VIC Going to Fix term lease from periodic

Discussion in 'Property Management' started by Drekko, 16th Apr, 2021.

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  1. Drekko

    Drekko Well-Known Member

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    Hi
    A tenant informed my agent that they were planning to move out and wished to go on a period lease in the meantime after the fixed term expired
    I agreed but as long as they eventually move out. If after a long time period they still wished to be in the property I would prefer a fixed term

    Well this was in 2018 and the tenant is still in my property with no intention to move out
    Which is fine by me. But I prefer to have a fixed term

    I spoke to my agent and asked them if we can switch the tenant back on a fixed term lease and they told me the tenants are obligated to go back on fixed term?
    Is this accurate?

    Main reason for this is more stability for me and I want to also increase the rent by $30 per week

    The rent has not had an increase for 3 years

    But if I mention anything about a rent increase the tenant will be very reluctant to go on fixed term and I could shoot myself in the foot if I mention it

    so 2nd question. Can I increase the rent after a new fixed term has been signed / agreed on? Or will a new fixed term need to be done ?
     
    Last edited: 16th Apr, 2021
  2. PurpleTurtle

    PurpleTurtle Well-Known Member

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    I didn’t think you could force them to sign a fixed term agreement, but you can raise the rent while on periodic.

    Regarding your second question, if they do sign a new fixed term then you can’t increase the rent in the middle of it.
     
  3. Drekko

    Drekko Well-Known Member

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    Thanks for your answer.

    Lets say they agree to go on fixed term. I can increase the rent in the new fixed term right?

    Then they would be. " no way I am signing this new fixed term because the rent is higher "

    Then I would be ok in increasing the rent while they are on periodic?
     
  4. ChrisDim

    ChrisDim Well-Known Member

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    Hi @Drekko, tenants are not obligated in any way to go to fixed (I think that is what your agent said) simply because a periodic lease is perfectly valid agreement in the eyes of the various state legislations. To be honest if your motivation to get tenants to sign another fixed agreement is a rent increase, that’s probably another reason they wouldn’t want to sign again. If your motivation to go into a fixed is some peace of mind over the next X months - assuming they are good tenants - then you may want to sacrifice some of the rent increase.

    Regardless, increasing the rent - if it is the right thing to do in your local area and for me it hasn’t been in Melbourne for a while now - that can happen any time and at regular intervals (with appropriate notice period).
     
  5. Drekko

    Drekko Well-Known Member

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    No worries thanks. Yeh Ive been planning to increase the rent for a few years. Its been very low for a long time
     
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  6. PurpleTurtle

    PurpleTurtle Well-Known Member

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    Yes, that’s my understanding. But I am by no means an expert.

    Edit: You could try something like, “I believe the property is now worth and extra $30 per week, but if you sign a 12 month lease we will only increase it by $20”
     
  7. MB18

    MB18 Well-Known Member

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    If you have had the same tenants for a few years now I wouldn't worry too much about stability.
    If you want (rather if warranted) increase the rent anyway.

    If I was in thier position (as I have been before) I would counter your offer with either:
    1) a discount for a fixed term or
    2) status quo on the periodic

    In all probablity Id expect to settle on either a fixed term at the old rate or an increased rent on periodic.

    Obviously it all varies but I was under the impression Melbourne has tenants in the drivers seat at the moment.
     
  8. Drekko

    Drekko Well-Known Member

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    They sure do

    Yeh I dont think they will move out. They've been in there for a while but they arent the best tenants

    I would prefer to increase the rent as I feel the rent has pretty low and the same for 6 years
     
  9. Ronen

    Ronen Well-Known Member

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    I wouldn't go that far....
    They have new rules that makes it a little bit harder for us, but they are still under similar set of rules, with the same obligations, and the same risk of doing the wrong thing and find it much harder to rent the next place.
    Some tenants will try to check how much they can pull, but I guess most will just keep on going the same way.
     
  10. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

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    Have a read of this thread where this was basically discussed in a round-about way and I provided my thoughts on fixed vs periodic lease, and rent increases.

    In most states you can't increase the rent during a fixed term lease. You can in WA (under certain restrictions - not sooner than 6 months into the lease and with 60 days notice), but you can't in SA, Victoria, NSW or Qld. I'm not sure about the NT, ACT or Tasmania.

    - Andrew
     
  11. Tom Rivera

    Tom Rivera Property Manager Business Member

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  12. Lil Skater

    Lil Skater Well-Known Member

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    I think there's been some pretty good advice to be honest.

    Depending on where the property is and what the market is like an increase may very well be warranted, I would speak with your agent about their first hand experience on the matter and weigh up whether an increase is justified first.

    We cannot force a renter to sign a lease and we can only increase rent once every 12 months, so I would find out whether the market supports and increase and if so have your agent send out the appropriate notices and advise the renter if they are looking to continue for 12 months that you would consider a smaller increase for the security the lease provides you.