After having invested in a property and leasing it, sooner or later, you will be faced with questions on lease renewals. As Property Managers in Perth, we would like to help you clarify some common questions to ensure that your property investment journey is smoother.
Types of tenancies
Generally, there are two main types of tenancies – “fixed-term” and “periodic”.
Fixed term tenancies involve a lease where the tenants agree to rent the property for a set period, generally 6 months, 12 months or 24 months. Periodic tenancies involve a lease where there is no fixed term and the tenancy continues until one party gives notice.
All written tenancy agreements must use the prescribed Residential Tenancy Agreement (Form 1AA). Whether the tenancy is agreed in writing or verbally, Tenants must be given an “Information for Tenants” sheet.
Furthermore, the Tenant must be given a copy of the written agreement at the time of signing. For more information please check the following website: https://www.commerce.wa.gov.au/consumer-protection/rental-agreements
How to renew a lease
Periodic Lease
If you are renting out a property on a periodic basis, there is no need to give a lease renewal notice to the tenant. The periodic lease will continue (with the original terms and conditions) until you or your tenant decide to end the agreement by giving notice. While the Tenants can provide only 21 days minimum notice to terminate the lease, Landlords are required to provide a 60-day notice to the tenants without requiring a specific reason
Fixed Lease
If you are renting under a fixed term agreement you will need to liaise with the Owner or Property Agent for a lease renewal – we would suggest at least 2 months prior to the lease expiring. Or the owner may contact the tenant prior to lease expiry to find out the tenant’s intentions.
Usually the Owner/Agent will contact the tenant at least 60 days prior to the lease expiring and ask for their intentions re the lease. The letter will include the following:
- the date you are sending the letter (should be 60 days or more before the lease agreement ends),
- the property address,
- the names of the tenants,
- ask the tenant to clarify their intentions re the lease
- how to contact you or your property manager if they have any questions.
Once the tenant has advised of their intentions, the owner/agent will draw up a new lease agreement with the same terms and conditions as the original lease except for the possibility of a rent increase. Review the market evidence and advise the tenants, giving 60 days’ notice if there is to be a rent increase and incorporate this into the lease agreement.
What if you don’t want to renew the lease?
Periodic Lease
If you don’t want to renew the lease, you must give the tenant the appropriate 60 days’ notice.
You will be required to fill out Form 1C:
https://www.commerce.wa.gov.au/sites/default/files/atoms/files/noticeofterminationform1c.pdf
When to fill out the form and submit it will depend on if you are on a fixed-term or periodic lease. If you want to end a periodic lease, the tenants must receive the form at least 60 days before they need to move out, whereas it will only be 30 days for a fixed-term prior to lease expiry.
Fixed- Term Lease
If you are on a fixed-term rental, the tenant needs to receive the form 30 days before the fixed-term agreement ends. If you give the notice less than 30 days before the end of the lease, the end date is extended until 30 days have passed since the notice was given.
There are other avenues provided by the legislation for Landlords to exit a fixed-term lease which includes rent arrears, breach of tenancy agreement, illegal activities conducted on the premises, destruction of the property etc
If a tenant decides to terminate a fixed-term lease prematurely without first obtaining a written agreement from the Owner, they will be required to pay rent and upkeep expenses (as well as other reasonable costs) on the property until the lessor finds a new tenant or the original tenancy period expires.
For more information about ending leases, visit
https://www.commerce.wa.gov.au/consumer-protection/lessor-ending-tenancy
Do you need a reason to end a lease?
This is not a current requirement by law, however, you must give the appropriate notice. For a periodic tenancy you can end at any time with 60 days notice. For a fixed-term tenancy you can end the tenancy any time the specified term ends, or for reasons cited in this article.
What happens if you want to end the tenancy but didn’t give notice at the end of the lease?
For a fixed-term lease, you may still get out of the lease if you have not given notice at the proper time.
The easiest and most straightforward way is if both the lessor and tenant agree in writing that they would both like to end the lease and set an ending date.
You can also give notice at any time (for both fixed-period or periodic) for the following reasons:
- If the tenants have not paid rent (they have 14 days from the time that they receive the notice of “breach of agreement” to make payment in full), the landlord can terminate the agreement.
- If the tenants do not keep any other part of the tenancy agreement (other than rent arrears), you must notify them what they have or have not done to fulfil the lease, and they are given 14 days to rectify the problem. If they do not comply with the required rectification, then the agreement can be terminated.
- If the premises are destroyed, and no longer considered habitable, or are compulsorily acquired by law, the tenants must have at least 7 days’ notice to move out.
For more information on ending leases, visit: https://www.commerce.wa.gov.au/consumer-protection/lessor-ending-tenancy
How to increase rent
Periodic Lease
For periodic rentals, you can only increase the rent once every six months, and you must give 60 days’ notice of the new rent amount.
Fixed-Term Lease
If you are in a fixed-term rental, the rent may only be increased if the method of increasing rent is set out in the original agreement, whether it is by percentage or CPI (make sure to check your lease for these clauses). It also can only be increased 6 months after the last increase, and the tenant must also be given 60 days notice for rent increase.
If the tenant is entering into a new fixed-term agreement, the old rate must apply for the first 30 days.
For more information visit https://www.commerce.wa.gov.au/consumer-protection/rent-increases
What do you do if the tenant refuses to move out?
If tenants refuse to move out, you can get a court order to request that the tenants vacate the property. This court order can be enforced through a warrant and a bailiff to evict the tenants if necessary.
Tenants can appeal to the magistrate to have the date they must leave delayed up to 30 days if they believe they will suffer hardship as a cause.
For more information: https://www.commerce.wa.gov.au/consumer-protection/evictions
NB:
All information is only applicable to Western Australia – other states will differ.
Visit https://www.commerce.wa.gov.au for the latest updated legal information on Lease Renewals.
The Residential Tenancy Act effective underwent changes on the 1st of July 2013. If you started renting before then, the old law may apply to you. In this case, this information may not be applicable and we recommend that you seek appropriate legal advice.
