lease renewal

[orDurve]

Would like to ask a quick question of LL/PMs on here.

Am renting and the 12 month lease is coming up for renewal next month. Had a letter mid year asking me "what my intentions are at the end of the lease" which I didn't respond to (thinking it was likely an error) and then a couple of calls a month or so later from PM, when I informed her that I had no plans one way or another and that, should I decide to vacate at any time, I would of course be giving the appropriate notice.

Received another couple of calls this week followed by an email asking the same question and I reiterated my previous position and asking what more information did they actually need. The response was that the tenancy wouldn't be rolling over to periodic (fair enough) and that if I wanted to stay the rent would be increasing (not unexpected).

My question is, how usual is it to start hassling the tenant months away from the renewal date about whether they're planning to move out or not and secondly, my impression is that they were looking to get a commitment to stay before advising of any rent increase (which would have put them/the landlord as somewhat of an advantage).

I'm just feeling a bit pressured and have done since the letter mid-year and feeling really really arsey about the whole thing but if it's entirely reasonable then it may be my arseyness is coming from elsewhere and I just need to get over it.

Of course if they are members here the above information will be enough for them to know who is posting this

 

[Propertunity]

One of the issues with needing to know your intentions is that many (not all) LL insurance policies will not cover a LL for loss of rent, when a tenant comes off lease and goes month-to-month (periodic).

 

[Sez]

I'm in VIC so totally different laws apply as far as notice periods etc. go. However, I always start contacting my landlords 3 months prior to a tenants lease expiry and then contact the tenants to discuss lease renewals and rent increases. Provides me with sufficient time to issue any notice of rent increases to tie them in with the new lease .

 

[orDurve]

... LL insurance policies will not cover a LL for loss of rent, when a tenant comes off lease and goes month-to-month (periodic).

OK already there is a good reason for their need to know, thanks

It's me then...

 

[orDurve]

Provides me with sufficient time to issue any notice of rent increases to tie them in with the new lease .

It has just felt like they haven't been upfront about the rent increase and only mentioned it when pushed.

 

[Sez]

I can understand that. I put it all on the table for the tenant at the same time . May just be poor communication skills as opposed to malice though!

 

[orDurve]

Thanks for giving some perspective on this (now feeling relieved my last email is still in the draft folder!)

 

[fisherman]

To comply with tenancy regulations, as a routine we give a formal notice to cease the tenancy at the conclusion of its fixed term.

That enables tenants to take advantage of a new fixed term lease which tenants say they want anyhow; ensures compliance with insurance requirements; and is the professional management that treats the majority of prevailing risks best.

If we don't manage professionally there will not be homes available to let. Margins are tight and risks are high, especially regulatory risks.

Frankly though, residential housing is not supposed to be used like a hotel or motel, where higher premiums are charged to balance the risks of unexpected vacancy, including at times where it could be difficult to find replacements.

 

[Scott No Mates]

the pm is trying to use time to their advantage. If you agree for a new lease, then they can give you appropriate notice for the rent review ie 60/90 days. Doing this so far out enables the increase to occur at or near the date of the new lease.

Not agreeing a lease until the end means that you maintain the current rent for as long as possible.

The risk being that the pm may give 30 days notice to terminate or you can give notice.

 

[wylie]

I think as others have said that due to insurance issues, the owner probably wants a commitment of a new lease being signed or the correct notice to leave in the event the tenant will not sign a new lease.

We were out walking last night and ran into one of our tenants. She's been there for about four years, loves the place, and said last January she would probably move on this coming January. Last night she said she's now got her boyfriend moved in with her, and two others already on the lease. She's a fantastic tenant and looks after the house like it is her own.

I actually brought the subject up and asked if they would be moving out or want to stay on. She knows that had they left last January we planned on turning a tiny fourth bedroom into a second bathroom instead (on advice from a rental agency). We said last night that she's most welcome to stay on for six or twelve months and we will do this job when she leaves, no hurry. I explained that if they planned on moving out in January, I'd get things started and get planning for the work. I need some lead time to organise tradies, fittings etc.

She says they would love to stay another six or twelve months, which is fine.

Unfortunately, the rental increase we would be asking is possibly going to be seen as "taking advantage" of knowing they love the place, but she has been quite open about that all along. So, I think I'm going to email her soon and confirm our willingness to re-sign them for six or twelve months (their choice) and that the rent would need to go up to keep it at or close to market, and hope that she doesn't assume it is because we are taking advantage of the knowledge they would like to stay.

I've always found being honest is the best way to negotiate. Each year they have been there we've increased the rent slightly, or we find ourselves considerably under market rates. I believe she fully expects an increase.

 

[Joe D]

The rules changed in July 2013 in WA and there are now a bunch of new requirements.

However, prior to this (and probably applicable to you as you mention a 12 mth lease) unless a tenant requested or agreed in writing to a continuing lease the Landlord had every right to expect vacant possession on the end date of the lease .................unless they were happy to allow it to roll over to periodic by default.

So a LL could kick you out on the end date. (Whether they physically could is another matter!)

Any new fixed lease you sign (after July 2013) will require tenant to give 30 days notice (although you cannot leave before end date unless otherwise agreed) or 21 days once it reverts to periodic. Landlord requirement is now 30 days fixed term and 60 days during periodic.

 

[travelbug]

Insurance is not a good reason for hassling someone months before the lease is due for renewal. 4 weeks out, fair enough. That way they are letting you know either be prepared to renew or get your marching orders.

