murraybridge How long should you lock a tenant’s lease in for? Is there a benefit to having a longer lease over a shorter one?
As a landlord you will need to weigh up the benefits of longer versus shorter-term leases, with each type having its advantages and disadvantage.
PROS OF LONGER LEASES:
Regular income stream – A long-term lease offers landlords the security that comes from having a regular rental income over a set period of time. This is particularly beneficial in a slow rental market when it can take awhile to find a new tenant and there could be periods without rental income coming in.
Reduced changeover costs – Even if there are no vacant days between tenants there can be changeover costs incurred from things like advertising and administration fees. A high tenant turnover can also increase the wear and tear on a property. Furthermore, it is not uncommon for tenants to make requests regarding changes or maintenance to the property at the start of a tenancy.
PROS OF SHORTER LEASES:
Offer greater flexibility – If you expect your circumstances to change in the future it can be useful to have a short-term lease in place as you can change terms to suit your changing needs with each lease. Short-term leases may also be an option if you are planning to sell in the near future, as a property may be easier to sell without tenants.
Potential for higher rent – Short-term leases may also attract a different kind of tenant, who may be willing to pay more rent to secure a property for only a short period, as is commonly the case for holiday lets for example. There may also be more opportunities for rental increases between tenants, particularly in a high demand market.
Overall most tenants and landlords prefer longer leases due to the level of security and stability it offers. However everyone’s circumstances are different and there may be occasions where a shorter lease is the more suitable option.
