During a tenancy

What to Do When your Lease is about to Expire

A lot of property owners are unsure of what to do at the end of their lease. Sometimes this results in unnecessary stress and unwanted conflict between the property owner and tenants. A good way to avoid this is to plan ahead; 2 months before your lease expires ask yourself two questions: “Am I happy with my current tenants?” and “Do I have plans of moving into or selling the property in the next 6 to 12 months?”

Your answer to these two questions will determine what is your best course of action. Below I have listed what you should do based on each possible answer.

"I am NOT happy with my tenants"

If you are not happy with your current tenants, don’t wait until your lease expires before you give them a notice to vacate, you are far better off dealing with this about 2 months prior to the lease expiring. I like to think of this as dealing with a situation before it gets out of hand. It is much easier to give your tenants a notice to vacate because the fixed term lease is coming to an end rather than having to give them a termination notice for unpaid rent down the track.

Giving the tenant an End of Lease notice to vacate about 1 - 2 months (or up to 90 days in Victoria) prior to your lease expiring will allow enough time to coincide the vacate date with the end of the fixed term lease. Doing it this way minimises confrontation with your tenants and best of all they cannot move out earlier than the vacate date as they would still be in a fixed term lease up until the vacate date.

Check the Residential Tenancy Act in your State or Territory for the exact notice periods and name of notice you need to give.

“I am happy with my tenants”

If your current tenants are paying rent on time, looking after the house and you have no intentions to move into the property or sell it within the next 6 - 12 months an ideal option might be to organise another fixed term lease for 6 or 12 months. It's a great idea to get a new lease drawn up and signed before the current one expires so there will be no nasty surprises for both parties as the current lease draws to a close. This renewal will ensure a stable and hopefully long term business relationship with your tenants and spare you from the stress of having a vacant rental property or the tenants giving you notice to move out at short notice.

“I could move into (or sell) the property in the near future”

If you intend to move into or sell your property within the next 6 - 12 months then it might be best to let the fixed term agreement automatically run into a periodic lease once the fixed term lease expires. A periodical lease allows easier access to your property should you decide to occupy your property or sell it while your tenant is living there. The responsibilities and obligations of both parties stay the same expect the tenant or yourself can give a notice to vacate (you may know it as a notice to terminate) anytime, check the Residential Tenancy Act for your State or Territory as to the actual number of days however it may be around 14 - 28 days for a tenant and bit longer for yourself depending on the reason.

Lets quickly assume you want your tenants to stay but you do not want to sign another lease, that's absolutely fine however if your property is in Tasmania for example where the tenant only needs to give 14 days notice to vacate it may be wise to look at doing 3 month leases at a time to avoid the property becoming suddenly vacant. I have found it generally takes about 6 weeks from the day you advertise to the day your new tenants move in, take a read of this blog for more information.

Whichever way you decide to go; if it's another fixed term lease or you let it run into periodic lease, you should also think about arranging a rent increase. It is best to organise this 60 days prior to the fixed term lease expiring so the new rent increase takes effect on the day after the current fixed term lease ends. In most States or Territories 60 days notice is required before the new increased rent amount takes effect but please check the rules that apply in your location. I have found consistent yearly rent increases of about 3% upto a maximum of 5% each year to be fair increases.

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