Purchased House with existing fixed term lease - Want to move in

My Partner and I have just purchased our first home in Victoria. :) Unfortunately the previous owner had signed a 12 month lease agreement with their tenants only 3 months ago. We would like to move into the house before this lease runs out but from a brief look at the tenancies act it seems like this would not be possible without their consent. We would save over $150 per week living in the house rather than continuing to rent while waiting for the tenancy to end. The rent they are paying is also around 10% less than comparable properties in the area so we are losing potential returns there as well.

How can I get the tenants to move out early?
Are their any legal options I may not have thought of?
Any Ozbargainers been in this situation before? If so what did you do?

EDIT 1: Just to be clear I knew and accepted the property was under lease when I purchased and worst case I accept I just have to wait 9 months. That said I am particularly interested in any responses to my last question. "Any Ozbargainers been in this situation before? If so what did you do?" I don't want to be too unfair to the tenants but would really like them to move out early.

Comments

  • +1

    Pretty simple really.

    The 10% lower rent is insignificant really.Even if you compare it with other houses in your area. Each house is unique. Other houses might be slightly bigger room or backyard, maybe comes with free gas or water etc etc.

    Even if it is 30% lower, it will still be irrelevant to your case anyway. There is no 'potential return' to speak of, since your intention is to move into your house, not renting it out to other new tenants.

    Legally, there is not much you can do. Unless you can find something wrong with the tenants, for example overcrowding. But it is not easy, it takes months to solve. Tenants can drag out the process too. Have you at least looked at the rental agreement? The number of tenants signing the lease is not equal to the maximum amount of people allowed to stay in the house. I can have just my name on the lease on a two bedroom house with 4 people living in it. A good REA will have included the exact number of people living in the house in the agreement.

    The existence of extra bed is an indication but it proves nothing really. They can just say that they are extra beds, which sometimes are used for guests saying over. Unless you secretly installed a surveillance camera to see the patterns of people staying in the house, you can forget about the overcrowding issues

    Which brings you to the two options available to you.

    One is to wait it out for 9 months. Financially will cost you around $6000 ( $150 a week)

    Two is to politely ask them to move out early or asap by offering them some incentives. How much incentives? that depends.

    If they are to break the lease agreement, they will be expected to pay the real estate agent some advertising fee ( normally equal to one week rent) plus continue to pay rent until new tenants are found ( generally between 2-4 weeks)

    So if you as the house owner want them to move out early, offer them the same thing. Pay the agents fee ( if there is any) and offer them money equivalent to at least a minimum of 2 weeks rent. On top of that, refund the bond in full.
    Give them reasonable time to find new places (2-4 weeks). The cost ?? Probably around $1000 depending on the rent and the time to find new places.

    • Yeah obviously they'll be no reletting fees and the like as owners would be moving back in. For a start I'll need to talk to them and ask if they'd be interested in leaving, you never know. Biggest difficulty might come from the 10% under market rater they're paying. If I was them I'd be reluctant to move out to a place where I'd have to pay 10% more rent. Will probably have to cut a deal there.

  • +2

    OP wrote earlier that there are plenty of vacancies in the area. If you know the REA handling your property, go and ask them if they have anything similar in the area for a similar rent. Assuming they have been good tenants, the REA may well have something for them.

    Offer a reasonable amount for moving costs, and 6 months worth of mail redirection, and your tenants may choose to leave on good terms.

    Whatever you do, you're going to have to present this as an 'opportunity'. If they feel pressured, who knows what acts of bastedry they will do on your house before leaving.

    As the new owner of the house, I should imagine you would get to see their application etc. which should give you an overview of their propensity to move. If they were at their last property for 10 years, it could be a good indicator they may be reluctant to move.

    • Very useful thoughts, thanks

  • Does the $150 factor the tax benefits as it will be an investment (eg interest, council/water rates, repairs)?

    The other way you can look at it now is that you have 9 months to plan what things you require, and get them for the best possible price.

    • True could be some tax savings there, would happily trade them for the right to live there sooner though.

      • You'll need to check with your accountant but you could also do some renovations which can be claimed back.

        • True, however according to posters above tenants can refuse to allow renovations if they desire

  • +2

    Lol wut. You're an idiot.

