To Renew or not to Renew a tenant’s lease
The tenant’s lease is about to expire, it is time to decide whether you want to offer an extension – to the tenants – to continue living in the property or ask them to leave.
There are three factors to ask before you make the decision.
1. Are you planning on selling the property? If you are, then be careful about whether you want to lock yourself into a further period. You can still sell with the property tenanted, but your pool of potential buyers will be limited to investors, who will be happy being the new landlords of your tenants.
2. Are you planning on moving into the property? It is a lot easier to move into your property at the end of the lease as long as the tenants are advised in advance that their lease is not being renewed. You have the right to move into your home during the lease as well but – depending on your lease- it may be possible by mutual agreement.
3. If your property is purely for investment, then you need to decide whether your tenant is the right fit for you and your property.
You need to consider:
Whether they have performed their obligations under the lease
Whether you have a good relationship with them that enables you to do your job efficiently and effectively. If you have a property manager, you won’t be required to have direct dealings with your tenants, so make sure you discuss fully the pros and cons of keeping the tenants.
There are two top issues that demonstrate the tenant’s compliance with the lease:
1. The tenants are paying the rent on time and
2. Keeping the property in a good state of cleanliness. If the tenant is constantly in arrears with payments, and or do not have the property in a clean and tidy state for the routine inspections, it might be time to end the lease.
Always remember the decision that you make could have serious financial consequences. Make sure your reasons for renewing the lease are valid and significant. Timing is important so you would need to plan ahead and ensure you/your property manager advertises before the tenants leave. The tenants have an obligation to allow you/your property manager to show the property to prospective tenants. If you delay this and your tenant vacates, for whatever reason, you may have a vacant property for some time, and no rental income.
Communication is key to a successful tenancy, landlord, and or property manager relationship, and therefore a great way to keep your investment working at its maximum.