Residential Lease Renewals

Residential Lease Renewals

Our Guide to the Pros and Cons

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NSW real estate agencies do not tend to renew leases with current tenants as a matter of general practice yet it is common practice in other states. Why is there a difference between States?

It has been a ‘cultural’ thing to only renew leases where there is a concern about the difficulty in reletting the property if the tenant vacated.

In my view, the reasons for this are that owners:

  • Have the flexibility of giving the tenant notice to vacate
  • Can increase the rent at any time (with required notice) or
  • Placing the property on the market for sale and being able to offer vacant possession.

However there are some negatives for the owner, having tenants on expired leases as well:

  • Tenants can leave at any time with 3 weeks’ notice
  • Can lead to higher changeover tenants
  • Vacancies between tenancies
  • Paying agents to find and re-lease the property.

There is also another downside which is becoming an issue.

A lot of owners take out landlords insurance to protect themselves from malicious damage and unpaid rent should it ever happen.

Kellie Andriessen from Newcastle Property Management recently had a situation where a major Insurance company refused to pay for the unpaid rent as the tenant was not on a current fixed term lease.

Upon further investigation Kellie found that this is now becoming more common with most insurance companies.

It is worth investigating if you have this type of insurance, are you covered for rent if the tenant is on an expired lease?

Newcastle Property Management is informing all their owners when residential lease are about to expire and whether they would like us to offer the tenant a new fixed term lease and at the same time review the current rent and adjust if necessary.

Whilst we can offer the tenant a new lease, we cannot enforce they sign it, if they don’t, then it is up to the owner if they wish for the tenant to remain or given notice.

To gain a better understanding as to how this might apply to your situation Kellie Andriessen is available to discuss this issue or help you with any other property management issue phone 4956 9777.

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