NSW Periodic or fixed lease

Hi, I have a Sydney property that dropped into periodic month to month for over a year now. The sitting tenant is an affordable housing provider who sub leases. As part of portfolio monitoring, I always thought it is better to keep on a long term lease of a year. In discussions with property manager, they think it makes no different as 3 weeks notice is needed for termination for a periodic lease.

That said, I’m thinking a one year lease ensures tenant don’t drop notification during a difficult leasing period such as Xmas break. Any thoughts?

 

The concern is that on a periodic lease if rent stops getting paid for whatever reason, there is no claim to be made against the Landlord Insurer for loss of rent against a fixed term tenancy, this is why/where fixed term tenancies hold their real value, apart from the obvious certainty for the Lessor etc.

 

I think you are spot on J61..

Once portfolio starts to get bigger, yearly leases really do help keep track of things and peace of mind..

I too always try and make sure leases are renewed for year even if I have to take hit on rental increase (as long as it's not way under the market rental)..

Cheers,

 

I think that is the only benifit of a fixed .Lease if if they breach it your insurance will cover it.

 

Thanks all. This all makes sense. Essentially marginally better fixed based on ease of portfolio management and better insurance coverage in the event of a break.

 

If the lease states the rental is weekly then it is a week-to-week lease. Month-to-month leases only apply when the rent is paid monthly - which is how most commercial and industrial leases are set up.

 

Correct.. but they can always give notice to 'break their lease' and then stop paying rent.

 

Landlord insurance policies that don't cover continuing tenancy agreements are not worth taking up. What these insurers fail to understand (and it amazes me that they have been failing to understand this for the 20 years I've been in the industry) is that TENANTS CAN'T BE FORCED TO RENEW LEASES.

 

No, but that's why you issue a Notice to Leave along with the Renewal, so if they don't renew, they have to leave

 

So many PMs do not get this.....but always a set term lease....and best with a PM that does not charge you to do what is in your interest....

 

Fixed-term leases give you a lot more control over your cash flow. The tenants can leave with minimal notice at any time on a periodic tenancy- including over Christmas.

 

It is not a cash flow issue IMO........They can all leave when they like anyway, possibly with some minor penalty.

 

Periodic better if you want to sell

 

That depends.

If your going to sell, do it when vacant or with the tenant.