Should I use a fixed term or periodic tenancy?

 

 

Fixed term or periodic tenancy – which is the best for your rental property?

To ensure you get the best cash flow for your property, you must make the right decision between a fixed term or periodic tenancy to suit your particular circumstances.

Choosing the right kind of tenancy will help will ensure you achieve your objectives, whether this is to lock in maximum cash-flow and security or to allow flexibility should circumstances change and you want to move back in, or sell.

You need to be clear about your primary objective, and work to that objective.

If you are planning to keep the property as a long term investment then you don’t need flexibility and I would recommend fixed term tenancies running year to year, summer to summer in the peak letting season.  This achieves maximum cash flow as both owner and tenant are locked in for the stated period.

If you need the flexibility to possibly move back into the property, or to sell we would recommend a periodic tenancy where you are able to give notice to the tenant to vacate.

However, a periodic tenancy tends to attract less stable tenants who also may be unsure of their plans. This means cash flow is less certain and there are likely to be more vacancies. The tenants can give 21 days notice at any time for any reason.

If you are planning to sell it is important to have a strategic approach.  We believe the best result is achieved by screening and finding tenants who know it might go on the market and are relaxed about that process. The property may rent for a lower price but these tenants will not impede a sale process by denying open homes, or making access difficult.

If you choose the wrong type of tenancy, or don’t get the right tenants for any flexibility that you may need, this can be very expensive.

Having tenants who do not co-operate with the sales process can reduce the sale price, and even stall selling altogether.

A property manager who understands how to work strategically can prevent these losses and ensure the best possible result.

Quinovic Johnsonville has grown to be the most successful property management service in Wellington's Northern Suburbs and is a multiple award winning franchise.

Our success comes from the systems we use, the experience we have and our commitment to applying those systems to give our customers the best returns on their property investments.

If you want to live your life the way you'd like to, we'd love to talk to you about managing your property for you.

See you soon,

Gerard


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