Existing tenant, rent increase and new lease

[lacc]

Hi there
Just after some confirmation that this is the right procedure.
I've just purchased a unit with existing tenants on a lease that has now rolled over to periodical.
Although the property is not due to settle until end of July, I've already contacted the tenants and issued a 60 day rent increase and a 90 day termination (as of settlement at end of July of course) for the current lease. So they will effectively have about 2-3 weeks extra notice on top of the required 60 and 90 days.
I've also offered a short fixed term lease instead and we agreed upon the original rent for the first 60 days (as per the notice) and the increased rent for the remainder of the lease.
My question is, do I need to do up two leases? One for the first 60 days at the original rent - and another for the remainder at the new rent?
The standard lease agreement template from Fair Trading doesn't seem to have a section to include two rent rates and periods and I want to make sure that I do this the right way as this is my first time self managing a property.

 

[Perp]

Can I clarify that you're talking about the first 60 days post-settlement on the existing rent, and 30 days (days 61-90) on the increased rent, and then they have to leave? If so, what do you need new tenancy agreements for at all?

Or have I misunderstood - what period does this "short fixed term lease" cover?

 

[chilliblue]

You cannot enter into any contract with the tenant until the property is legally yours so any agreement will be considered invalid.

You really need to talk to your conveyancer and definitely engage a PM to cover the settlement period.

 

[lacc]

Thanks for your replies.
I was advised by my conveyancer that I would need to either enter into a new lease with the tenants or give them 90 days notice to vacate. We were keen to offer them a new fixed term lease, from settlement onwards of course, instead of continuing on the current periodical lease.
As we currently live in the same building as the property we've just purchased, I thought it would be relatively easy to self manage.
I didn't realise though that I can't negotiate with the tenants before settlement or that they can't sign a lease before settlement so I will speak to my conveyancer again.
Sounds like we will just need to reissue the 60 day rent increase and 90 day termination for the existing periodical lease and offer a new fixed term lease on the day of settlement rather than before settlement.
Anyway, I think the tenants appreciated knowing beforehand what our intentions are so that they now know that they don't need to look for a new place!
My actual question was how to include the rent increase in the lease (ie. first 60 days on existing amount, remainder on increased amount) but I will check with my conveyancer about that one as well.

 

[thatbum]

Why are you staggering the rent increases like that?

 

[mumbai]

I just did that on my recent IP. I dont self manage. My PM collected the papers from the tenant's existing PM a day after settlement. She then sent the tenants a letter that they will be managing the property and option to sign a new fixed term lease with increase in rent effective after 60 days.

 

[wylie]

You could ask the vendor to increase the rent and sign the new lease so that you don't have to wait until you own the property.

Or just wait until you own it, and do it the easiest way.

 

[lacc]

Why are you staggering the rent increases like that?

There's only one rent increase. The tenants need 60 days notice which I can't give until settlement.

 

[lacc]

I just did that on my recent IP. I dont self manage. My PM collected the papers from the tenant's existing PM a day after settlement. She then sent the tenants a letter that they will be managing the property and option to sign a new fixed term lease with increase in rent effective after 60 days.

Thank you. That's pretty much what we are intending to do.

 

[thatbum]

Thank you. That's pretty much what we are intending to do.

Why not just have a rent increase effective immediately on the signing of the new lease?

You can do this in WA at least, so I'd be surprised if you couldn't in the other states (but admittedly I don't know off the top of my head).

 

[mumbai]

You cannot have rent increase effective immdly in NSW. 60 days notice is required, at least this is my understanding

 

[Perp]

You cannot have rent increase effective immdly in NSW. 60 days notice is required, at least this is my understanding

Right, so first 60 days they're on a periodic lease on the old rent. 90 days (max) their periodic lease ends.

I think what thatbum is saying is "why bother with a rent increase under the old periodic lease for the sake of 30 days?" I'm also not sure if you can increase rent during a period when you're also seeking to terminate.

Why not just give 90 days notice to terminate the periodic lease, and then at 90 days - or sooner if the tenant agrees - start a new fixed lease at the higher rent?

 

[lacc]

Why not just have a rent increase effective immediately on the signing of the new lease?

You can do this in WA at least, so I'd be surprised if you couldn't in the other states (but admittedly I don't know off the top of my head).

I'm in NSW. I did think about that initially but then thought it was a bit unfair for the tenants to not at least have 60 days notice for a rent increase, regardless of whether it's required or not.

 

[Perp]

I'm in NSW. I did think about that initially but then thought it was a bit unfair for the tenants to not at least have 60 days notice for a rent increase, regardless of whether it's required or not.

The new lease wouldn't be signed until at least 60 days and possibly up to 90 days, anyway. So they would have notice.

 

[chilliblue]

Also, take note that their existing bond rolls over and you cannot ask for an increase.

 

[thatbum]

You cannot have rent increase effective immdly in NSW. 60 days notice is required, at least this is my understanding

Its not really a rent increase under the old lease - its just a new lease with a new owner.

The tenant doesn't have to agree, they can rely on their own periodic rolling over, but for a number of reasons they would probably want a fresh lease. Which gives you bargaining power for an immediate "rent increase".

 

[Salvatore1]

Iacc,
You dont need a new lease with the tenant. When the property settles all you need to inform them in writing, is that you are the new owner and your contact and banking info. At that time you can give them the 60 days notice off the increase. If they ask for a new lease then draw one up but not needed. Make sure the change of management is lodged with NSW Fair Trading for the bond. Paper work should be prepared for you from the current PM.

 

[Perp]

You dont need a new lease with the tenant.

I think the point is that lacc, for unspecified reasons, wants the tenants on a fixed-term rather than periodic agreement.

 

[mumbai]

Reasons could be peace of mind or insurance purposes.

 

[lacc]

Reasons could be peace of mind or insurance purposes.

Yes - both insurance and peace of mind in knowing that we won't have to organise a tenant at short notice if the current tenants decide to end the periodical lease at any time