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Tenant not signing lease renewal

Discussion in 'Property Management' started by morgzzz, 23rd Sep, 2015.

  1. morgzzz

    morgzzz Member

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    Hi all,
    Back in May our property manager wrote up a contract for a 12month renewal and notified the tenant that they needed to sign it.
    A few days ago I emailed the PM to ask them to increase the rent (we had discussed increasing it back in May for 4mths time)
    I now find out the tenant hasn't come in and signed the contract, hasn't returned the PMs calls.

    These tenants are fantastic tenants, never have a problem, pay on time & have been there years before we purchased 18months ago, they were off contract when we purchased it, and the agent had them sign 12months as part of the sale.

    We were hoping to sign a 6-12month lease to get us through Christmas/New Year. Given they've gone month to month before, and not gone anywhere, I wonder if I am just stressing.

    So my real issue is, should the PM be following this this up? Should they have been checking up and seeing why it hasn't been signed, and not have me chasing up whether it's done?
    We have been through 5 PMs in 18mths, when I send emails with water bills I always get a different person replying.

    Our other property with another agent, it's the one person I deal with and has been all over stuff.
    Is it hard to move a property to another agent?
    I worry that if I notify them of the change of agent, the tenant will move, or the agent won't do their part as they know we're getting rid of them.
     
  2. wylie

    wylie Moderator Staff Member

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    Problem is you have no idea what the tenants plan to do. Sounds like they will stay but who knows. Many PMs send a notice to vacate (as at the end of the lease) with a letter explaining the new lease must be signed or the notice to vacate stands, which usually motivates the tenant to sign up if they plan to stay on instead of putting it aside with all the other things in the "I'll get to that later" pile.

    This is what I like about self-managing. I get to speak with the tenants and keep myself informed.
     
  3. WestOz

    WestOz Well-Known Member

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    Ummmm? Yes! Your paying them for the service right?
    If you gave that service in your job to a client (and your employer/manager knew about it) how long would it/you last.
    If the PM was a manager of a business you owned would you put up with it or sack-em.

    Being that the tenant has been long-term, no issues, perhaps have a go at self manage.
    Perhaps the tenant is also pist with the PM due to receiving similar service/replies, my tenants were with my recent purchase, their stoked to have meet let alone being looked after/things actually being done, by an owner.
     
  4. The Y-man

    The Y-man Moderator Staff Member

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    @morgzzz

    Which state is the IP in?

    In Vic, a tenant is not required to sign a lease once the initial lease lapses. It just rolls over to a monthly tenancy. You can still do rental rises (actually more often on a monthly tenancy) provided the right process followed.

    The Y-man
     
  5. wylie

    wylie Moderator Staff Member

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    I think this is the case in Queensland too, which is why a lot of PMs send the notice to vacate with the lease - to show they really want the lease signed and if the tenants choose not to sign, the notice to leave is issued within the correct timeframe and can be enforced.
     
  6. D.T.

    D.T. Adelaide Property Manager Business Member

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    Every state now has fixed leases automatically rolling onto periodical if not correctly renewed or ended.

    Your tenants have successfully played your PM. They've avoided being on 'contract' for the freedom of 'prepaid'. They should have absolutely been following up on this rigorously as after a certain number of days (varies per state) you can't tell them to finish up at lease end, either.

    Swap it to be with the same PM as your other property, sounds like they'd be more on top of it.
     
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  7. Lil Skater

    Lil Skater Well-Known Member Business Member

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    PM should've followed up the lease within 14-30 days, depending on their processes.

    If it's in Vic you cannot issue a NTV with a lease, as that's seen as retaliatory and is thrown out at VCAT. If they'd been on a month to month lease and stuck around, they might be considering staying - but your PM should've had that discussion with them back in May.
     
  8. D.T.

    D.T. Adelaide Property Manager Business Member

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    That's interesting because in SA that's exactly what ya do!
     
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  9. Lil Skater

    Lil Skater Well-Known Member Business Member

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    And QLD as I understand too, but not here. There's lots you can't do here that you can in other states - bring on the overhaul of the RTA (and hope it's decent!).
     
  10. D.T.

    D.T. Adelaide Property Manager Business Member

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    Don't upset status quo , ours was overhauled and Residential Tenancy Tribunal became SACAT earlier this year not convinced its any better though.
     
  11. morgzzz

    morgzzz Member

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    Thanks for the feedback guys, the property is in NSW.
     
  12. SeafordSunshine

    SeafordSunshine Well-Known Member

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    'So my real issue is, should the PM be following this this up? Should they have been checking up and seeing why it hasn't been signed, and not have me chasing up whether it's done?
    We have been through 5 PMs in 18mths, when I send emails with water bills I always get a different person replying.'

