Periodic Lease Question and Insurance

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  Xetrok on 17/04/2020 - 10:22

  Most landlords are advertising/accepting 6 month leases at the moment.

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  Dumax on 17/04/2020 - 10:23

  A fixed term agreement will automatically convert a periodic agreement at it's conclusion (if you do nothing or can't come to an agreement).

  There is some good reading here regarding the options at the end of a fixed term, but ultimately they can't force you to sign a new fixed term agreement. Whilst they can ask you to leave they are still required to provide you with the standard 2 months notice (assuming they have no other grounds).

  From a landlord's perspective, especially considering the current conditions of the lockdown - it wouldn't really make any sense to kick out a tenant that's been paying their rent on time and haven't asked for a reduction.

  The only downside to a periodic agrement for you is that they can start instituting rent increases (which can be challenged).

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  woodg on 17/04/2020 - 11:15

  Yes, some Landlord Insurance policies only provide cover when the tenant is on a fixed-term lease.

  At present many insurers have completely stopped selling Landlord Insurance, and those insurers that still do sell Landlord Insurance have changed their terms for new policies to exclude rent loss, so the landlord is probably unable to change insurers.

  • 

    JimmyF on 17/04/2020 - 11:16

    Yes, some Landlord Insurance policies only provide cover when the tenant is on a fixed-term lease.

    But thats not the OP issue, and they are within their right to move to a month by moth lease.

    • 

      ZSasha on 17/04/2020 - 12:45

      I think this is exactly my case.
      Our agent wants us to sign a new fixed term lease because, as he says, lender's insurance only works if a tenant on a fixed lease.
      That's a reason (as they say) they can't let us go for a periodic.

      OR it might be just an attempt to make sure they have their income keeps flowing for the next 6 months.

    • 

      dizzle on 17/04/2020 - 12:51

      Just like it's the landlords rights to ask for a fixed lease, or discontinue the current one at the end of the lease.

      They normally ask the tenant to sign a new 12 month lease around 2 months before the current one is up, and if the tenant declines, it gives them enough time to ask the tenant to leave at the end of the lease. This way they don't get close to going on an on-going lease.

      Honestly as a landlord I would not let my lease go month to month unless I felt I would need the property back in the next 12 months.
      I've also found that useful as a tenant so that I can organise my career and holidays around that timetable, rather than risking the landlord giving me two months notice at any stage.

  • 

    pollopollo on 17/04/2020 - 15:29

    Yes, some Landlord Insurance policies only provide cover when the tenant is on a fixed-term lease.

    Do you have an example? It seems odd. What difference does it make to the insurer if your tenant is on a fixed-term or periodic lease? I just looked at NRMA and GIO PDSs and neither seem to have this rule.

    • 

      billyb67 on 03/04/2024 - 14:42

      Nrma declined a policy on this point around this time, possibly 2019, maybe it's changed now but it was their standard policy at the time.

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  JimmyF on 17/04/2020 - 11:16

  However our agent told me that their landlord insurance does work only if tenants are on fixed term lease so they won't do periodic.

  They don't have a choice, if you don't sign a new fixed term lease, it automatically changes to a periodic lease.

  • 

    ZSasha on 17/04/2020 - 12:41

    But they can give us a termination notice in advance if we don't sign new lease in advance.
    I think legally they can do that but will they do that - that's a question.

    • 

      dizzle on 17/04/2020 - 12:52

      yes they can. They'll give you some time to think it over, but they normally leave enough room between offering the new lease and the end of the current one so they can end it comfortably.

    • 

      JimmyF on 17/04/2020 - 13:08

      They can issue you a termination notice if the landlord is petty enough to kick out someone that has been being paying rent and looked after the place as they won't sign a 12 month lease. Sure, as long as they meet the requirements of the termination notice.

      Still doesn't change the fact they can't stop you going month to month, they can't demand you sign a lease, unless they wish to toss you out. Which is kinda low.