  • +7

    I wonder if the tenants are also OzBargainers who are following this thread. Soon we will see another new thread titled 'Renting house which has been sold mid fixed term, how do we maximise lease and squeeze new landlord dry'

    • Hahaha would be amusing, Ozbargain is now the 7th biggest shopping website in the country so anythings possible

  • Whatever approach you choose, be reasonable and considerate. Don't act entitled to anything because legally, you aren't until the lease is up.

    I hear a lot of things about landlords having difficulties finding good tenants, so if you make a dick move, they might take it upon themselves to trash the place before returning it to you. Then you may be looking at much more than 9 months of additional rent to repair damages.

    As mentioned by others, financial compensation would probably be the best recourse. Offering to pay for removalists, offering to pay for X amount of weeks at new address, or simply offering them cash to leave by a certain date… All while remaining courteous!

    • Thanks

  • They have a lease, why the hell do you think it's ethical to kick them out.

    If you want them to move, pay for their removal and some free rent

    • +5

      I see you have the same moral fibre as the OP. Proud of yourself?

      • +1

        He should do it, he would burn through more money than he stands to gain as Vic tenants laws are pretty water tight.

  • +8

    I remember when I was renting the place was sold from underneath us. It was a pain as they had people traipsing through over several weekends, and then the auction day, all of which meant we had to be elsewhere.

    Then the real estate principle agent asked us to move as the new owner wanted to move in. I said sure, but they pay for the removalists, and also find us a new place at the same rent which was comparable, and some compensation for the inconvenience. At the time I think we had close to 12 months on the lease and it seemed the real estate agent had screwed up in renewing it given the owners wanted to sell.

    We didn't hear back from them. Sometimes I lay awake at night wondering how that poor agent managed to sleep at night. Not.

    Renting is hard enough without having to move every few months.

    The new owners were reasonable and started putting in new stuff into the house, fixing the gardens during the next 12 months in preparation for their move, and we were happy for them to do that. We just wanted to live in a house and get on with our lives.

    I would be using the time to work out what you want to do with the place and getting stuff fixed before you move in.

  • +3

    We'll stirlo, I guess you've demonstrated to everyone what sort of person you are. I'm very glad that I don't know you.

    • -8

      Someone who wants to save $6,000?

      • +13

        Personally I wouldn't sell my integrity for $6,000, but I suppose there are those without any to start with.

  • +2

    Salty buyer. Most other ozbangers would have purchased accepting the terms of the agreement or have bought something else if they couldn't. You bought hoping you could kick them out rather than coming to terms with it beforehand, regardless of your statement to the contrary. Otherwise this thread wouldn't exist.

    Separately, you are renting it out and paying interest on a loan. Have you looked into possible tax benefits on your losses for the 9 month period they will be renting?

    You might find it will pretty much negate your $150 weekly that you are paying extra. Keep track of all expenses related to the property including loan interest paid should the total expenses plus interest paid exceed the rent, the difference may be tax deductible depending on your situation.

    • -5

      It's not that salty, bought the place wanting to live there, knew lease would require waiting, making a deal or finding a loophole. Thought Ozbargain might have a bit of advice. So far advice seems to be "you're an idiot" Nope, knew full well what I was getting into, or "you're an (profanity)" fair enough but if it saves me $6000 I can live with myself. Thats a lot of eneloops…

      • +1

        eneloops are not going to get you out of this hole.

        • They also won't help him sleep at night.

  • In Victoria, 4 months notice is required to be given if you plan to move into your home.

    • Yes….I skimmed through the comments but no one seems to have actually referred to the Residential Tenancies Act. Found easily online, the Act defines the notice period you can give a tenant even if they have a lease in place, one of those being that you want to move in to it.

      That being said, I tend to agree with the general sentiments of the rest of the team here, you knew there was a lease in place, moving house costs a bomb, don't be impatient and wait out their lease term.

    • It is actually 60 days if no fixed lease is in place. That said plenty of time to give notice if waiting until lease is up

      • BTW It's 90 days here in SYD for anyone that wants to know.

    • Thanks for this piece of information. Got notified (yesterday) that the owner is moving back from interstate and wants to break fixed lease 4 months early (presently 6-7 months left on lease). Worst part had been informed by agent (and owner) upon signing the renewal they had no intention on moving back for many years (multiple conversations).

  • +1

    You're in a bit of a pickle, you just have to wait it out.
    Bribing them out would seem to be the dumbest idea presented so far in 2017 (after the new Executive Order).

  • +1

    As someone who lived in a house the owners wanted to sell they agreed to let us out of contract when we found a new house without penalty. Your best option is to offer the same to the people who moved in so they have plenty of time to find a new house to live in. We moved out before the end of the lease and then the house sat vacant for months because they wanted too much for it haha.

