Tenant breaking lease - increasing rent question

Hi guys, we have a tenant who wants to break their lease early. Don't worry, t's a good thing.
Our PM advised that the current tenant will be responsible for paying the rent until we find another tenant.
The property is due for a rent increase, so we want to increase it for the next tenant.
PM Said "the house can only be advertised at the same amount as the tenant is responsible for the rent until a new tenant is found." <sic>
Which is reasonable, the previous tenant shouldn't have to pay while it's vacant if you significantly increase the rent from $250 to $350 and it takes a long time to get someone in.
Suggestions from people with experience on how to increase the rent while having the previous tenant still pay until we get another tenant? Nothing too dodgy ;)
 
Thoughts so far (not necessarily do-able, but we have already thought of them):
Ask the PM to network and gauge interest in the property 'informally' without advertising (small percentage chance but might be right person at right time).
Advertise at current rent rate, then re-advertise it in a couple of weeks at the higher rate (doesn't seem practical).
Advertise at current rent rate, then tell applicants that it has increased as we're painting/minor reno (true but sounds a little bait and switchy).
 
2 things:

You could 'mutually' terminate the lease and readvertise at the higher rent (risking vacant).

You could inform the new incoming tenant who takes over the lease that the rent will increase after the current term to $x when the review is up.

What you are currently asking is to have your cake and eat it too. That's the only thing that's dodgy.


pinkboy
 
Azazel, The law changed in NSW in Jan 2012 re a tenant breaking their lease early and fees they need to pay. Your property manager should be aware of the law changes!! If a tenant breaks their lease in the first half of the lease they have to pay rent until they move out + an additional 6 weeks rent if broken in early break lease fee the 2nd half then only 4 weeks break lease fee.
 
If a tenant breaks their lease in the first half of the lease they have to pay rent until they move out + an additional 6 weeks rent if broken in early break lease fee the 2nd half then only 4 weeks break lease fee.

Thanks for the reply Salvatore, would you be able to clarify the above?
It says there is an 'optional' break fee at:
http://www.fairtrading.nsw.gov.au/T.../Ending_a_tenancy/Breaking_a_lease_early.html
It also has:
"Breaking your tenancy agreement during the fixed term can be costly. You may have to pay:
rent until a new tenant takes over or the fixed term period ends, whichever occurs first, and
a percentage of the advertising costs and the agent's reletting fee (if the landlord uses an agent). For example, if you break the lease 9 months into a 12-month tenancy there is 25% of the lease remaining, so you would expect to pay 25% of these amounts."

and:
"The landlord and agent must try to keep your costs to a minimum. For example, if they do anything to make it harder to find a new tenant (such as asking for a higher rent or unreasonably rejecting potential tenants) you may not have to pay the full amount they are asking."
 
It all depends which option you have written into your lease. I purchase my forms from EAC and they have the 6 & 4 week option written in them I believe this is common with all pre printed leases). If you agent crossed this option out and did not include the other option in the extras then you can not charge a break lease fee or loss of rent fee.
 
You are obliged to make every effort to find a new tenant. Increasing the rent would lessen the chances of a re-let which is why it is prohibited.
Marg
 
If you do get a tenant in at the time where the previous Tennant has a lease contract, then the difference would need to be paid back to the first tenant during that term.
 
You are obliged to make every effort to find a new tenant. Increasing the rent would lessen the chances of a re-let which is why it is prohibited.
Marg

Thanks Marg, as I said "Which is reasonable, the previous tenant shouldn't have to pay while it's vacant if you significantly increase the rent from $250 to $350 and it takes a long time to get someone in."

A very modest increase is different in my opinion.
 
Can you advertise at higher rent (which agent confirms is market rate)
but tell current tenants to only pay their previous rent to you?
 
If you do get a tenant in at the time where the previous Tennant has a lease contract, then the difference would need to be paid back to the first tenant during that term.

Thanks Xenia, I can't get my head around that one, can you clarify please?
 
Thanks Xenia, I can't get my head around that one, can you clarify please?

Sure
If the current tenant is leasing at $300 per week and has a contract for 12 months then break the contract at 9 months then they are up for lease break charges for 3 months.

You need to put on market for $300 per week otherwise you may breach the part of the legislation that requires you to mitigate losses.

However if you do go ahead and lease the property at $400 per week and it takes a month then a tribunal could order that the extra $100 per week needs to be paid back to the tenant that broke the lease - until end of lease term date. Say the remaining 8 weeks.

I have seen this enforced once - that was in SA so you may want to check out how it works in your state or if it's enforceable.
 
However if you do go ahead and lease the property at $400 per week and it takes a month then a tribunal could order that the extra $100 per week needs to be paid back to the tenant that broke the lease - until end of lease term date. Say the remaining 8 weeks.

Ah, IF you increased the rent, thanks for the detailed explanation.
 
Azazel, The law changed in NSW in Jan 2012 re a tenant breaking their lease early and fees they need to pay. Your property manager should be aware of the law changes!! If a tenant breaks their lease in the first half of the lease they have to pay rent until they move out + an additional 6 weeks rent if broken in early break lease fee the 2nd half then only 4 weeks break lease fee.


I think you are a little confused. The 6/4 week break fee only applies if it is specifically listed on the lease. Also the fixed fee is instead of paying rent and advertising while property is vacant, not as well as.
 
This is in vic- similar may apply to you.
You can actually state in the advertisement that the rent will be increased to $$ from this date (the date of which the current tenants fixed lease terminates).
Therefore you are seeking a tenant to see out the remainder of the current lease period for which the rent must be the same.

Tenants are required to pay rent under the current agreement until a new tenant takes possession. They are also required to pay pro rata lease break fees and advertising dependant on how much time is left on their lease.
Eg- 6 months left. Normal lease fee $500 and advert $200. They pay $250 fee and $100 advert. Landlord pays remaining as that is considered fees for new tenancy period (the further 6 months with new tenant).
 
This is in vic- similar may apply to you.
You can actually state in the advertisement that the rent will be increased to $$ from this date (the date of which the current tenants fixed lease terminates).
Therefore you are seeking a tenant to see out the remainder of the current lease period for which the rent must be the same.
Tenants are required to pay rent under the current agreement until a new tenant takes possession. They are also required to pay pro rata lease break fees and advertising dependant on how much time is left on their lease.
Eg- 6 months left. Normal lease fee $500 and advert $200. They pay $250 fee and $100 advert. Landlord pays remaining as that is considered fees for new tenancy period (the further 6 months with new tenant).

That is interesting, and sounds very similar but I will have to double check.
We were being more than reasonable with tyring to get it ready to be rented asap, but the current tenants are being difficult with giving us access for a day here and there before they move out. Planned with 7 days written notice. You would think if they're liable for the rent until we find someone else, they would be agreeable to having some things done while they're still there. But ah well, as long as it takes to get things done once they leave. I can see it being a whole thing trying to get the rent out of them. Oh the joys of being the rich landlord ;)
 
Unless the tenancies act specifically states you cannot increase the rent, it's up to your interpretation.

In Vic, it doesn't. It simply says you must mitigate the tenants loss.

Have I increased rent previously in a lease break? Yep. Long term tenants, large change in the market etc. means that the current tenant has been on a cheap rent, and raising this to market rate isn't an issue. I've had this challenged at VCAT and won costs as I could display that advertising at a higher rate was at market, the landlord had the right to increase rent and that because the property was leased within a reasonable time frame that it didn't impact on what the tenant was liable for.

On other occasions we've had to reduce the rent and the tenant has been liable for the difference for the remainder of their tenancy.

As suggested above you could put it remains at x per week, increasing to x in July (as an example).
 
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