So, I have sold my place and want to buy a smaller house that I like.
So what's the problem? Well I want to live there, but the house is currently leased to an existing tenant with 10 months remaining on the Fixed Term lease.
What are my options? Can I pay the tenant to leave? What is a fair amount? What if they don't want to leave? If they agree to leave early is it legally binding, could they just take the money and continue to pay rent and stay out the term?
Lease was a 12 month contract. Increasing the rent is not possible in a standard fixed term NSW tenancy agreement.
[For a Fixed Term of less than 2 years]
Note: The rent payable under a fixed term agreement for a fixed term of less than 2 years must not be increased during the fixed term unless the agreement specifies the increased rent or the method of calculating the increase.
This is only the case IF the agreement has a rent increase stepping IN the agreement they sign.
"Fixed term of less than 2 years that set out a rent increase"
You missed a bit.
The term in the agreement must spell out the amount of the increase or the exact method of calculating the increase (e.g. a dollar amount or %). It cannot be unclear, for example statements 'in line with the market' or 'by the rate of inflation'.
No, you cannot arbitrarily increase the rent by $400 at a whim for fixed term contracts.
@orangetrain Imagine being so loud yet so wrong. Amazing stuff.
Please stop talking if you have no idea…
You've kind of answered your own question - you can't kick them out simply because you're bought the place, that contract with the existing landlord should be considered and transferred as part of the sale. You can offer to buy them out, but they'll likely not do it without special consideration - it's a pain in the ass to move, and they did so only 2 months ago. If they accept your offer, get it in writing with signatures (and a witness, if desired) and it's legally binding. Usually, breaking the contracted 12 month lease requires both parties to agree, which they'd be doing if they accepted your offer.
it's a pain in the ass to move, and they did so only 2 months ago
they might not have moved 2 months ago, they might have been there for several years at this point and they were just renewing it again
Ask the existing owner for a discount?
House prices are falling anyway, if you walk away from the sale there's no skin off your back.
Sounds like you're SOOL as it's a periodic lease.
Maybe approach them and give them the offer to break the lease early? else you'll be waiting 10 months.
If it were me i'd be using it as a bargaining chip. It seems the owners got cold feet when the rates started to rise so they're under pressure to sell. Use it as a bargaining chip to get the price down. You wouldn't sign a 12 month lease if you knew you'd sell it in 2 months, even if your were the tenants.
If it were a month to month lease that's a different story and you could wind it up pretty fast.
You knew before purchasing the place… so this is now an 11th hour problem? How?
Solution: Stay where you are for 10 more months.
Where did I say I’ve purchased. I said I want to.
If you notify the tenants now that you intend to move at the end of lease and they’ll need to vacate, they may move out earlier if they find somewhere suitable. Let them know there will be no fees for early termination.
It’s up to them, they can stay for the full lease but may choose to get out sooner if it works ok for them.
You may also offer some incentive, just how much will be determined by a few factors. How easy it is for them to find a new place, when it’s available, how much their moving costs will be, if they will need to pay more in rent etc. if it’s hard to find somewhere else you’ll need to offer more. If they need removalists it’ll cost more than if they hire their own truck and have friends help etc.
If you make it difficult or pressure them too much, they could cause headaches like damaging your new place or staying until the last minute just to spite you.
From a personal experience, when I found out the owner was selling. We agreed with the owners (who were selling) to terminate the lease early and we moved out. We found a new place with the same agent so it was a win-win for them, they got a tenant for a house they were managing and they got the commission for selling the other house.
You could advise that you wish to move in and would waive any cancelling fees of the existing lease.
Make a token gesture of 2 weeks free rent + maybe a K towards moving fees if they move out with in X amount of time.
If they are happy with that.
Put it in a contract and done.
I bought my place subject to a lease. The tenants were good enough to move out before settlement as the agent found them another place. Otherwise I was prepared to sweeten the deal for them.
The lease will just be factored in to the offers by buyers. Owner occupiers that would like to move in ASAP may see it as a negative whilst investors (or you?) may see it as a positive given 10 months (7-8 months post-settlement) guaranteed rental returns.
You could ask the agent to ask the vendor to ask the tenants about committing to an earlier termination of the lease but none of those three parties have any requirement to do so.
Slightly off topic, we included, as part of our winning offer, that the current owner could live rent free in the house for up to three months until they found their next place. It helped us win the bidding war. Try to turn your consideration of others needs in to a positive?
orangetrain on 01/07/2022 - 23:06 Comment score below threshold.