Renting Basics - Understanding Tenancy Agreements
As part of our ongoing renting basics series, we have been looking at the important aspects of choosing the right place to move into as a tenant. But once you agree that a place is right for you and your potential living companions, there is still a lot of ground to cover! If you have your finances in place, you need to make sure the lease or tenancy agreement has terms that are right for both the tenants and the investor client.
This can be a hefty document, and one that requires careful consideration. So what should you be looking for to properly understand a lease?
There are two main types of tenancy agreements than you can sign into in NSW, each specifying a different kind of stay.
This is a contract to stay in a rental property for a fixed period of time, often 6 to 12 months, but it can be much longer. During this lease term, the terms of the lease agreement cannot be altered, offering security to both the tenant and the investor. The fixed term lease can be renewed upon agreement between both tenant and landlord. Most new tenancies start with this type of lease. A tenant can “break” this agreement, however check what penalties might be in place before you decide if this is right for you, as it might be more cost effective to see the lease term out and give notice that you will be leaving at the end of the lease.
A periodic agreement can begin immediately when you move into a rental property, but it generally follows on from an initial fixed term agreement. This type of tenancy agreement has no fixed end date, also the tenant can decide to leave the property at any time by giving the required notice period (each state and territory is different) the rent may also be reviewed at any time (some states and territories have specified timeframes for this, so the rent can’t be reviewed every week. If you feel your rent has been increased to a figure beyond market rent, you can approach your local tenant advisory for assistance) The rest of the agreement has the same rules and regulations as a fixed contract.
Reading the fine print
A tenancy agreement should have the length of the lease, when it starts and finishes, details of your rental bond, how much rent is paid and how it is paid. It will also outline your rights and responsibilities as a tenant in a rental property. This ranges from your obligation to maintain the property to insurance requirements, to whether you can have pets on the property, to the consequences of falling into arrears with your rent.
Without a signed tenancy agreement, the landlord has the right to evict you or increase rent without notice. Setting out this paperwork establishes the boundaries of your tenancy clearly, so you know exactly what your rights and responsibilities are. You must be given a copy of the tenancy agreement once it is signed. You should also receive a property condition report. This report outlines the condition of the property as it is when you move it. It is an important report, as your bond refund is determined by this information. Ensure you check it thoroughly before signing it and check when it needs to be returned, to ensure it is valid.
Once you begin your tenancy, you are obliged to maintain the condition of the rental property and continue paying rent as the tenancy agreement outlines. Here is a look at what you should consider before you sign the document.
Know the time period
Too often, people get over-eager to move into a property immediately and sign themselves on without properly checking the length of a lease. This is generally 12 months, but can vary. Make sure you can afford to stay there for this period and pay rent. If not, some negotiating over the exit date might be necessary - this isn't always easy!
It's a legal document, so you can't just up and leave when you feel like it - once you sign, you're bound as a tenant for this time period. Make sure you know how long you're going to be there.
Check the property
The tenancy agreement will also outline any repairs or modifications that have been promised by the landlord. For example, if a window doesn't function, then this could be listed in the agreement. Make sure you get exactly what you agreed upon, and go over all of this before you sign on the dotted line.
Generally, a landlord will be happy to provide good living conditions for you - raise any concerns about the home you have and get these fixes down in writing.
Keep good records
A year can be a long time, and it's easy to lose documents or throw out old paperwork. Don't let this happen with your tenancy agreement. It's a vital document that you will need when the lease ends, and is effectively the rules you must live by in the house.
Keep this, any bond lodgement forms and copies of emails in a specific folder for safe keeping. Nine times out of 10 they won't be needed to resolve a dispute, but better safe than sorry! Taking photos of the residency before you move in is also an excellent idea, to prove the condition of the dwelling both before and after your tenancy.
Renting is a fantastic way to live, and by following these steps to fully understand the paperwork in front of you it should be pain-free and fun. For any questions about the renting process, the LJ Hooker property management team can answer all of your question.