VIC Tenant asking for LT lease. I'd like ST. What are my options.

Hi,

My Melbourne tenant of 6 months likes my property and is requesting 24 month lease.

When the market eventually turns, I'd like to sell, and a lease deters a section of the market, which is why when my PM asked me recently what I'd like to do at the end of the 6 months initial lease I said let it lapse to periodic.

I realise the market probably will not turn in the next year or possibly even 2, or maybe more, but it seems silly to assume this is the case and screw myself over in case things change and end up where the market was a year ago.

Firstly I would like to know my options.
Can I say that I will not go for a fixed lease at all and only periodic?

Secondly, I'd like your opinion here.
While I don't want to shell out on the cost of a new tenant, it isn't going to cost me thousands in lost rent. It's 20km from Melbourne CBD, so it isn't out in the sticks or anything.

Appreciate your thoughts.

 

Tenants want some sort of security which they don’t get on a periodic lease - they can be forced to move at an unknown, inconvenient time.

Maybe opt for a 12 month lease.

Good tenants are worth keeping.
Marg

 

Seems like you've got a good LT tenant on your hands ... Keep them... It's the wisest decision to make.

Property prices aren't going to jump straight away, they need time to recover .. are you able to hold it for two years? Or even one?

 

Not sure about Melbourne but you may not want the lease expiring in June. Offer an 18 month lease ...

 

I dream of good tenants that want/ask for a 2 year lease.

 

sus you out how?

 

Maybe to see how you are as a landlord, it's probably more to do with the area, amenities and lifestyle around where the home is.

BUT, that said if you're anything like my current landlord they wouldn't want 24 months .. trust me.. Has breached the peace quiet privacy act 4 times now.. Micromanaging and plan just a creep.

 

oh and if you are a slumlord,
leases mean nothing to Shoothouse tenants,

they will break it regardless of whether its a 1week lease or a 10 yr lease

 

You don't have to offer the tenant anything, ultimately that decision lies with you.

If you would be okay with another 12 months, then roll with that and just say to the agent that you do not wish to do 2 years. Simples.

If you do think you'll hold it for another 2 though and they are really good tenants, then I'd suggest the 2 years - but that's all down to your own circumstances and the cost of releasing during that time if needed.

 

@Lil Skater

If I would like to keep my options open to sell it in case the market turns around before 12 months, what would your suggestion be?

 

Keep in mind if you go periodic, the tenant only needs to give you 28 days notice to vacate. If that occurs, and you haven't decided you want to sell at that point and don't want to leave the place vacant, you could potential end up in a more restrictive position than if you had gone with a 6 or 12 month fixed lease with the current tenant. If you want to keep renting it out you will have to offer another fixed term lease to the new tenant.

If you do decide to sell, you are possibly guaranteeing yourself some significant vacancy. By the time you engage an agent, get photos and a campaign uploaded, run inspections etc, the tenant will be gone. Even if you can sell it reasonably quickly, you still have to wait for the settlement period. If you are somewhat reliant on the rental income it can put a bit of pressure on to sell at a price below what you want/expect .

If you offered a 12 month lease and decided in 7 or 8 months that you were going to sell providing vacant possession should not be a big issue given the time frames from decision to sell to a potential settlement, and you are still collecting rent for that period. If the sale becomes dependant on vacant possession, the tenant knows they have to go anyway, it is not unusual to offer an incentive for them to agree to end the tenancy early to allow for this.

- Luke

 

@Anthony Brew Basically what Andrew said above, or you could make sure it's timed when it's a reasonably good time to sell (historically). So instead of 6 or 12 months, you might do 8 so it expires at the "right" time of year.

Either way I would be instructing the PM not to mention a potential sale, as this will likely push the tenants out - but if you're set on periodic have them say that you're really happy with their tenancy and want to keep them at the property, however do not wish to sign a lease at this stage and you can review again down the track (or something to that effect).