I recently had my tenants break the lease because they separated. Fortunately, they are still paying the rent until I find as suitable tenant. I had found new tenants last week but they decided to not sign at the last minute. So now I am back to square one, finding new tenants. I have the property open for inspection this weekend but I am not sure I want to do that due to the corona virus. How long do the tenants, that broke the lease, have to pay the rent for – is there a limit? What do I do if I can’t open for inspections? What are my legal obligations? Thanks for your advice. Barry
That is all in the lease agreement, on theb fair Trading website & what you pay the PM to handle. If self-managing, you need to comply with the terms of the lease break to minimise the loss for the current tenant. If you can't do the opens, appoint an agent just for letting.
Thanks Scott. Yeah I was thinking of appointing an agent for the letting after this weekend but what if the agents also refuse to do opens - do we just do nothing until the virus clears or can the tenant who broke the lease stop paying rent? Cheers, Barry
I would be reading your lease agreement thoroughly, talking to your property manager and reading the relevant acts. Tenants are well supported by the various acts and rules so it pays to be on top of it.
The Queensland RTA says: The tenant may be asked to pay: reasonable re-letting costs (usually 1 week’s rent plus GST) reasonable advertising costs (if incurred), and compensation for loss of rent (until a new tenant is found or until the end date of the agreement whichever happens first). The property manager/owner is legally required to minimise any costs associated with breaking the lease. If you feel they are not mitigating this loss, contact the RTA for assistance. Or if the tenant is experiencing excessive hardship (e.g. serious financial or health issues) they may make an urgent application to QCAT for an order terminating the agreement. However, QCAT may also order compensation to be paid even if the agreement is terminated. So could the corona virus be classified as excessive hardship?
Which insurer are you with? In our QLD properties we've had success with TS, having the tenant apply to QCAT to have lease terminated on grounds of hardship and then TS covers the costs. In SA this doesnt matter as much, as legislation here is more clear cut on what % of letting fee they pay, paying rent til new tenant found, etc.
I have Westpac landlords insurance mainly because they cover flood damage which TS didn't at the time. They state that they cover - Loss of rent caused by your tenant defaulting on their payments.
You're expected to make every reasonable effort to mitigate the tenants loss, as they are yours. If you have made every reasonable effort, but the results aren't ideal, then theoretically you have carried out your obligations. In practice, tenants who have waited over four weeks for a replacement tenant in a break lease situation will usually be awarded termination in QCAT unless the agent/lessor can successfully argue why the extended vacancy (I've seen cases go either way).
Thanks for your input Tom. At this stage it has been 6 weeks since the tenants vacated so it is probably not looking favorably to us. The Prime Minister stated, in his address from parliament house on Tuesday evening, that all property open inspections will be banned as from midnight Wednesday the 25th March 2020. How do property managers intend to show houses to prospective tenants?
Only public inspections, and we had slowed down on doing these even prior to this as we were finding them less and less effective. We've invested in virtual tour technology so people can walk through our properties from their own homes. We also encourage them to apply online, and then the shortlisted applicant(s) can be shown through either as a private viewing or a small group. This means you have qualified people coming along - far better chances of success, and has actually resulted in faster lease times for us.