Might be a new landlord? New agent?

I've had tenants ask me what my intentions are before they sign a new lease. Fair enough they don't want to have a place put on the market when they are tied in. I've never asked someone (before the lease is due) what their intentions are.

4 weeks before I'd ask what the new rent will be then negotiate. Sign or don't sign depending on how happy you are.

 

[Scott No Mates]

Insurance is not a good reason for hassling someone months before the lease is due for renewal. 4 weeks out, fair enough.

Landlord has to give a set period of notice for a rent increase, if they wait until the end of the lease, then they need to wait out the notice period before it takes effect. The earlier agreement can be reached on the new lease and rent increase date, the less lag between lease commencement and the rent increase.

Might be a new landlord? New agent?

Being keen to renew (on the part of the owner/PM) is not a sign of anxiety but possibly being organised.

I've had tenants ask me what my intentions are before they sign a new lease. Fair enough they don't want to have a place put on the market when they are tied in. I've never asked someone (before the lease is due) what their intentions are.

For some unknown reason, the odd tenant actually wants to know if they will be needing to move at the end of the lease (this may be a dealbreaker for them eg. having to change schools, further from transport/services etc). As an owner, you should know what the tenant intends doing at the end of lease. How can you plan cashflow when your window of the lease is getting shorter without confirmation of the tenant's intentions?

 

[orDurve]

... As an owner, you should know what the tenant intends doing at the end of lease. How can you plan cashflow when your window of the lease is getting shorter without confirmation of the tenant's intentions?

For me the puzzle was, why would the owner not simply assume that the tenant was staying put and issue notices for rent increase/send new lease automatically? That's what I would have expected given I'd given them no reason to think I was going anywhere?

 

[travelbug]

Landlord has to give a set period of notice for a rent increase, if they wait until the end of the lease, then they need to wait out the notice period before it takes effect. The earlier agreement can be reached on the new lease and rent increase date, the less lag between lease commencement and the rent increase.

You need to give 60 days notice. I DO NOT think it's reasonable for a landlord to start houding a tenant when theyu arte halfway through their lease. 60 days before the lease ends send the rate increase. If you are houding tenants for months before the lease is due you have a) too much time on your hands or b) too few properties.

Being keen to renew (on the part of the owner/PM) is not a sign of anxiety but possibly being organised.

Keen to renew and hassling tenants. 2 different things.

For some unknown reason, the odd tenant actually wants to know if they will be needing to move at the end of the lease (this may be a dealbreaker for them eg. having to change schools, further from transport/services etc). As an owner, you should know what the tenant intends doing at the end of lease. How can you plan cashflow when your window of the lease is getting shorter without confirmation of the tenant's intentions?

As I said "fair enough" that the tenant wants to know if you are selling. I've only ever been asked once and that was at the end of the lease. I was happy with periodic but she wanted to sign as she was worried about me asking her to move out.
Most of mine are now on periodic lease. I don't plan my cashflow. It is what it is. Me hassling tenants won't change that. Well it may by getting them to move out more frequently.
I leave them alone, they pay their rent. When I put it up, they pay it. Simple. If they want to move out, they'll let me know with the required 2 weeks. The lease doesn't get shorter. They sign and that's what it is. If you want a long lease get them to sign one. I only ever sign new tenants on a 6 month lease but tell them if they pay on time and the property is being looked after they can then sign a 12 month lease.

Working so far.

 

[Scott No Mates]

For me the puzzle was, why would the owner not simply assume that the tenant was staying put and issue notices for rent increase/send new lease automatically? That's what I would have expected given I'd given them no reason to think I was going anywhere?

They'd hate to do the paperwork for no reason and not to get paid for it.

 

[MIW]

Would like to ask a quick question of LL/PMs on here.
....
My question is, how usual is it to start hassling the tenant months away from the renewal date about whether they're planning to move out or not and secondly, my impression is that they were looking to get a commitment to stay before advising of any rent increase (which would have put them/the landlord as somewhat of an advantage).

It's not unusual but it depends on the agent and landlord's agreement. The IP I have in WA, and all others, I always like to have fixed term leases. After each I take advise whether rent increase is warranted, and try even for small increase if the economy or the market permits it.
Not only do I like rent increases but also fixed term leases. I try to treat this investing as a business, so this is warranted...
Perhaps, the agent did not communicate well and so your expectation was different from the start, yes/no?

 

[Joe D]

For me the puzzle was, why would the owner not simply assume that the tenant was staying put and issue notices for rent increase/send new lease automatically? That's what I would have expected given I'd given them no reason to think I was going anywhere?

Assume nothing.

Pre July 2013 before the new WA RTA rules came into play, as a LL if my tenant did not respond to my inquiry on their intentions on whether they wished to renew a lease, then I would be assuming they were intending to vacate.

At that point I would commence advertising for a new tenant and I would start incurring costs in sourcing a new tenant........

Clear communication is the key to avoid conflict, so in your particular case a lack of communication may have lead to you looking for a new residence or having to reimburse the LL for his incurred costs (if it was me!) if he let you stay on.

 

[orDurve]

Thank you for the different perspectives on this - much appreciated.

 

[greentomato]

Your PM/landlord sounds very pushy!

I've rented for many years in a few different states, and I've never been contacted that early regarding an end of lease/renewal.

Most PMs contact me about a month prior to the lease expiry, some have written to me and others a phone call but never earlier than a month.