Have you just bought your first rental property? Below are some common tenancy agreements that you can select when renting out your property.
Fixed Term Tenancies
Fixed-term tenancy agreements stipulate the beginning and end of a tenant's stay in your premises. For example, the duration of the tenancy may be half a year from the time the tenant signs the agreement. The agreement often spells out the extent and frequency of any rent increases as well as the terms for extending or renewing the tenancy agreement at the end of the duration.
The major benefit of this type of tenancy agreement is that your income is more stable than the rental income from a property whose owner opted for a periodic tenancy agreement. However, fixed term tenancy agreements can be problematic in case you need to take possession of your property urgently. For example, it may take longer for you to occupy the property in case you lose a job and decide to live in the rental unit.
Periodic Tenancy Agreements
Periodic tenancy agreements are more open-ended when compared to fixed-term rental agreements. Under this agreement, the tenant consents to pay you a predetermined rental fee for each agreed period (weekly, fortnightly or monthly) until either you or the tenant decides to terminate the agreement. Each party must give the other notice in case of an intention to end the agreement. The minimum number of days for the notice is stipulated in the regulations that govern landlord/tenant relationships in different jurisdictions.
Periodic tenancy agreements can be better for you in case you would like to terminate the agreement due to a change in your circumstances, such as when you want to downsize after experiencing a job loss. However, the ease of termination also has its disadvantages. Your tenant can also leave the premises as easily as you can get them out. Consequently, your rental income may be more unstable if you opt for periodic rental agreements.
It may be advisable for you to discuss these two rental agreements with a rental properties professional before you select the one to apply when your first tenant comes knocking. The real estate professional will assess your needs before recommending the most appropriate option to take. You can also experiment with both types of agreements in case your property has more than one rental unit. The results can then guide you on how to proceed with future tenants.
Share21 November 2017
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