What is the difference between a fixed term lease and a periodic lease?
There are two types of residential leases commonly entered into- fixed term and periodic. A fixed term tenancy is where there the contract has a defined time period (for example, 21 February 2017 to 20 August 2017). A periodic tenancy is an ongoing agreement, which continues until either party terminates. At the end of a fixed term tenancy, the lease rolls into a periodic tenancy unless a new fixed term tenancy is entered into. The tenant is not required to vacate without being provided a termination notice which complies with the below notice periods.
Things you will need to consider:
Insurance: When considering both types of leases you should discuss options with your insurance company. Depending on the varying policies, you may have greater or lesser coverage dependent on the lease type.
Advertising: As the real estate industry is governed by state level legislation, the access periods for prospective tenant inspections will vary. In ACT, you can only access the property in the last 3 weeks of the tenancy provided you give 24 hours’ notice.
Things change: Just because the lease is a fixed term does not mean the tenant needs to pay out the remainder of the lease. The tenant can seek an early termination or break lease from ACAT. Also consider your situation, if the tenant is in a fixed term lease, you cannot terminate the lease because you want the property back. You will need to seek a formal termination from ACAT.
What happens if the tenant needs to terminate the lease agreement before the completion of the fixed term tenancy?
Unfortunately circumstances can change for the tenant and they may need to vacate the premises prior to the end of the fixed term tenancy. If the tenant wishes to terminate early, they are advised to contact their property manager immediately. The tenants lease is terminated from the date they return the keys to the agency, however they are required to pay reasonable compensation to the landlord for any loss incurred. This may include; loss of rent or reasonable letting fees. Your property manager will assist in reaching a fair agreement between all parties.
How many routine inspections can be carried out each year in ACT?
The Residential Tenancies Act 1997, states conduct two inspections in each twelve-month period of the tenancy. In addition to these two inspections, you can carry out a routine inspection in the first month of tenancy, and an inspection in the last month of tenancy.
You must provide the tenant a minimum of seven days’ notice of entry for a routine inspection and take reasonable steps to try and agree with the tenant for an inspection time.
What is the maximum rent in advance I can ask my tenant in the ACT to pay?
The maximum rent in advance you can request a tenant to pay is 1 calendar month of rent.
Do I need to tell the tenants I want to sell my property?
As a landlord you have the right to sell your property whilst it is tenanted. It is in your best interest to notify the tenant as soon as possible to ensure you can gain access. The landlord /their agent is only able to show the property after the tenant has been notified in writing of the intention to sell.
Once the landlord has provided this notice, the tenant is required to allow reasonable access to the property and the landlord must provide 24 hours notice. The legislation also outlines when you cannot access the premises.
What happens if I sell my property whilst it is tenanted?
If you sell your property with a fixed term lease in place, the terms of the lease do not change. The new owners of the property are bound by the agreement. If it is a periodic tenancy, you can issue 8 weeks notice to terminate.
What is reasonable notice for access?
Reasonable access is not defined in the legislation and it will depend on the circumstances of each situation. It is important to provide the correct notice period to the tenant and discuss access with them before entering the premises.
Please be aware, the tenant has the right to be present for all access periods.
The legislation states the landlord cannot access the premises
- On Sundays
- On public holidays
- Before 8am or after 6pm
unless urgent maintenance is required or permission is provide by the tenant.
What is fair wear and tear?
Fair wear and tear is damage or repairs required as a result of general day-to-day living at the property. Fair wear and tear is not malicious, deliberate or accidental damage caused by the tenant.
Fair wear and tear is generally ruled based on the evidence of the case, which is why it’s important to have a thorough condition report and photos at the commencement of the tenancy.