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When the time comes to renew a tenant’s lease, it’s important to make sure you are covering all bases.
The Real Estate Institute of Queensland (REIQ) recently issued a reminder to property managers about best practices when renewing a residential tenancy lease.
As a prime time for tenant-landlord negotiations, the lease renewal offers property managers an opportunity to prove their mettle.
Here are four questions the REIQ urged property managers to ask themselves when renewing a lease.
1. How does the landlord want to proceed?
When a fixed-term lease comes to an end, the lessor has three options to take, according to the REIQ: they can “extend the existing fixed-term agreement by agreeing on a new finishing date”; “enter into a new fixed-term agreement”; or “do nothing and allow the agreement to revert to a periodic agreement”.
The lessor can also choose to break the lease and seek out a new tenant.
“Instructions and commitments must be taken and negotiated until a mutual agreement can be made,” stated the REIQ.
2. Does the landlord want to change the tenancy terms?
The end of a fixed-term tenancy is “the ideal time to review the current terms of the agreement and propose changes in accordance with the owner’s instructions,” stated the REIQ.
This may include increasing the rent, if at least 12 months have lapsed since the last rent raise.
3. Is the landlord aware of all time frames?
According to the REIQ, the tenancy renewal process may take up to three months – and it’s essential that the lessor is aware of this.
“When first discussing the expiry of the tenancy with the client, it is important for them to understand their rights and obligations,” the institute stated.
“Many lessors are not aware that if they require vacant possession at the expiry of the tenancy, they are required to give a minimum two months written notice to the tenant.”
The REIQ also noted that all negotiations must take place before a written agreement is issued, as tenants will be required to sign the lease agreement in just five days.
4. Have tenants been kept in the loop?
If the lease is being renewed, tenants will most likely receive a form instructing them to sign and return the agreement within five days, or risk being given a notice to leave the property.
As the REIQ noted, “this may sometimes cause tenants confusion”.
“As the engaged professional, it is your responsibility to explain the different possibilities that both the lessor and tenant may experience during the lease renegotiation process,” the institute said.
