Tenant gives notice to vacate during fixed term agreement

[JIT]

Hi there,

If a tenant gives a notice to vacate during a fixed term agreement, I believe the required notice period is 28 days.

If this happens, does it mean that the tenant has to pay out the remaining rent until the end of the lease period, or, find another tenant to replace them, before they can exit the contract?

Any thoughts appreciated.

Thanks,

GSJ

 

[TheCamel]

normally, they'd have to pay a reletting fee, pro-rata advertising fees, and continue to pay rent until a new tenant is found.

 

[crest133]

Any costs that would not have come to you had the tenant fulfilled their lease obligations should be borne by the tenant, and fair enough too.
You contracted to keep the premises for the tenant at a set rent rate until the agreed date, and the tenant defaults and creates re=letting costs, so the law allows you to claim those costs from the tenant.
Rent for the fixed period
ads
lease costs.

cheers
crest133

 

[Lizard King]

Mitigate Losses

Bear in mind that you have to mitigate losses for the tenant.

a) You cannot raise the rent for a new tenant - you have to advertise at the same rent; and b) make the utmost and best effort to get a new tenant asap.

Lizard King

 

[BoatBoy]

As an add on to Lizard King's post, we had a tenant bail early and the next ones in wanted a 12 mth lease as did we, so the first 3 months was at the old rent and the balance went up to the new amount and was written into the lease accordingly.

Dave

 

[quoll]

b) make the utmost and best effort to get a new tenant asap.

But they still have to be acceptable to you (the landloard), and the tenant pays for the advertising.

We moved out of one place and I reckon we found 6-8 new tenants until the landlord was happy with one. Had to pay about 6weeks rent after we moved out. Cause they where so picky.

cheers
quoll

 

[superb]

Bear in mind that you have to mitigate losses for the tenant.

a) You cannot raise the rent for a new tenant - you have to advertise at the same rent; and b) make the utmost and best effort to get a new tenant asap.

Lizard King

a) I rang the Fair Trading in my state and they said they have never heard of this. They said that I can re-advertise the property to find a new tenant for any rent amount I want.

 

[s_t]

Yes, Fair trading is correct in that you can readvertise at a higher price if you want. However, don't expect the leaving tenant to cough up any money for you.

 

[JIT]

Update...in this case, the tenant wanted to leave as they found a PPOR, the landlord agreed to let them go if they could find another tenant...until then they still had to pay the initially agreed rental amount. Property re-advertised at current market rent which was $40 per week higher, and subsequently leased at this price within a week. Old tenant out, new tenant in, landlord and PM happy!

 

[superb]

....However, don't expect the leaving tenant to cough up any money for you.

Lucky the landlords insurance does though. Best investment I ever made apart from the property!

 

[sailor]

Cheeky tenants?

Got this from my PM this morning:

"Re increase rent to $310 week.

The rent is currently $290 week and as the tenants are breaking their lease, it is not correct to change the rent charge whilst we are trying to find another tenant. The vacating tenants can say we are disadvantaging the chances of finding a new tenant with the increase in rental figure. They will be paying rent up until we find a new tenant. It would be fine to change the rent at the end of the new tenants lease.

We would be in trouble with the RTA if the existing tenants complained."

My initial response was that the outgoing tenants have a bit of a hide telling me (the landlord) that I can't raise the rent for new tenants. Maybe I should tell them to phone the RTA and check it out? Or just advertise the unit at the existing $290 pw with the added clause in the contract that tis going up to $310 after 3 months. Unit is in Qld, any advice would be most welcome please.

 

[LynnH]

sailor

Unfortunately, your tenants (and PM) are correct in this case. I think the best thing to do would be as you outlined in your last paragraph: advertise it at $290 with an increase to $310 in 3 months.

Hope you find new tenants quickly!

Cheers
LynnH

 

[geoffw]

In NSW, if a tenant breaks the lease, the tenant is liable for rent and relet fees up until the time a new tenant moves in- but the rent for the new tenant must be the same as the existing rent.

If you wish to raise the rent, it's possible to release the old tenant from the lease- in which case, you are liable for the relet fees, and you don't receive any rent when the place is vacant.