    You may or may not have them move out early but it's easier to find a house you like if you have a bit of time. You still need to give them the usual notice period.

    If they are renting through a real estate I would talk to them for advice because I'm sure you aren't the first person to want to do this.

  • +4

    You definitely need to talk to them. Even if you offer no incentive, they should be made aware that you are moving in at the end of the lease. If that was me, I would take the opportunity to try and find a new place. It's hard finding a nice place to rent and also timing it with when your lease runs out.

    If you are flexible (as it sounds like) then it's a win/win. They might not move out right away, but they might move out a few months early at least, which is better than nothing.

  • +3

    Your looking at this one sided. I hope the tenants stay for the full 9 months which they have a right to.

    • +1

      Agreed. I cant believe he or she even had the audacity to respond to people the way that he or she did.

      I know everybody would feel the way the OP feels but they would deal with it or at least have the decency to keep it in your close circle (realistically speaking). They will judge you but since they are your close circle, they will judge silently lol.

      Here, it is against all moral codes and you still think you are somewhat allowed to do it given the chance. Even more unbelievable is the fact that you are being a renter yourself. For god's sake.

    • +1

      +1

      If i am the renter, I wanna punch this landlord!!!

  • +1

    Not sure if already mentioned, but if you want them to vacate at the end of the lease you need to give them 30 days notice.

    Failure to do so will result in the tenancy going month to month and you'll have to give them 90 days notice.

    • Good point, wouldn't want to mess that part up

  • What a shit post…

  • I would talk to them directly and ask about the possibility of them moving before the lease. As others have said, offer something if they agree.

    I wouldn't start threatening a lawyer or serving notices to vacate unless you want someone in your house thinking of ways they can make your life difficult in return.

  • +1

    I would have thought it was fairly simple. Let the tenants know that you are not extending their lease when it expires and you will be moving in. Also let them know that you will not penalise them if they break the lease early. This will give them time to find another place, the sooner they find one the better for you. They might decide to stick it out though, which is just the way it is.

  • +2

    Just to be clear I knew and accepted the property was under lease when I purchased and worst case I accept I just have to wait 9 months. That said I am particularly interested in any responses to my last question. "Any Ozbargainers been in this situation before? If so what did you do?" I don't want to be too unfair to the tenants but would really like them to move out early.

    Something about this post seems off even with the edit but I couldn't quite put my finger on it, but it's suddenly occurred to me now.

    Isn't this something you should have asked BEFORE you purchased the house?

    • -1

      Not really, I'm still happy with the purchase even if I have to wait 9 months. I'd just prefer to move sooner.

    • -4

      He did, but this being a social media era felt the need to make this thread so he could tell us all about it.

      Unfortunately, he's just experienced the not so 'social' crowd so instead of receiving helpful suggestions / options, he's mostly being pummeled by a bunch 'social justice' keyboard warriors.

      • +5

        and here it is, dismiss everyone by calling them social justice keyboard warriors.

        If my friends, even the closest ones, came asking this kind of questions, my answer would be exactly the same as what has been given by everyone here.

    • +1

      Agreed, at face value this is stupidity of epic proportions…has got to be a troll.

  • -2

    Tell them you plan on doing major renovations and they need to go, unfortunately. Not sure if it still exists but you used to be able to go this few years back.

    Of course, you can always change your mind once they vacate. :)

  • If I was you, I would ask the vendor fix it before settle

    • If it is in the contract subject to leased, i dont think you can

  • +1

    Haven't read through all of this, but if you really wanted them to move out, the only way to do it legally and ethically would be to incentivise it for them.

    Ie. Offer to pay for moving costs (if you are saving over $150 a week by moving in sooner) then offer $1200 (8 weeks of potential savings) to assist in early moving. Tell them if they agree to leave now, they don't need to do a bond clean.

    You could also look at taking advantage of the situation. Is there anything that needs 'repairing' on the house? If you do it while it's tenanted, those 'repairs' should be able to be written off against your tax for this year (as it's an investment expense) and when you do move in you have everything 'replaced/repaired.

    • Roofing
    • Guttering
    • Patio/car-ports
    • Painting
    • Plumbing
    • Electrical appliances (hot water / air con / solar / fans / light fittings / electrical sockets )
    • Fencing

    Stay within the rules though…
    https://www.ato.gov.au/Business/Income-and-deductions-for-bu…

    • He wants them out. If they don't leave it will cost him $6k. He could be very decent. Split the difference and offer them $3k. Or if really desperate offer $6k and take the convenience as his own incentive.

