A leading real estate network is considering extending residential leases to provide landlords and tenants with more long-term security.
LJ Hooker has called for extended residential leases, similar to those offered in commercial leasing situations.
Currently the traditional residential lease term is six-12 months, whereas commercial leases are three-, five- or 10-year agreements.
“Long-term leases allow tenants in the commercial space to put their roots down and go about their business. Residential tenants should have the same option,” said LJ Hooker head of research, Matthew Tiller.
Other features of commercial leases that would be considered would be set rent reviews and lease extension options.
The network is of the opinion that these longer leases would be beneficial to both tenants and landlords, providing more stability to both, especially in the current rental market where tenants can struggle to find dwellings.
“It has been an option I’ve offered to investors over the years as they have been happy to pay a lease renewal fee based on the length of lease,” said LJ Hooker head of property investment management, Amy Sanderson.
“It’s all about speaking with the investor and offer to match their needs to the tenant’s. A long-term investor will be better served with a long-term tenant,” said Ms Sanderson.
Ms Sanderson said the agreement would be assessed on a case-by-case basis.
“After a 12-month period, when everyone is happy, it’s worth having a conversation about a longer-term lease with set rental increases for how much and when it will be,” she said.