Periodic lease & increasing the rent

Discussion in 'Property Management' started by TripleK, 13th Jun, 2014.

  1. TripleK

    TripleK Member

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    Long term stalker first time poster.

    First time buying in Brisbane and I'm trying to do all my homework, I have found a property and am planning on making an offer, its a decent place and a nice area but the current owners have a tenant on a periodic lease way below the market rate, about $100 below the median for the area.

    They have been in the property over 4 years and the agent has given assurances they are good tenants which is why they haven't had much of an increase. Still asking for some rental history evidence and will make that part of the contract if I can.

    I know to terminate a periodic lease we have to give 2mths notice, my questions are:
    - Does the same time frame apply to advise of a rent increase?
    - In Queensland, how difficult is it to get tenants to leave if they don't want to?

    I have read some horror stories in the forum but have only ever had good tenants in my Sydney rental. We were thinking one option is asking for vacant possession but if they are good tenants we would like them to stay but at a more reasonable rate.

    Any advice would be fantastic.
     
  2. Scott No Mates

    Scott No Mates ...and people wonder why?

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    Do the simple thing and go for vacant possession. That way you can ask the rent that you want without any baggage of the previous ownership.
     
  3. superAndrew

    superAndrew Member

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    Yes. 2 months for rent increases too. But you can only increase it if it is a periodic agreement.

    Rent cannot be increased during a fixed term agreement unless it is stated in the tenancy agreement.

    The current owner can't just kick them out, so you will have to wait for 2 months anyway.

    Why not give them a notice to increase the rent?

    If they don't want to stay, you can line up new tenants just before they leave.

    Andrew
     
  4. Peterw

    Peterw Member

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    If a contract calls for vacant possession, I believe only 4 weeks notice is required. You can have your contract call for the owner to give notice when you go unconditional and then have settlement scheduled 4 weeks after notice is given.
     
  5. travelbug

    travelbug Member

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    Yes that is corrct- 4 weeks if selling.

    But why kick out perfectly good tenants?

    I have had this situation before, with under market rent. The tenants knew they were on a good wicket. One I put up $50 from $240 (market rent was $300) and they stayed and 3 years later and a few more increases they are still there. I asked the managing agent to explain that it was way under market rent and therefore would have to increase).

    Others stayed also but increase wasn't as high. Actually none of the tenants have moved out after I've bought and increased the rent.
    All they have to do is look on RE.com and they'll see it's not worth moving.

    As long as you are at or slightly under market rent.
     
  6. TripleK

    TripleK Member

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    Thanks everyone for your reply to my questions. Much appreciated for sharing your experience & knowledge. Just want to clarify:

    @Superandrew: Can the notice to rent increase be given before the settlement date? Who can do this? Vendor or the new owner?

    @Peterw & @Travelbug: Do you mean 4 weeks notice to terminate periodic lease or to increase rent if selling?
     
  7. MichaelGilbert

    MichaelGilbert L.R.E.A

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    I agree with Travelbug, just increase the rent to just below ($10 - $15) market rate so if they move out, just find another tenant. But think its important to explain why to tenants so they can understand the situation plus when the see RE.com.au they'll loose all motivation to move.

    I"m not 100% familiar with QLD legislation but you could give them the rent increase prior to settlement (after unconditional exchange of contracts). I"m pretty sure the current owner would have to give them this increase. This should be 2 months notice. However I would get your conveyancer to sort this one out for you as the actual start of the increase would probably start after settlement.
     
  8. superAndrew

    superAndrew Member

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    2 months notice for rent increases is also QLD law.
     
  9. travelbug

    travelbug Member

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    The 4 weeks I was refering to is the notice to vacate when you are selling. Increase in rent is 6 weeks (plus 4 days postage unless you hand deliver).

    You cannot give notice to increase the rent if you do not own the property. Once you own it you can give notice of an increase.

    In for for NSW. Not sure about other states.