What to consider during a lease renewal
As a landlord, you probably already appreciate that lease renewals come around sooner than expected, regardless of whether your tenants sign a six-month or one-year agreement.
And with that renewal come a series of questions you as the landlord need to consider. The key to a smooth lease renewal is understanding your options and making your intentions clear long before lease renewal date arrives.
Here’s a quick guide to what you need to consider as a landlord during a lease renewal.
If you have long-term tenants who look after your property, a lease renewal is the opportunity to secure them for a further term.
If, however your tenants have left a little to be desired in terms of meeting their obligations and maintaining the home, it’s also the chance to open up the property to new tenants.
The thing to weigh up here is the value of good tenants. Tenants who pay their rent on time, look after a home and are stable are worth their weight in gold, offering you security in your investment.
Should I raise the rent?
If you’re looking to secure those tenants for a further term, the big question is: should you raise the rent? And that really depends – on both market conditions and how much you value your tenant.
Many tenants anticipate a small rent increase as part of a lease renewal but in some cases their budget may not allow for it.
Meanwhile, if other similar properties are commanding higher rents than yours, you might consider a price rise worth the risk.
What type of lease?
When an initial lease expires landlords and tenants have the options to then enter into a further fixed term or a periodic agreement.
A periodic agreement is basically a week-to-week lease with different conditions when it comes to notice to leave periods and rent increases.
The lease you offer will depend on your intentions for the property and also the wishes of the tenant. Fixed-term leases like six-month or 12-months offer security for both you and the tenant, while periodic agreements allow for flexibility should circumstances change.
If you’re considering selling your investment property in the future or feel it’s looking tired and dated, the lease renewal might be the perfect opportunity to consider a renovation.
Again, this depends on your personal circumstances. However, if you’re happy to open up the property to new tenants, you could feasibly give notice to the current residents and use the period after they leave to conduct any major repairs or improvements.
The right time to make decisions
When it comes to timing, the ideal time to consider offering a new lease or ending an agreement is three months before the existing tenancy agreement expires. This enables your property manager to liaise with the tenant, put together the necessary paperwork and ensure everything is in place long before the lease ends.
At Eview Group our experienced property managers pride themselves on establishing great relationships with both tenants and landlords. We appreciate as a renter, the property you reside in is the place you call home.