Back in March 2020, I wrote about our New Leases in NSW following some changes to the Residential Tenancies Act & Regulations. Great timing huh, dealing with a pandemic and its impacts and making sweeping changes to how landlords and tenants view a Lease Agreement.
So it’s been a while now that these changes have been in but I still get calls and questions arising out of the blog I wrote about the changes. Titled To Renew or not to renew that blog can be read here.
As a quick summary though it goes through the Pros & Cons of this new legislation, and the potential impacts it might have (and has had) on owners and tenants, and the certainty that Fixed Term lease agreements once gave them that is now lacking. But I’ll summarise what the changes have done even further than that;
- Resigning / Renewing a Lease to a New Fixed-term has little to no importance now because of how easy a lease can be broken
- Owners see Periodic / Expired Agreements as more of an advantage as at least they are given 3 weeks’ notice of a tenant vacating. They also have not had to pay for a renewal to be signed.
- Easy to Break a Lease but when they’d like some certainty of a Fixed Term Lease, they lose out with fewer owners offering them because of the reasons above.
So for Landlords, the options are;
- Not renew a Lease and have continuing agreement where tenants provide you with 3 weeks’ notice to vacate at any point
2. Renew a Lease where tenants can break the agreement by paying a set break fee as outlined in my blog
What has happened since these changes have come into place is tenants simply upping and leaving when they’ve found another property after a landlord has gone through the effort of finding them and the compliance measures that need to be fulfilled just before they get keys. The main concern for landlords is that you go through all of this and can now end up with a vacant property at any time. Realistically, the Break Fee isn’t covering the costs of reletting, vacancy in between tenancies, and so on.
Sadly now some owners only offer 6-month leases and no renewals, so whilst it was being heavily advocated that there be this leniency to Break Lease clauses when these reviews were being considered, who are the real losers here? Long-term tenants seeking some certainty, or Landlords thinking that maybe investing in Property looks less attractive.
Speaking to the Real Estate Institute of NSW though, they’re sure that these terms are set to remain in place so like most things, pandemic included, we have to learn to live with them.
Am I being too dramatic about it all, too negative? Let me know in the comments below.
Antonio Mesiti is the Principal & Property Manager at The Management Agency, a local Property Management specialist offering a one on one service for his Property Investor clients.
For more information visit; https://themanagementagency.com.au/about/