They want a 12 month lease but is it a good idea to do 6 month lease incase they turn out to be bad eggs? They have also had 1 arrears for 7+ days in 3 years. And the last PM did not circle yes or no to the question "was any damage noted during inspections?"
Normally, we advise landlords to take a 12 month term instead of a 24 month for this reason. 6 months, however, may not be great. What if they want to move out after 6 months - then you may have vacancy and more letting fees to deal with. Tenants (especially young tenants), however, would LOVE a 6 month lease for the lack of commitment. As a PM, I wouldn't advice a 6 instead of 12. 1 arrears in 3 years is also not an alarm bell for me. Consistent lateness is. 7days+ is a LONG time, but if it's only 1 in 36 months, that's ok to me. But fee free to ask for a please explain. And re the damage - that's a very important question. I would want that answered before moving forward. Hope that helps
I would speak to the last PM and find out about how they kept the previous property, was there anything deducted out of bond, would they be happy to rent to them again, they might also be able to explain what happened in that one arrears. Sometimes getting a verbal reference sheds so much more light on a tenant. I am also recommending 12 month tenancies because it indicates more of a long-term committed tenant (as long as they are properly reference checked), especially at the moment I don't want a 6 month tenancy to end during off-peak winter months. During Winter I am more flexible on lease term in order to minimise vacancy.
Putting your investor thinking cap on, I dont mind 6 month initial leases, some tenants and PMs prefer it also depends on releasing fees, if there is a cost, then thats what you need to think about, you can negotiate it down as well as Mel Morgan said, you dont want to have tenants leave at the worst times, hence I ask my PM when the worst and best times are and modify the lease, so a 12 month might become 10 to 14 months, most tenants understand 1 x 7+ day arrears isnt a big deal in my eyes, ask for an explanation, if they want to hide the real reason, they will tell you a story you want to hear, then its up to you
Vast majority here are 12 months. When the best applicant is a c grade tenant, sometimes do 6 month to serve as a trial. Gives exit strategy if needed, or extend for longer term if needed. When considering lease term please also consider what time of year it finishes. With careful planning you can have it not be during dead times in your local market.
I would normally only do 6 months if it’s a trial basis. Ie. someone you’re not 100% on but want to give a go. Once adding up vacancy and letting fees it’s normally not worth it. If you’re doing a new lease, might I suggest slightly longer so you don’t have vacancy next Christmas ie. 13-14 months
We've done a few 6 month leases with the tenant paying the letting fee on top of that. The cost of the letting fee is then held in trust to go towards the rent if they then sign on for another 6 months. We find quality people don't mind this option because they know if they're going to be good tenants, they're not losing that money. It also covers the owner in case they do turn out to be duds - the letting fee is already paid. They still get vacancy in between tenants- but it's better than nothing, especially at this time of year when it's much harder to lease / less people moving.
