Have you read your tenancy agreement, when renting your property investment out have you considered everything?
If you’re new to the property rental
market, setting up a tenancy agreement for the first time can feel more
complicated than it has to be. From legal terminology to finding the right
agreement to suit your property investment needs, it’s easy to see why many
property investors hire a property manager.
It doesn’t have to be this way. All you
need is a simple understanding of the legal terminology to always keep you in
the know.
As a professional landlord, there are 4
types of tenancy agreements that you need to be aware of:
Estate for years:
This is the most common of the 4 property
leases, offering tenants a specified beginning and finishing date for their
lease. The basis around this lease is to ensure you always have control of who
lives in your rental property at what time. So when the lease expires, the
tenant is expected to leave without the aid of a notice.
This lease is also perfect for controlling
rent, allowing you to specify when you want to receive your rental payment.
If you’re hoping to target the student
accommodation market with your rental property, Estate for years is more than
ideal.
By applying this type of lease to your
property, when one tenant moves out you can already have another tenant waiting
to move in.
Estate from Period to Period:
Legally known as a ?periodic tenancy’, this
type of tenancy refrains from giving an end date to the tenancy agreement. The
only requirement is that specified periods of tenancy and rental payment take
place, for example the tenant must pay you rent by the 25th of every
month.
If you choose to adopt this type of tenancy
agreement to your property, there is only one condition ? a notice to vacate
must be given to your tenants. And the reason? There is no defined termination
date.
Depending on what area of the rental market
you are aiming for, it is quite probable that you will use this type of lease
for the majority of your tenancies. Its flexibility means if you find a tenant
who is in the rental market for the long run, you can profit from a continued
tenancy relationship and save yourself the time of finding a new tenant.
Estate at Will:
Of all the leases, this is the most
unstable with no specified ending date or a defined tenancy for the monthly
payments.
We recommend you avoid this one. It lacks
control on your monthly rental payments and runs the risk of you being left
with the debt.
Estate at Sufferance:
Is a leasehold estate that arises when a
tenant overstays their lease agreement and refuses to leave.
This is probably the worse of all the
agreements, and revokes your claim on the property. Unless you are able to
establish a new agreement with the tenant, the situation could get very
complicated and may even end up in court.
With all these leases, it is important to
remember that according to the Statute of Frauds, leases over one year should
be declared in writing to make them enforceable.
So if you create such an agreement it
should spell out the rights and obligations of both you the owner/landlord and
the tenant? including maintenance, repairs and utilities. It may sound silly
but these features will add to the security of your agreement. Allowing you to
always remain in control.
Keep yourself aware of the legalities. If
you do choose to hire a property manager they can deal with all the tenancy
agreement, from start to finish. But by acquiring an understanding of the
rental market and your lease requirements , you can keep yourself in the know
and always be one step ahead.
About the author
Tags: landlord, legal terminology, periodic tenancy, periods, property investment, property investors, property leases, refrains, rental property, student accommodation, tenancy agreement, tenancy agreements, tenant moves, types of tenancy