      • 

        brendanm on 17/04/2020 - 13:35

        If it's true that the landlords insurance will not cover them on a month to month lease, it's not pretty at all, it's simply covering their ass.

        • 

          JimmyF on 17/04/2020 - 15:33

          @brendanm:

          If it's true that the landlords insurance will not cover them on a month to month lease, it's not pretty at all, it's simply covering their ass.

          They still have landlord insurance, they don't have the income protection part. Regardless that is the landlords issue to deal with, not the renters.

          As above, the landlord can't force them sign a 12 month lease. Simple as that. All they can do it kick them out. But why would you kick out someone looking after your place and been paying rent on time? Because you're petty. Thats why.

      • 

        dizzle on 17/04/2020 - 13:45

        It's not about being petty, it's about ensuring they have a consistent income. I would rather hunt for a new tenant once a year than run the risk of the house being empty when I'm not expecting it.

        Yes, I risk the property being empty for a couple of weeks, but if planned properly and you have a fair rent you can have the next tenant lined up before the old one leaves. Or you can plan for renovations when you know the house will be empty

        But if a tenant gives me two months notice on the periodic lease, it could happen at any time. It's my investment, I'd prefer it to be on my schedule than someone elses.

        • 

          JimmyF on 17/04/2020 - 15:36

          @dizzle:

          It's not about being petty, it's about ensuring they have a consistent income

          So kicking out someone who has been paying rent on time and not trashed the place? Yeah petty

          I would rather hunt for a new tenant once a year than run the risk of the house being empty when I'm not expecting it.

          Or leave them on month to month and they might stay there for years on end :)

          Yes, I risk the property being empty for a couple of weeks, but if planned properly and you have a fair rent you can have the next tenant lined up before the old one leaves.

          and the reasons you can't do this on the month to month lease is? Oh wait there isn't.

          it could happen at any time. It's my investment, I'd prefer it to be on my schedule than someone elses.

          You poor thing, how dare someone do something not on your schedule.

          What happens if you place goes empty on your schedule and doesn't get fill for 3 months, you're poor schedule it thrown out!

          • 

            dizzle on 17/04/2020 - 18:54

            +1

            @JimmyF:

            So kicking out someone who has been paying rent on time and not trashed the place? Yeah petty

            It's not kicking them out, it's ending a term contract. Both parties can then decide whether they want to sign another contract or not.

            Or leave them on month to month and they might stay there for years on end :)

            Or they might not, that's the point of the 12 month lease - to get commitment. If they think they're going to be there in 12 months time, what's the harm?

            and the reasons you can't do this on the month to month lease is? Oh wait there isn't.

            Because it's a month to month lease, you don't know whether it will be June, October, December, until they decide to inform you.
            As it is I know that my lease finishes in June, so I can plan for some renovations then. If they were month to month and decided to leave in December, that's my busiest work time and I would struggle getting it ready until February.

            You poor thing, how dare someone do something not on your schedule.

            It's my property, I can decide whether I want it on my schedule or not.

            I charge a reasonable price, and repair things when necessary. I've had the same tenants for 2 years and they seem happy, but whenever someone's moved on, it rents quickly because I price it well. To be honest, I sleep fine at night, so if you think that's petty, that's up to you.

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  duluxe2000 on 18/04/2020 - 00:50

  Where are you ? In some states, the law has changed which sets a maximum cost of breaking lease early.(e.g. in NSW break cost is 4-3-2-1 weeks of rent depending how long you stay in the contract)

  It's not about the landlord. It's about you who will decide which way is more cost-effective,like a phone contract or month-to-month one.

  Do your research and consider a 6 month as well?

  • 

    ZSasha on 18/04/2020 - 11:35

    Well, we are actually hoping to buy own our house in a few months time - that's the main reason why we would prefer to go month-to-month.
    But I heard what people were saying - and thanks everyone for your input.