Month-to-Month vs Fixed term lease

Discussion in 'Property Management' started by Hwangers, 1st Feb, 2017.

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  1. Hwangers

    Hwangers Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    338
    Location:
    Sydney
    Hi all,

    Just wondering what people's thoughts are for a month-to-month lease compared with a fixed term lease? Pros and Cons to each and am curious to hear what peoples experiences are and in your opinion which one is better?

    Cheers!
     
  2. D.T.

    D.T. Specialist Property Manager Business Member

    Joined:
    3rd Jun, 2015
    Posts:
    9,189
    Location:
    Adelaide and Gold Coast
    Fixed term lease
    - Stability / predictability
    - Longer notice periods (could be seen as a pro / con depending on your situation)

    Periodic lease
    - Flexibility
    - Lesser notice periods (could be seen as a pro / con depending on your situation)
    - Some banks might not like it for serviceability purposes
    - Some insurers might not like it for coverage purposes.

    We pretty much always prefer fixed term.
     
  3. 8650

    8650 Well-Known Member

    Joined:
    24th Jan, 2017
    Posts:
    88
    Fixed term lease is always beneficial for insurance purposes and financial stability. If tenant defaults and are evicted from the property. The insurance company will cover for the loss of rent for amount of approx 12 weeks after vacate date ( depends on what cover you have and also as to why the tenant is no longer in the property - abandonment, death etc). Also gives you piece of mind that tenants cant leave at any given time by giving the appropriate notice.

    Month to month is beneficial if you are considering selling the property or wanting to do renovations and need the tenant to vacate as you can give the tenant the appropriate notice at anytime to do so then having to wait until the end of the fixed term agreement. If tenant does abscond while on periodic lease majority of insurance companies will only cover 2 weeks rent after vacate date.

    All items to take into consideration.
     
    Simon L and wylie like this.