Our tenant is coming to the end of their 12-month lease and has asked for a 6-month lease. With the new break fee structure that came in March 2020, we can't really see any incentive to us to do so. It seems to me that the 21 days notice from the tenant on a periodic lease is better than the break costs without notice should the tenant break the fixed lease. It would only be if the tenant broke the lease in the first 25% of the term that we would be better off (and get 4 weeks break fees). Are the changes making other landlords more hesitant to re-sign leases too? Are there benefits to having tenants on fixed leases? The only thing I can think of is if we were trying to borrow more money, the bank may look more favorably on a fixed lease.
There's nothing in the PDS for our policy that specifies any difference between fixed and periodic lease terms. I can see this possibly being an issue for claims for loss of rent, but we don't have this cover as the tenancy started during covid.
Maybe give them a 6 month ish lease and have it end in January as that’s the best time to find new tenants if they do decide to leave.
Neither Terri Scheer or EBM have an issue with periodic tenancies, I also haven't come across it as an issue for most lenders. The benefit in the break fee is that you get vacant possession plus the break fee, rather than 21 days notice with the tenant is there. If the tenant doesn't allow access or its not well presented, the 21 days is not overly useful. The break fee also discourages tenants to break their lease (people usually don't want any sort of penalty) and reduces the risk of having vacancy right before the holiday period. There's some benefit to a 6 month lease now so that it can end in late Jan/Feb which is peak time to re-let. Hopefully your PM won't be charging a renewal fee.
Thanks @Mel Morgan, good logic there. The existing lease expires in August so we'd get through to February. By lease renewal fee, do you mean the $33 fee for preparing the new lease, or do some PMs charge an additional fee if tenants re-lease? The $33 fee is another reason we don't really want a 6 month lease.
My view in many dense parts of Sydney is a 6-12 month renewal will hopefully lead to some sort of border re-opening (or international students at least) and rental increases. Some PMs don't charge anything for a renewal (like me), some charge $33 and others charge a half or even whole week! (or even 2 weeks in some states, but we won't go there..)
