short leases vs long ones

[tax-man]

Hi,
I have one IP (in NT) which has been on 1 year leases for 4 years. I just bought another one (in QLD) which had the first lease signed for 6 months.

Both my PMs charge one week's rent as "Letting Fee". There is NO explicit mention in either PMs' contract for "Re-Letting Fees"/"Lease Extension Fees" (i.e. same tennant staying on).

I understand that 6 month leases give me a chance to increase the rent twice a year, but then do I have to pay 2 weeks rent as letting fees in one year?

Apart from this, what other factors should I consider when deciding how long to make my leases...?

Also, I have no intention of reopening the debate that went on in the other post here "Letting Fees" - but I went through it and couldnt find any concensus on these 2 issues:

1. In the absence of the item "Re-Letting Fees" in my contract, can the PM legally just go ahead and charge me a weeks rent, even if the same tennant chooses to stay on? So far the one in NT has been... Or is it upto me to 'negotiate' (plead/request/argue/scream) with them?

2. Re the "double-dip": My NT PM charges me one weeks rent as re-letting fee, but charges me the management fes on the gross rent (i.e. does not subtract the letting fees from gross rent before taking out the management fees). What is the concensus on this issue?

Thanks very much.

 

[travelbug]

I don't know why it's not specified in the contract. It's something I ask as it makes a bit of difference to your overall costs.
Find out what their charges are regarding releasing. Some of mine just charge a small fee to sign a new lease ($30) with an existing tenant. I don't think it's fair to charge again (but some do).

If you think rents are rising quickly go 6 month (or build in an increase after 6 months). If finding tenants is difficult I'd want a long lease.

 

[marg4000]

We always go for 12 month leases, but write in a rent increase after 6 months. This gives us the best of both worlds.

BTW, we have not paid leasing fees for several years now. Our tenants have broken their lease and the fees are charged to them for the new tenant. This has happened three times in a row.
Marg

 

[jezza]

Tax Man

Have never paid a reletting fee ever. Find out why they deserve it, Is it because they feel they are the reason the tennant is staying on. With the lack of supply I recently have given tennants the option of 12 months with a rent increase at 6 months or a 24 month lease with a rent increase which is slightly higher than the first option at 12 months. My last 2 have both signed on for 2 years.

Jezza

 

[lura]

Qld PAMD20A - Fees and Charges by an Agent

Tax man - to answer your questions:

1. No they cannot charge you a re-let fee if not stated in the Appointment to Act. If you have an REIQ version - you will find the fees and charges for this stated in the Schedule Part D FEES on page 5 of your QLD Appointment.

2. Double dipping? Well, management fee and rent collection are charged on rent going into trust account. Let Fee is separate to this as a one off charge. This is industry norm and the trust account programs automatically make those allocations.
I can empathise with you - because I had to double check the Trust software - but this is how the program works.

You should shop around to find agents that do not charge re-let fees ect. They should be open about what they charge - too many are not leaving many owners asking questions like yourself.

Some questions you may want to ask in future: http://www.rehq.com.au/frequently-asked-questions-5.aspx

Unless stated in the appointment to Act: no fees can be charged if not indicated.

I'm in agreeance with Jezza - do 12 month leases with rent increases every 6 months. This way they know when they stand and you know where you stand. If the market moves a little more than this but you have great happy tenants - I think you are way infront. If they are no good - you still got the increase and then make decision about whether you want to extend to them next year.

Note: Leases don't have to be 12 months or 6 months - it can be any length - with a start date and an end date. How this is useful - when properties become vacant over holidays periods or to align with high demand periods (most important near/around unversities)

Hope this helps.

Lura