What Options Do I Have if The Landlord Wants The Place Back before The Fixed Term Contract Is over

We have been renting an apartment since 2016 March in Oakleigh East, VIC. After the initial 1-year fixed term lease ended, we leased it for another 1-year fixed term.

Yesterday I got a call from the property manager asking if we could give it back in 6 months instead of the year. The owners want to sell it. To make it appealing to us, he said they were willing to rent it out to us an extra month at no charge. So, basically 7 months lease but we pay only 6 months.

Legally we can say 'No'. It's not as if we are preventing him from selling it, but he might not get the same attraction from buyers, especially people who want it for their PPOR can't buy it.

There was a reason behind why were eager to sign a 1-year least in the first place. We were planning to move to our own place near the end of the term. Because of the first term, we don't need to move to another place before that. Moving to our own place within 6 months is difficult, but in 12 months it might be possible. If we cannot do it in 12 months, then that's something we have to live with ourselves. Besides, there was the chance that the landlord would keep the rental rolling after the fixed term so we could have more time. But as it stands now, 12 months is the absolute maximum we are going to get.

Here's what I can think of, whether they agree with them or not is another question.

1. Stay there until the 1-year lease is over (basically, say that we cannot give it up) - and no compensation of course.
   
   
2. Say that we will try our best to find a property to buy (not rent) within the original lease period, and move out as soon as possible. As for compensation, they have to give us some amount for each month we move earlier than the end of lease period.
   
   
3. Say we should be given the chance to leave any time before the 6 months with 14 days notice, but they cannot kick us out before that. No idea about compensation? Is that term - ability to leave any time - the compensation? Or perhaps, 'they cannot kick us out before' is the compensation. But this doesn't really help with buying a property.
   
   
4. The real estate agent can find us a similar place (to rent) within the 6 months, with a 1-year contract (it will total up to more than 12 months, but we will live), and reimburse us the expenses (bond in full, moving costs, cleaning and any utility setting up costs).

What other reasonable options do I have?

Edit:
The idea initially struck me. What if we bought the unit? This area is great being close to so many things. Everything we need is pretty much there. But it's a small apartment with 2 bedrooms. We will definitely have to make it an IP in a few years.

 

You have received one offer to leave early.

Figure out if you want to stay or go. If you are prepared to go, negotiate for a better deal.

As well as the one month free, negotiate for moving expenses plus allowance for inconvenience, change of utilities etc.
Marg

 

If you are ok to leave the lease early, go for option 4, but you find the property. Leaving it to the agent to find you something means leaving you a bit open to accept whatever they deemed comparable

 

KISS

Stay there until the lease ends (knowing it is unlikely they will extend) and work on finding your own place, if you find something earlier work on the worst case scenario and take it as a bonus they let you out of your obligations.

Get compo to move now, I know of a tenant that got paid I think $50,000 to move early after the buyer wanted to move in within 30 days and so the vendor and purchaser paid 25k each to make it happen.

 

I edited the OP a bit. What if WE bought the place? What are the pros and cons of buying an apartment?

 

No moving costs, you know the unit better than if you were purchasing something you hadn't lived in, no competition.

Cons
It might not be the right choice for you, the vendor might have unrealistic expectations, the vendor will still have to pay REA fees so you cannot use as a bargaining chip, you are unable to afford the price the vendor wants even if realistic.

 

Of course, that is true. What if the price is reasonable (i.e. we get a discount or something) and we are OK with the price? What are the issues that come with it? I heard that apartments don't appreciate as houses because there is no land. So, when it is time to sell it, we won't get much more than what we paid for (in the best case). It should be OK as a rental property, given the location. The location is what's going for it.

And also, there is no way we can afford a house in this area in another decade. We have to move 30km away from where we live, to own a house.

If we buy it, we will be buying it purely on the assumption that we buy another PPOR (making this an rental IP or selling it) in a few years.

 

That is one of the cons (might not be the right choice for you), you still have land within the apartment but be small m2 typically. However I can buy 1,000 acres in the middle of no where cheaper than a 1 acre block of land in the middle of Melbourne. So you could say the 1,000 acres has more land but the 1 acre block has more value and thus will increase.

If you have an apartment in Toorak the land is worth more than a house in Wallan, but the house in Toorak will have a great land value.

You will be surprised what can happen in 10 years, I bought in Watsonia 7 years ago but 1 year ago we started to look for another property. We could of sold Watsonia and bought in a 'better' location but instead went with an IP else where. If we were to sell and buy it would probably have us moving 5km closer to the CBD or around Ivanhoe. Our thought process was we would rather have someone help us pay for the next step than to take on the total debt ourselves. Never know the next purchase could be Ivanhoe .

