it is often a bit of a shock for a tenant to receive information about renewal, when in their mind, they just moved in, so the longer tenancy seems to help with that as well. Your comments about staff changing, is one that all business work hard at addressing. Generally, if a business has the challenge of a new PM, not lasting long, usually its for reasons outside the business's control, and if the policy and procedures are in place, then that can make life easier for others in the business, as well as the new PM get settled. We had a run a few years ago, and a "not young" PM, only lasted around 3 months, as her daughter with children had a car accident in Cairns, so being a mum, off she went to help. Thankfully our owners understood, and gave us the time to find a replacement and get them settled. Communication between the parties is very often the key to good outcomes.