    This happened to me, the tenants vacated in June, we didn't get new ones 'til November ... thats quite a bit of vacancy. It turned out their was a lease, signed, without the rent increase. Please learn from my mistake!
    For heavens sake, jump up and down! Make a noise!
    Tell them to compensate you for the lost rent increase!
    You did issue instructions to them in writing, didn' t you?
    Send the licencee in charge a copy of your instructions, and tell them that unless you have a very good reason, you will be making a formal complaint to:
    1. The Head Franchise (if indeed it is franchised)
    2. Fair Trading NSW
    I hope this helps
     
  13. TMNT

    TMNT Well-Known Member

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    I thought youd just increase the rent on a periodic. And if they dont like it. Kick them out . If they are happy with it. They will pay the higher rent . If they wanted to sign. They will.
     
  14. JacM

    JacM VIC Buyer's Agent Business Member

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    It is easy to sack a PM. Just contact your new preferred PM, fill out authority forms for them to manage the property, and they will send the forms to the old PM, thereby relieving them of their duty.

    Before doing so however, check your current arrangements in your management agreement with your current PM. You are usually obliged to stay put for a period of time before you can move.
     
  15. wylie

    wylie Moderator Staff Member

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    I've heard some PMs will take over immediately for no cost for the first three months (or whatever the overlap is that you are obligated to the old PM). Even if your new PM isn't prepared to do that, I would prefer the new PM pick everything up, and pay both for the short period than leave my house in the hands of a bad PM who also knows she is losing the listing. I reckon the service could go from bad to worse.

    If your current PM has made bad decisions, I would put it to them that they allow you out of the contract immediately or you will take it further.
     
  16. The Y-man

    The Y-man Moderator Staff Member

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    There are definitely some advantages to the landlord (in Vic anyway) to have them periodic. Being able to revise the rent more than once a year is one of them.

    The Y-man
     
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  17. D.T.

    D.T. Adelaide Property Manager Business Member

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    Avoid them like Ebola here :p
     
  18. Sonamic

    Sonamic Well-Known Member

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    No Lease, or a refusal to sign one, is a flight risk IMO. Tenant could leave at any time they please if they find something better/ cheaper without a Lease in place to "hold" them there and you may not even know that they are gone until several weeks later. In this situation how far in arrears would the PM let the Rent get before an alert went off and discovered a vacancy? Then the property may require repairs/ cleaning/ pest control at YOUR cost before Relisting. Maybe they haven't signed a Lease Renewal because they're refusing the Rent increase? Actually signing the renewal obligates them to pay the new rental amount for the Lease Term.

    To me a Signed Rental Agreement with a 6 or 12 month Lease Term is another form of Landlord Insurance. If your PM can't extract this from them and is going to let the tenant control the situation you're better off self managing and saving their Fee, which IMO the PM is not earning. Tenants have rights, but so do Landlords. At the end of the day it's your property, your income and your decision.
     
    Last edited: 24th Sep, 2015
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  19. Handyandy

    Handyandy Well-Known Member

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    Firstly, how were you hoping to increase rents 4 months from May if you also wanted the PM to get them to sign a 12 month lease in May.

    You also need to realise that to increase rents when tenants are on a periodic takes at least 60 days notice in NSW. As such you should have followed it up in June to ensure that the notice was issued.

    You can increase the rent immediately with a new 12 month lease but only if the tenant agreed to sign the new lease. Maybe this is what the PM was planning to do.

    Regardless, IMO your are worrying needlessly. You have a sitting tenant who likes the property - they will stay unless you dislodge them.

    We have over 50 rentals and the only time that my tenants are on a lease is when they move in. My initial lease is always 12 months as I want tenants who are going to stay. My average tenant stay is over 5 years. Many have stayed well over 10 years. Some have stayed so long that I have seen their kids grow up during their stay.

    At this point I would suggest that you either get them to sign a 12 month lease (with increase if you can) or leave them in place until after Christmas and then issue a notice to increase rent. This would mean no actual increase until late Feb. The risk if you issue an increase now is that they will move out prior to Xmas.

    We issued an substantial increase across the portfolio in May this year and we had a total of 5 moves. 2 left going elsewhere. 2 wanted to move and asked my PM to find them other premises. We moved from their properties to the 2 who left properties. They didn't know we were also the landlord of the new premises. They basically upgraded and we charged the new rents on those properties. 1 property remains empty as we will now renovate it.

    The point is that with rent increase you will prompt tenants to start questioning their living decisions and some will be dislodged. We see this each time an increase is processed.

    Cheers
     
  20. morgzzz

    morgzzz Member

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    Notice to terminate was sent last Thursday... I had to call on Friday afternoon to confirm they received it because they couldn't even respond!!
    The other agency we use will take over, she talked me thru everything and reassured me.
    The agent who is taking over is going to touch base with the tenants to introduce herself in the coming week, as she believes the agent managing it won't inform the tenant until the last minute.

    Thanks for everyone's advice, really appreciate it :)