Tenant with financial issues

[allsuccess]

Hello all,
One of the tenants is going through some financial issues. I have visited this property few times and know the tenant. Tenant looks after the property well.
In recent times, he has been behind with the rent. Tenant also wants to include his partner into the tenancy agreement and the real estate agency charges admin fee for it. The other day, the tenant turned up at my door pleading if I could let tenant's partner stay in the property without including her into the tenancy agreement, mainly to avoid the admin fee. He rather pays that towards the rent.
From what I can see, this person is going through a rough time. I'm going to let his partner stay.
What would you do?

PS Not sure how I can do this formally without adding her into the tenancy agreement.

 

[Scott No Mates]

How many people are allowed on the lease?

If the additional person is on the lease, then they can also be held liable for any outstanding rent.

is the tenant likely to be able to pay their rent or is it a loss leader? If it's temporary, is it worth losing a good tenant over? How long will it take to replace the tenant & at what cost (vacancies, lost rent, letting fee, lease preparation costs)?

How much is the administration charge? What for?

 

[allsuccess]

currently there's only 1 person on the lease.
Tenant is good. Has been on the property for 2+ years. Only recent times he is having financial issues. I think it could be temporary. Agency is charging $165 admin fee to re-do the lease (i.e. add tenant's partner), which is not helping the current tenant's financial situation. Property can easily be rented again. It'll cost me 2 weeks rent for re-listing and have to check what the advertising costs are. However, given that I have known this person for 2+ years so not worth replacing this tenant. Also, it doesn't feel right to replace when he is already having trouble.

Tenant is simply asking if I could give consent to have an additional person in the property without adding that person to the lease. I have to find out from legal standpoint that if I'm not interfering with real estate agency rules.

 

[kathryn d]

We self manage (in Canada), but when a tenant requests to add another person, we just have them submit an 'add resident request' ..and it's done...for free.

Maybe you can provide him something in writing granting permission, without the need to re-do the complete lease?

$165 seem a bit much

 

[poordeveloper]

Why does the partner need to be on the lease? In Victoria, you can just give the tenant permission to sublet and then the partner doesn't need to be on the lease. I don't see how that could violate any agreement with the REA.

 

[Perp]

Having additional people on the lease is to your advantage, yet your PM is deterring people from doing so by imposing a fee.

I would be speaking to your PM re their having policies that work counter to your interests.

 

[allsuccess]

$165 seem a bit much

Yes, I agree.

Why does the partner need to be on the lease? In Victoria, you can just give the tenant permission to sublet and then the partner doesn't need to be on the lease. I don't see how that could violate any agreement with the REA.

Yep, I have to look into this approach.

 

[Blueberry]

It has to be less work and more cost effective for the agent to draw up a new lease for free than evict tenant for non payment. I would put that to them.

Failing that it seems if you want it official with them on the lease (and the sublet thing isn't a go), that it would be cheeper for you to pay the $165, then to get someone else in. That is assuming the partner checks out ok.

 

[neK]

It has to be less work and more cost effective for the agent to draw up a new lease for free than evict tenant for non payment. I would put that to them.

Failing that it seems if you want it official with them on the lease (and the sublet thing isn't a go), that it would be cheeper for you to pay the $165, then to get someone else in. That is assuming the partner checks out ok.

While it would be less work for the property manager and more cost effective for the owner to draw up a new lease than evict a tenant, if the property manager evicts and gets a new tenant, he gets to charge a new lease fee.

My PM charges me half and the tenant half of drawing up a new lease. I think from memory in NSW its $30, so $15 each.

Not sure how much it is in VIC, but $165 sounds steep. Unless the PM is very good at what they are doing, I'd be sacking them if they weren't willing to negotiate the fee and finding another agent who charges more reasonable rates.

In my experience, those who are following "policy" on such matters don't really know how to think for themselves and are rather stupid anyway. At which point I don't these kind of monkeys managing my property.

 

[Scott No Mates]

My PM charges me half and the tenant half of drawing up a new lease. I think from memory in NSW its $30, so $15 each.

No longer possible under the NSW RTA 2010. The owner now wears the full cost (btw it was tenant $15, owner $15 + gst for both parties).

 

[Sez]

I am a PM in Victoria, in this circumstance I would have the partner drop in an application form, process it (free of charge to all), call the landlord and let them know what I had found in the reference checks and ask if they may move into the property. We then add those additional tenant details to our software and if a new lease is drawn up then all names are on it, I don't charge anyone a huge amount to do this (or any amount for that matter). Why not ask your agency to waive the charges for your tenant in this situation?

 

[wylie]

Maybe I'm missing something, but if your tenant has asked your permission to have his partner stay with him in your house, and if you agree, and if you don't mind if she is not added to the lease, then I think the PM doesn't have to do anything. You have given your approval. Maybe send an email to the PM advising you are happy that his partner moves in and don't want the lease changed.

If you do want her added to the lease, then I would be pushing for this to be done for much less than the quoted figure. That is crazy.

So many tenants wouldn't even ask you.

 

[Salvatore1]

I cant see how and why they charge $165? I dont charge any landlord to draw up a new lease with an existing tenant and only $16.50 (inc GST) for a new tenant/lease. In NSW we are not allowed to charge a tenant anything for lease prep. If I had a request (in writing) from a tenant to go from 1 to 2, I would forward the request to the owner and if he stated okay I would inform tenant all okay (in writing). That is all that would be required and no need for a new lease or to include the new name on a lease. I believe your agent is taking advantage of you!

 

[allsuccess]

Thanks for all your feedback.

Yes, I agree with the admin fee, I was surprised to see $165.
Apart from that, I'm pretty happy with the PM. Everything is very formal and prompt. Every conversation is followed up by emails and I get copies.

I'll give the PM a ring and see what can be done.

 

[allsuccess]

Maybe I'm missing something, but if your tenant has asked your permission to have his partner stay with him in your house, and if you agree, and if you don't mind if she is not added to the lease, then I think the PM doesn't have to do anything. You have given your approval. Maybe send an email to the PM advising you are happy that his partner moves in and don't want the lease changed.

If you do want her added to the lease, then I would be pushing for this to be done for much less than the quoted figure. That is crazy.

So many tenants wouldn't even ask you.

PM will have to do a reference check. Even though I know the tenant. I don't know the partner. I have no issues to give the approval. But, after that, PM must follow their own policies (e.g. reference checks etc...). As others said, it is cheaper for me to pay $165 as an expense and keep the tenant.

 

[crest133]

Expensive PM fee, surely can't be less work in NSW ($15) than Vic ($165) so why the gouge? If you lose a tenant or have one week's vacancy, $165 will look small change. I'd suggest you make the tenant official on the lease to protect yourself and make the tenants responsible in their respective names, pay the fee if you have to, provided you're convinced they can't pay it, (which puts them close to the wind for affordability issues, or starting arrears.) Might be time to make a comparison with other REAs in the area for costs of PM.
Cheers
crest133