Lease Renewals & Offering your tenant a new tenancy

The term Lease Renewal is one that is used so often that people think this is what actually happens when a tenant is offered a new fixed term tenancy for a further term. 

The truth is you aren't actually "renewing" the previous tenancy, you are offering a new fixed term tenancy for a further term. Terms typically change, even in a minor way, between tenancies. This could be a change in a housemate, a household pet, a rent increase, whether or not the tenant pays for a utility / service etc.

Each state has notice periods for where you (or the Landlord) may want to increase the rent when offering a new tenancy. This is something you should be mindful of and check with your relevant State Tenancy Authority.

Not only should you be mindful of what the minimum notice periods are, you should also adopt a best practice procedure that allow for enough time for negotiations between landlord and tenant (where needed).

Below we are going to use the Queensland Tenancy timeframes as an example of how you could set up a process within your business to factor in the minimum time frames needed as well as what to do from a best practice standpoint.

• Run a report of expiring leases in 3 months time (3 months before the end of a lease is when this process should start for a QLD property manager)
• Assess whether or not rent can actually be increased for the properties you are reviewing (in QLD you are now only allowed to increase rent once every 12 months regardless of how many tenancies have occurred in the last 12 months)
• Assess the market and work out whether there is an opportunity to increase the rent (conduct a market analysis and review where needed)
• Contact your Landlord and seek their instructions to offer a new tenancy or not. Provide a reasonable timeframe and deadline for them to respond, advising that if you don't hear from them by that deadline you will offer a new tenancy in their best interest and to avoid the property becoming vacant and non-income generating for them
  • The information you provide your Landlord should include advice on their options should the tenant not wish to take up the offer of a new tenancy. In Queensland ultimately there are two options. One is to let the tenancy revert to a periodic tenancy. This is not recommended as it creates uncertainty with the tenants being able to give 2 weeks notice to vacate the property at anytime in the future. The other option is to end the tenancy and search for a new tenant that would be eager to enter into a fixed term tenancy. If this is the option you need to be very mindful of the minimum notice period in place to end a tenancy (in Queensland it is 2 calendar months but cannot expire / end before the end date of the current fixed term tenancy).
• The deadline for the Landlord to get back to you should not be any later than 2.5 months prior to the tenants lease end date
• Once you have approval to offer a new tenancy, offer this to the tenant with a 7 day timeframe to return the tenancy signed. In that offer ensure you advise them of any rent increase and/or change of tenancy terms. Also ensure that you make them aware that should they not accept the offer within the timeframe noted that the offer will be considered as withdrawn and further instructions will be sought from the Landlord. Those instructions may result in the Landlord requesting the tenancy to be ended and Notice to be given to the tenants.
• If the offer of a new tenancy is signed and returned by the tenants:
  • Ensure your Landlord receives a copy of the signed agreement
  • Ensure that any rent increase that is due to take place is entered into your Trust Accounting Software
  • Ensure any increase / top up in bond is also noted in your Trust Accounting Software
  • If relevant, ensure that your Smoke Alarm Contractor is booked to test and check the smoke alarms prior to the commencement of the new fixed term tenancy
  • If applicable, ensure any fees that can be charged (in accordance with your Appointment) are processed through your Trust Accounting Software

Hints & Tips on completing a Tenancy Agreement

• Lease start and end dates should line up with the rent cycle of the tenancy
  • Weekly Rent Tenancies
  • If the rent agreed on is a weekly rent with the 12 month tenancy commencing on Friday 20 September 2024, you should have the lease expiring on Thursday 18 September 2025. 
  • This allows for you to increase the rent on the offer of a new tenancy from Friday 20 September 2025 which is the same day of the week the normal rent is due
  • It also makes it nice and easy to explain to the tenant how much rent they owe in the lead up to them vacating (if they end the tenancy) as the tenancy is a very clean number of weeks (not weeks and a pro-rata of days on top of that)
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  • Monthly Tenancies
  • If the rent agreed on is a monthly rent with the 12 month tenancy commencing on Friday 20 September 2024, you should have the lease expiring on Friday 19 September 2025. 
  • This allows for you to increase the rent on the offer of a new tenancy from Friday 20 September 2025 which is the same day of the month the normal rent is due
  • It also makes it nice and easy to explain to the tenant how much rent they owe in the lead up to them vacating (if they end the tenancy) as the tenancy is a very clean number of calendar months
  • Remember: to calculate a monthly rent you should multiply the weekly rent by 52, then divide that figure by 12. Don't simply multiply the weekly rent by 4 as this will short change your Landlord.

• Everyone over the age of 18 should be added to a tenancy as a tenant, even if its adult children of the tenants living at the property. This allows your more tenants to be responsible for all the term and obligations of the tenancy. It also assists younger people in obtaining future rental properties as a reference can be provided

Uploading to the CRM

When you have a signed copy of the tenancy agreement you should be uploading this to the @realty CRM so that the HO Support Team can process what is required on the administrative side of things for you.

If you need assistance in understanding the upload process be sure to book yourself into 1on1 training with one of the PM Support Team Members via your CRM Dashboard.