The end of a fixed term lease can be a stressful time for landlords and tenants, but with come clear communication and forward planning it can become straight forward. Not only is the end of the lease a time to check in with the existing tenant before they make their choice to move or stay, but it’s also a good opportunity to take a closer look at your property and future plans you may have.
Here are four things to do before the lease is up on your investment property:
1 – Find out whether the tenant is staying or going.
In Victoria, the tenants must give landlords a ‘notice of intention to vacate’ in writing a minimum 28 days prior to the end of the fixed lease agreement if they intend to move out of your property. Otherwise, they will automatically move onto a periodic (month to month) lease if a new agreement has not been signed.
Our property management team are proactive in this matter and always seeking a response from the tenant well ahead of the lease expiry – at least 2-3 months in advance.
You may also want to consider whether you want the tenant to stay on at all, especially if you are considering moving into the home shortly, or even a change of use etc. If a landlord does not have grounds, then you should give three months notice (90 days) before the end of the lease (60 days is the fixed term lease is lease than 6 months). If you have grounds, then different notice periods apply and you should research these or talk with your property manager ahead of time.
2 – Line up an inspection.
At the end of the fixed term lease, there is an exit inspection conducted. If a tenant is vacating, this will be a thorough exit inspection conducted with the use of the condition report to determine whether anything has been damaged or altered beyond standard wear and tear.
However, even if the tenant is not leaving the property, your property manager will undertake a routine inspection. If there is anything you are particularly concerned about or want to double check, now is the time to ask to have it looked at. You may also consider this a worthwhile check to make sure the tenant has looked after the property well, so if they do apply for another fixed term lease you can make an educated decision.
3 – Consider your strategy.
If your property is outdated or in need of some renovations, perhaps even as part of your strategy, you would be wise to consider this between tenancies rather than during one. Renovating when the property is vacant is easier, however it is possible to negotiate access and mutually agreeable circumstances with a tenant in situ. Speak to your property manager before making any certain decisions as they may have suggestions for improvements that would be worthwhile to make.
You should consider whether it’s time to sell the property, move back in, redevelop or pull out any equity in the property. If you are intending to do any of these things, it’s worth considering it a couple of months in advance of the end of the fixed term lease so you can have the choice of vacant possession and the appropriate notice given.
For the majority of landlords, they will likely want to continue renting the home out until it is nearer the time. Being aware of your own timelines on property, if you have a specific plan, will ensure you are never kept in the dark or chasing your tail.
4 – Research market rent.
You should be keeping a close eye on the advertised market rent for local properties compared to what you are currently charging. If you think your rate is too low, speak to your property manager about arranging an increase in rent. It must be more than six months since the last increase to be valid and not in a already binding fixed term lease unless written into that particular lease.
Keep your property manager up to date with your thoughts and plans to ensure you’re on the right track for smoothly negotiating the end of the lease period.