Should I terminate tenant's lease?

Hi All,

A little dilemma here.
Lease is up for renewal and tenants are refusing to sign an extra 6 months to year as they are unsure about their employment situation.

The property manager has given me an option of terminating the lease on 'no grounds'.
I'd have to provide 90 days notice for this to happen.

If the tenants were to leave unexpectedly, they only need to give 3 weeks.

I am unsure how far they have left in the job as they can't give me an answer. Am I better off terminating this lease? I don't want them legging it close to Christmas which is why I am thinking of terminating it.

Do I need to know anything else or be aware of any other situation?
For example, can prospective tenants come in the view the property whilst the current ones are still living there?

Thanks

 

I guess the major question is how confident are you to be able to secure a new tenant now, in 3-week's time, or 90-days time.....

 

It never really has had an issue with being tenanted.
More of an issue of how I can protect myself against downtime the most...

 

Will they sign a 3month lease? I would try to keep them, better the devil you know imho. You will also have relet costs if you ask them to leave eg. Advertising and agents fees for new lease...

 

I've asked for a 3month lease and they have refused this in the past unfortunately

 

I had a tenant signing monthly leases at one stage as they were building, is that an option with your agent? (Mine didn't charge extra for that)...

 

How much rent are they paying? Say it's 300pw, tell them a periodic lease is 340pw or they can sign a 5 month lease (mid January is hot time to lease) for 310pw. Steer them towards what you want them to do.

 

You could try a rent increase to cover your increased risk. e.g. Tenant terminating over Christmas.
I think in QLD on a periodic lease 2 months notice is required for an increase.

 

A tenant is not obliged to sign a new lease. 90 days leaves a vacancy at the end of November - not much better.

 

I like this idea. How much notice do you need to give for a rent increase?

 

I have one who didn't want to sign when the initial 12 month lease expired, they wanted to go month to month instead.

I'd have to look it up? But that must be 6 or 7+ years ago now?
They are still there, place is neatly kept.

 

I would get your agent to hand them (in person and tomorrow) a termination notice with a 3 month or option for 5+ month in hand, and let them know that if they don't sign either of 3 month or 5+ month lease within a couple of days, the lease option is withdrawn and termination notice stays.

Reason for taking it in person and only giving a couple of days is that if they don't sign for 5+ months, then you need them out by 3 months from pretty much right now - another week sets you a little too tightly towards the Christmas period I think.

It's very unfortunate that it is at this time of year, otherwise I think you could prepare yourself to allow a periodic lease by being ready to advertise as soon as they give their 30 day notice (assuming they have shown them selves to be paying on time and taking care of the property).

Of course I would run this idea by @Xenia to get her thoughts before instructing my agent to do anything.

 

Similar to @skyfall suggestion
Up the rent a nominal amount
Also as per @Kassy month to month

So offer month to month with a slight rental increase.
In the agreement it can be specified ONE MONTHS NOTICE to vacate.

This gives you more notice, and ensures the tenant continues to be a good tenant until vacate

 

I lent money to someone once and they paid it back..

Actually that never happened LOL (the getting paid back part).
But hopefully you get my point.

 

Yep, never let a tenant go onto a periodic lease. I would give them a week to decide on a month to month contract before sending the termination notice.

 

Dear SS ,
prospective tenants can inspect prior to departure.
Do it all by appointment..
Give the outgoing tenants 7 days notice in accordance of the inspection with the terms of their lease..

Check what the market is doing before you give notice though.
I hope this helps

 

In the ACT you have to give tenants 6 months notice for 'termination without cause' and the 6 months can't expire within the fixed period. Once it switches to a periodic tenancy i.e. month to month (and you can't force the tenants to sign a new fixed term agreement) the tenant can give the landlord 3 weeks notice at any time but the landlord has to give:

• 4 weeks notice if they plan to move in
• 8 weeks if they plan to sell
• 12 weeks notice if they plan to renovate

 

Thanks Andrew
Running into Christmas is not your problem here.
Properties should be shown to new prospective tenants prior to first tenant leaving which would reduce vacancies.

Running into a periodic tenancy is the main problem as it would put a landlord into a financial risk with limited lease break charges - if needed.

For my clients, I would recommend another fixers term lease or termination if current lease.

 

All the advice here is fantastic- but bear in mind your individual circumstances will affect the result.

We have a situation at the moment with a tenant building a house who thinks he's going to move out late November, a month after his lease expires. After a chat to the Landlord, we decided we were happy to let him onto a periodic lease for now while his build matures. He's been an exceptional and trustworthy tenant so we were happy to give him the flexibility. He'll also let me come through the house with near zero notice at any time with prospective tenants and it's an easy house to re-let.

Every situation is different and sometimes you do have to protect yourself against the potential consequences. Keep in mind though that if you hardball the tenant now or ask them to leave, there's not much chance you'll be getting prospective new tenants through the door prior to their vacancy.

It does sound like the tenants like to hold all the cards, so you might need to take the hard line. Offer them 3 months, 5 months or a rent increase, I don't think that's unreasonable.