As an investment home owner, it pays to know your rights and responsibilities when it comes to home renters.
Once you’ve set up your investment home, the next hurdle is finding the right home renter and setting up a lease agreement that works for you.
There are two main types of lease agreements in Queensland – fixed term and periodic. ‘Here’s what you need to know about each of these agreements and how they function:
The ‘traditional’ fixed term lease agreement
Majority of lease agreements will initially commence as fixed term, signing the home renter up for a block of time such as 3, 6 or 12 months.
If you plan to increase the rental amount during this time, you’ll need to include these details in the original lease agreement and ensure you provide the home renter a minimum of 60 days’ notice of the pending increase.
If you don’t include information about rent increases in the original agreement and the lease is for less than two years, you are unable to ask for an increase during this lease period.
Can home renters get out of fixed term leases?
While a fixed term lease can limit your ability to increase rent, it does protect you if your home renter decides to terminate the lease early. Your home renter may be required to continue paying rent until someone else takes over, along with out of pocket costs like advertising / marketing fees.
Periodic or ‘month to month’ lease agreements
Once the fixed term is up, home renters automatically transfer to a periodic agreement unless a new fixed term agreement is put in place.
A home renter on a periodic lease is required to follow all the same rules as in their original agreement, but they are able to vacate the home at any time, as long as they give 14 days’ notice.
It’s important to know about this automatic switch to a periodic or ‘rolling’ lease agreement as a home owner. Property managers who are familiar with this process can sometimes fail to communicate the change to home owners, and this can cause huge headaches if a home renter decides to take advantage of the 14-day notice period.
Why use a periodic agreement?
Periodic leases are clearly less stable from a home owners point of view and can cause stress for home renters as well. The flexibility of the periodic agreement means that you only have to give 60 days’ notice if you wish to gain possession of your home. This may be in the event that you decide to sell and want to present the home styled.
The bottom line when it comes to leases is: take the time to read the fine print and clarify any queries with your property manager. Knowing the rules will go a long way toward avoiding difficulties with home renters when it comes time to make changes.