  • +3

    I'm sorry to say, this post is idiotic even by OzB standards…what kind of goose knowingly buys a property without vacant possession & expects to move into it…with a long term lease no less…FFS, what was your conveyancer/solicitor doing to earn their fee throughout this debacle. :/

    Words fail me…

    • +2

      bought the place wanting to live there, knew lease would require waiting, making a deal or finding a loophole

      OP knew what he was doing when he made the purchase … and this included looking for a loophole to get rid of his tenants! Now he is frustrated that the loophole isn't really there and he is going to miss out $6000, and wants our help ….go figure!

  • +3

    I was in a similar situation as a tenant (in Victoria). The landlord needed to move into the house urgently so their child could be enrolled at the local high school - he had bought in the school zone a couple of years before but didn't realise that strict zoning rules meant that he had to be living in the property when they applied for the school. We were 7 months into our lease but knew we would have to move out at the 12 month mark anyway, so we started to look for a property straight away rather than have it hanging over us. As an incentive, we were offered two weeks free rent. Fortunately it didn't take long to find an alternative property and about 4 - 5 weeks later we were gone.

    As many have suggested, offer a few weeks free rent. This will help with the cost of moving - yes, they would have to pay this when they move at the end of their 12 months tenancy anyway, but they wouldn't have been expecting these costs at the moment and having just moved myself it cost upwards of $1000 and we tried to do it cheap! A few people suggested letting them go without having to do the bond clean - this would be a nice gesture and incentive enough for me to leave early. If you are saving $150 a week by moving in then you will cover the cost of paying for cleaning yourself in no time. I think it would be advantageous for you that the tenant feels like you are trying to do the right thing in the situation and you are making an effort to support them to move on… if they feel like you are a decent guy then they might be more willing to just move on and get it over and done with sooner rather than later. If they feel like you are a jerk they might dig their heels in and sit it out for the next 9 months. Make a good offer but be prepared to accept the outcome whichever way. You never know, they might have life plans (e.g. buying their own house, moving overseas) that means they don't want to start a new 12 month lease elsewhere and they want to stay to the end of their current lease as originally planned. In that case, don't count the $150 pw as lost money - some buyers would not have been interested in the property given the long tenancy and that most likely reduced competition and therefore the price you paid for it by at least $6k, if not more…. so buying a tenanted property could have actually worked out in your favour after all! You'll never really know so don't focus on the money. It will probably take some negotiation and flexibility on both sides, but best case scenario is that it works out happily for both parties.

    • Good advice. I hope something can be sorted out that good for both of us

  • -1

    Everything that is so f***ed up about the Australian property market and the mentality of pure unadulterated greedy landlords is summed up in this topic.

    I hope your house has building defects that run into the thousands.

    • -1

      I upvoted you while reading till I read the bit where you wished him harm, at which point I downvoted.

  • Someone should put post something like:

    "On a fix term lease. Owner wants to toss us out.

    Hi. We are renting signed a 12 month fixed term lease 3 months ago. Now the owner has sold the place and the new owner wants to kick us out. He's applying every pressure he legally can, and now he's going on Internet message boards trying to find loopholes to throw us out. We know we will have to go at the end of the lease but we need the time to save for moving expenses. How can we stop the owner from harassing us to move out?"

    • -1

      Simply say "I do not want to move and intend to stay for the duration of the lease" probably should make sure you're not running an unauthorised subletting operation first though

      • +1

        Even if they were subletting there's little you can do about it. Proving they are subletting is hard unless they are stupid and posted an ad online or something.

        Have you done a google search on the address or area? You might see photos of the house.

  • I was in the opposite scenario a number of years ago, the house was both on the market and up for lease, whatever happened first. When we rented it they took it off the market but a month or two later someone who had looked at it too buy made them an offer which they accepted. The new owner offered $2000 towards removal costs from memory to move out early, I had a look around and decided it wasn't worthwhile with what was available at the time to move out early. Best you can do is to make it known that you will be moving in at the end of the lease and provide them with the opportunity to break lease early, some incentive may help as well but there are no guarantees.