 

This is simply not always true.
Some of our greatest capital gains percentage-wise came from well located units. In two cases price tripled in 9-10 years.
Marg

 

you are aware that the landlord has to give you a minimum 120 day notice to vacate without any reason on a fixed contract here in VIC..so when you say legally you can say no...your wrong....they give you 120 day notice to vacate and there reason can be whatever...id be looking ...i know as im doing the same to a tenant who has been in my house for 3 years....i dont care what their reason is to stay, I want to get into my own house to do it up and sell it..sounds the same as here....

 

90 day eviction without reason in NSW.

I'd be checking what your rights are in Vic

 

The 120 day notice only applies if there is no fixed term contract in place

Landlord giving notice to vacate - Consumer Affairs Victoria

 

Only if no fixed term contract in place.

 

Landlords may end a fixed-term lease before the end date by mutual agreement with the tenant. Agreements should be in writing. Otherwise, a landlord must give the tenant written notice

I read this as you must give a written notice if there is no agreement by the tenant and landlord...

 

The first table in the consumer.vic site linked above clearly lists the reasons a lease can be ended early.

The landlord selling the property is not one of them.

 

I think if you can move, negotiate what works for you, if it will be too hard, then just say no, you want to carry on.

Do not complicate it.

 

1. Go to the bank, see if they or any one else would
lend you the money.
2 How much would the bank value it at?
3 Why is it a good place to live?
4 How much is that worth to you? ( How convenient , schools, shops, cafes) lifestyle?
5 Find out by another agent how much they would assess its value. (Comparable sales)
6 Now you have a little plan!
7 This could be the making of you!
best of luck!

I hope this helps

 

I do understand that land everywhere is not valued similarly. I can compare two lands. But not a land + house vs a unit in an apartment building. That's the confusion about.

The small size is just one problem. There are many other problems.
1. There is only one carport (and that's not a secure garage - hence we won't have storage options) within the premises
2. The electricity meter is not a smart meter so we always have to pay peak rates
3. Washing the car is a pain (I prefer to do it myself)
4. Cannot use mobile mechanics to service the car
5. Don't have a garden (both a pro and a con really) to grow some vegetables
6. The building is pretty old (I think it is over 50 years old) but we got it soon after renovation, so the inside looks like brand new) so there will be issues with sewage pipes needing frequent service. (I think it is one reason why we might be able to afford it)
7. We cannot hang clothes outside (there is a dedicated area for that, but my wife cannot do it with the kids) etc.
8. We can never have solar panels
9. It will take another couple of years to get NBN to this area

Yes, it is not perfect. Far from it in fact. But that's what happens when you don't have unlimited funds, and when you move to Australia after having kids with a single income.

But it's a great location.
1. 5 minutes from Chadstone Shopping Centre.
2. 5 minutes from Clayton, Oakleigh central
3. Hospitals (Monash Medical Centre, Moorabbin Hospital)
4. Great schools and universities close by
5. Parks - so many of them
6. The bus halt is right in front of the apartment
7. 16km from CBD (if we buy/build a house, it will be 50km from CBD)
8. So many job opportunities within reasonable commute time (I will be saving hours per day)
9. There will be more job opportunities for my wife as well

I know it is a risk.

I will look for other apartments around the area as well.

We ideally need a house, but the kids are very small and we can probably get by 2 rooms for another 5 years.

 

Is it a bad time to buy an apartment in Melbourne as I hear the market is in its peak?

 

Market always changes. Unless you're planning to sell and it takes a massive dive, you're not losing anything as you're planning on buying anyway. I like that you're thinking about it as an investment though, many people get caught up emotionally.

I would first and foremost do your due diligence. How old is the place? When was it last sold? Price? Capital gains in that period? How much has the rent increased during that time? What about other apartments in the block/suburb?

Then, if you're comfortable with all of that find out what they want and what you can borrow. Chat to a few brokers and also make sure you have a solicitor to review the S32's.

If all lines up, and you're happy to part with your hard earned cash do it, but I wouldn't expect to get any kind of discount. Why would they give you one?

I think you've also answered your own question in terms of job opportunities, travel etc. Even if you need to move in 5 years, consider that you could potentially use this property to borrow against and/or be in a better financial situation and be able to afford to buy another property in the area as well that suits your family.