Length of tenancy agreements

[phm]

Hi there

Our lease with our tenant expires in early October. I would like to extend the new lease from 6 months (which makes it expire in April) to expiring either in June or preferably early January. According to what I have read, January would be the easiest time to re-lease our property, if we had to.

Are you legally allowed to do a tenancy agreement for 8 or 14 months?

Thanking you in advance.

 

[bundy1964]

Hi

Personaly I like 5 year leases with options for another 5 linked to CPI and then market rents.

Not much help in your case though

bundy

 

[Tibor]

Bundy,

Aren't you having an issue with GST?

My understanding that if a lease is longer than 3 years, it becomes commercial and GST is payable (by you, even if you did not collect it). I was thinking about exploring similar leases, but would need more accounting advice of the pros and cons.

I have currently one 3 year lease with annual CPI increase then at expiry renegotiation based on market. reason for it was to
be able to knock back financiers with their 75% to 80% income calculation.

Maybe it is something Dale should be asked for a qualified opinion.

Cheers,

Tibor

 

[Gill Bates]

re
Are you legally allowed to do a tenancy agreement for 8 or 14 months?

Yes

 

[astroboy]

Originally posted by Tibor
Bundy,

Aren't you having an issue with GST?

I think you'll find Bundy does commercial rather than residential Tibor.
astroboy

 

[bundy1964]

Astro you got it in one.

Wouldnt mind a resi as a deposit funder though

bundy

 

[Pamela Yardney]

Originally posted by phm
Hi there

Our lease with our tenant expires in early October. I would like to extend the new lease from 6 months (which makes it expire in April) to expiring either in June or preferably early January. According to what I have read, January would be the easiest time to re-lease our property, if we had to.

Are you legally allowed to do a tenancy agreement for 8 or 14 months?

Thanking you in advance.

Gemini

You are legally allowed to have a lease for 8 or 14 months.

I am not sure where your investment is located, but in Melbourne early January is NOT a good time to find tenants. People are away on holidays or in a festive mood and enquiries are "dead."

Rather than assuming the tenant is going to vacate, have you considered offering another 12 month tenancy or some inducement to take a longer lease?

 

[phm]

Hi there.

Thank you helpful replies.

Pamela, our IP is in central Qld on the coast. According to my research, January is the most popular letting time for this area. We had no trouble in getting a tenant in April when we purchased the property (actually, we had a choice of 3). I'm just planning for the future, if and when the tenant leaves.

I 'm thinking that since the 6 month lease is due for renewal in October, then it would be a good time to offer the tenant a longer lease of 8 or 14 months. If the tenant wanted the 8 month lease expiring in June and then wanted to leave, then our next lease would be for 6 months, allowing it to expire in January. If however the tenant wanted a 14 month lease then that too would expire in January.

A win/win situation, I'm thinking. Perhaps, however I think about things too much!

I will be speaking to the PM about what the tenant's intentions are before making any decisions but I wanted to find out the correct info before talking to her.

I appreciate your honest and impartial advice.

 

[paul_s]

I haven't heard of any law specificying any kind of minimum for a lease, or that it can only be 6mths/12mths. I would assume 8 mths is fine.

 

[phm]

Hi there.

I just wanted to thank everybody for your helpful replies.

Greatly appreciated.

 

[Bmok]

Hi all,

Tibor mentioned above that if you have a lease longer than 3 years, it becomes commercial and attracts GST.

If you wrote your lease as 1 + 1 + 1 + 1 + 1 years, would this get you around the GST implications.

Reason that I am wondering about this is that I am considering offering a 5 year lease with an option to purchase at the end of the lease.

Many thanks,
Cheers, Bmok

 

[phm]

Hi there.

I spoke to one of our PM yesterday and she said that in our area (Yeppoon), the peak rental time for properties (not executive) is November to Mar/April. So I think I'll be leaving our lease as it is.

She did say however, that our type of property (suitable for the average family) is sought out all year round.

Good to know, but good to get external advice as well.