I have in the past agreed to release a tenant from a lease in order to increase the rent.

 

[sailor]

Thanks for the info everyone...most helpful. We will probably rerent at the same price, with a clause increasing it after 3 months. I rang the RTA just to confer, and they said that was ok. They also said that the existing tenant could complain to them, if our decision to raise the rent for a new tenant, delayed getting the unit re-let. Then they could take us to the tribunal. I'm getting a tad weary of all this stuff that's in the tenant's favour and nothing in the interest of the landlord.

 

[wylie]

Thanks for the info everyone...most helpful. We will probably rerent at the same price, with a clause increasing it after 3 months. I rang the RTA just to confer, and they said that was ok. They also said that the existing tenant could complain to them, if our decision to raise the rent for a new tenant, delayed getting the unit re-let. Then they could take us to the tribunal. I'm getting a tad weary of all this stuff that's in the tenant's favour and nothing in the interest of the landlord.

Without being difficult, I don't think this is in the tenant's favour at all. They are paying the agreed rent until you rent it again. If they stayed you would be locked into this weekly rent until the end of the lease. So you should not lose anything assuming it rents quickly, and don't use up all their bond, in which case, you may have problems making them pay.

If you build in a clause to raise rents in three months, aren't you actually doing better than if the present tenants stayed the whole lease (assuming their lease term would have gone for longer than another three months)?

Of course, I am assuming they are paying ALL costs to find a new tenant. You should not be out of pocket at all, or am I missing something?

Wylie

 

[s_t]

Nope, I agree Wylie. Whilst tenants might be favoured in many situations, I see this as fair.

 

[redsquash]

Got this from my PM this morning:

"Re increase rent to $310 week.

The rent is currently $290 week and as the tenants are breaking their lease, it is not correct to change the rent charge whilst we are trying to find another tenant. The vacating tenants can say we are disadvantaging the chances of finding a new tenant with the increase in rental figure. They will be paying rent up until we find a new tenant. It would be fine to change the rent at the end of the new tenants lease.

We would be in trouble with the RTA if the existing tenants complained."

My initial response was that the outgoing tenants have a bit of a hide telling me (the landlord) that I can't raise the rent for new tenants. Maybe I should tell them to phone the RTA and check it out? Or just advertise the unit at the existing $290 pw with the added clause in the contract that tis going up to $310 after 3 months. Unit is in Qld, any advice would be most welcome please.

The other option is terminate the lease on an agreed date and advertise the property for whatever rental you want.
That may be a bit risky
The down side is that you will be paying for advertising AND NOT GETTING RENT WHILST THE PLACE IS EMPTY.
IF DEMAND IS STRONG THEN YOU DONT NEED TO WORRY ABOUT ANY VACANIES AS YOU WILL HAVE MANY APPLICANTS

 

[wylie]

But if the landlord agrees to terminate the lease then they are also releasing the tenant from his obligation to pay until a new tenant is found, plus advertising (my understanding anyway).

Even if a new tenant pays a higher rent, there will be new letting fee (one week usually) plus the advertising fees. It would be better to hold the tenant to his obligation, get a new tenant at the same rent and put it up as soon as legally possible.

That is what I would be doing.

Wylie

 

[sailor]

If you build in a clause to raise rents in three months, aren't you actually doing better than if the present tenants stayed the whole lease (assuming their lease term would have gone for longer than another three months)?

Of course, I am assuming they are paying ALL costs to find a new tenant. You should not be out of pocket at all, or am I missing something?

Wylie

They only had 2 months left on their lease. And we were intending to raise the rent then anyway, because market value has gone up considerably. Yes they will be paying ALL costs.
I was just trying to achieve what we had intended to achieve if they hadn't given notice to quit the lease.

 

[wylie]

If they were due to leave in two months, I would think you can build into the lease a rise in two months. Have never done this, but a house in our street is renting for $930 per week until January when it goes to $960 per week due to a break lease situation.

It is professionally managed so it must be okay to do this. Tenant is brother of the agency owner, so I assume it would be done correctly.

Wylie