Vacancy in December

[Bryanw]

I have an apartment in central Auckland. In negotiating the renewal of an expired fixed term tenancy, tenant wants new term to end early December as he might need to move on then. He is an excellent tenant. I was asking for expiry end January. December is a relatively bad time to be seeking a new tenant. What would you do?

[eri]

it's very hard to rent out a student apartment in central auckland once all the students have gone on holiday start of december

so a lot depends on the apartment

if it's an expensive 3 bed in towerhill, lack of students will make little difference

if it's a cheap 2 bed on hobson street it could be hard to find new tenants without dropping the rent 20 - 30%

i have a working tenant who only ever renews for 6 months due to his job, a june expiration would mean a new term to november

nice guy, treats the place like his own and has 3 years

he's worth keeping so have been happy to let him renew for whatever he likes

but have had students who have treated apartments very poorly, more people than agreed, bug infestations due to no hygiene, broken stuff, taken stuff, endless lies etc

wouldn't let them cause any more grief or costs by renewing a lease for november departure

your call

[Bryanw]

Yes, it would be more clear cut if it was student territory but this is a middle of the road but popular two bed on Nelson St and the clientelle is more immigrant and inner city workers. The fact that the building is undergoing remedial repairs tips the scale a little in favour of retaining a good sitting tenant, I think.

[Bryanw]

As for my demons, Eri, I've got them in retreat.....I think.

[sidinz]

If the fixed term has already expired, he's on a periodic tenancy. So he's holding all the aces.

[Nick G]

You could say that you need the certainty and would advertise for a new tenant from August on if he couldn't commit?

[BigWal]

FYI - Section 60A of the RTA here explains the comment from sidinz.

Also - note section 24(1)(g) and 24(1A) here regarding rent increases. These in turn refer to Schedule 1 ("Clauses for rent increases in fixed-term tenancy agreements).

Basically - if you want to increase the rent at the end of a FTT you have to:

1. Between 90 and 21 days before the agreement, give the tenant notice of your intention not to continue with the tenancy, and then convince them to sign a _new_ TA with increased rent starting the day after the original FTT expired, or,
2. Mutually agree to extend the TA, and then give them 60 days notice that rent will be going up, provided the TA already has one of the clauses in Schedule 1 in it or,
3. Let the tenancy revert to periodic, and then give them 60 days notice that rent will be going up.

[eri]

As for my demons, Eri, I've got them in retreat.....I think.

i tell ya

it's a lifelong battle

[Nick G]

eri = Japanese?

You certainly tend to write in Haiku ;-)

[eri]

[Bryanw]

My original post was misleading in my effort to keep it short and simple. It was a sale situation with vacant possession so the vendor gave the sitting tenant notice. Thanks BigWal and Sidinz for your reminder of the law on expiring fixed terms which reminded me that I had two options: either ask the vendor to withdraw the notice to quit and then give notice of increase or let the notice expire and re-let the property to the same tenant. I have taken the latter course. Different results flow from which option is chosen; a notice of change of landlord becomes a bond transfer (though I think either form would suffice) and gives opportunity to increase the bond because of the new rent; inspections/condition of chattels are different scenarios too. What if there was damage during the vendor's tenure? If it was a new tenancy I could not probably claim on the bond. As against that, waiting 60 days for Notice of Increase to run represents $540 odd. All very interesting! My post was prompted by wondering if the disadvantage of having a possible vacancy in early December was serious enough to want to give away something to get a better expiry date. I decided to accept early Dec expiry because I think they will be able to and they definitely would want to renew after that, they are excellent tenants and the rent is good. I will know in plenty of time whether it is to renew or not and can advertise 3 weeks beforehand and offer a reduced rent for a couple of months if necessary. But in theory, just how bad is it to have a vacancy just before Christmas? (Eri, your comments were helpful)

[eri]

sounds like a good choice

december used to be a really bad to rent 3? years ago

but as the rental situation in auckland bites, each december seems to show fewer vacancies than the year before

plus there is a ratchet in rents each march or each re-let

tenants seem to have cottoned on to this and are no longer hoping between apartments at the end of each lease looking for something better

now they could easily end up paying more for a place they like less,so if there's no good reason to leave, they won't

the auckland apartment market is still relatively young and this change is probably a sign that it is slowly starting to mature into something more like the rest of the country or apartment markets overseas

[FJW]

Hi Bryanw

I would be inclined to fix it to say October and then review it then. if he can't bridge it to Jan then I would be looking for a new tenant.

I'm not intimate with the Auckland rental market so don't know how strong the demand is around December. If its in Wellington especially student accommodation then December would be totally out of the question.

Hope that helps