    • Thanks

  • Surely all you need to do is speak to the tennat, ask them to move as soon as practical for them, say you will give them $500 if they move within 2 months, a positive referral letter, maybe even say they dont need to clean the place (save carpet, external cleaning services). Basically just make it enticing for them to move….no point being heavy handed since they are within their rights to stay….

    • +4

      Moving is a pain, its a whole day wasted in itself, stuff is going to break and then you have to come back to clean… The op sounds like a jerk so you know there would be bond issues.

      I certainly wouldn't do it for less than $5k

      The cost of hiring a truck/movers, losing two days, cleaning, having two bonds… $500 is insulting.

      • +1

        Trust me, OP wouldnt even think about giving $500, let alone $5000.

  • We purchased a house that was still leased for 8 months, but wanted to move in, offered tenant 4 weeks rent toto around $1600 was accepted.

  • Make them a really good offer to move out. Something like $150 x the number of weeks left remaining on the lease. It's a win-win then as you won't technically be out of pocket

    • There's 9 months left on the lease, with a projected saving of ~$6K to the OP if the tenants move out early.

      Offering $150 / week to the tenants whilst great for them, would almost equal the $6K he's trying to save.

      $1500-$2000 (towards moving costs) should be sufficient to make it worthwhile.

      • If OP really wants the house they would be happy to break even financially to get the house early. I wouldn't move early for $2k They need to make the offer as attractive as possible

  • I was exactly in same situation last year !
    actually there is nothing you can do, will have to wait until tenancy agreement expire or they move out early !

  • -2

    I'm certain that you can end the agreement with no reason but must give 90 says notice in NSW.

    That said they can also move out at any time and give NO NOTICE. As in - they could randomly pick a day to move out and tell you on the day they are moving out.

    This happens all the time and is perfectly normal, legal and moral.

    It's your house not theirs.

    People who rent should know that at any given time they may have to move.

    • +1

      I'm certain you cannot.

      The minimum period of notice you can give the tenant to vacate is:
      •14 days – if the tenant is 14 days or more behind with the rent or has committed some other breach of the tenancy agreement
      •30 days – if the fixed term of the agreement is due to end
      •30 days – if the premises have been sold after the fixed term has ended and vacant possession is required by the buyer under the terms of the sale contract
      90 days – if the fixed term period has expired and no new agreement has been signed.

      source:
      http://www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owner…

      • Oh I didn't know that - I have previously been given 90 days' notice due to sale of the property while I was in a fixed term agreement….

        And reading further - if there are tenants with a fixed term agreement and you buy the place - you have to honour their tenancy as the new landlord.

        Wow.

        I take that back then =\

        I guess the easiest thing to do is to ask them if they would move out earlier - that way you set an expectation that their contract will not be renewed and with rent increasing just about everywhere they may opt to move earlier.

  • Think of a lease just like how you would for any other contract.

    I agree to sell you my card for $10,000. You accept the offer and take possession of the car. I can't then ask for the car back, nor can I make you pay $11,000 for it.

    It would be unfair, unconscionable and just downright (profanity) behaviour to try to up the rent during a fixed term lease.

  • So it is ok to ask dumb questions if they are about a house, is it? Because of all the dumbass, self serving, you the know the answer and are just looking for a reason to be a jerk to someone questions I have ever read, this one wins.

  • +2

    You are not allowed to move in. period.

    Any forceful action will trigger a chain of legal consequences against you. Hopefully the fixed term isn't 10 years…

  • +1

    Tenants needs time to move too. It costs them money as well. You knew what you were getting into. Stop being a prick.

  • Have you asked your Rental Agent? Phrase the question along the line of "what is a cheeky way to kick the Tenants out, without paying a single Cent? Or better still, they might have to compensate me for some wrongdoings". Love to see their face. That might remind them about their Rent Commission…. Bwahaha.

  • My parents were in a similar situation, when they made the offer, the tenants were to be given 2 months notice if the offer was accepted.

  • So follow up time for everyone that cares.

    The tenants have moved out and we have been able to move in. In the end it seems it worked out for everyone with no money changing hands. We sent them a nice letter explaining that we would not be renewing their lease and that if they wanted to move out early we would waive any lease break and cleaning fees. They started looking for a new place pretty much straight away and after 3 weeks told us they had put an application in. 2 weeks later it was accepted and they told us they were moving out in a few days. While the move out time and notice period weren't great for my partner and I as we had to provide 28 days notice on our own rental the long term impact is a massive plus. We were extremely lucky to have such nice tenants and hopefully they found a new place they really like.

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