Negotiating Tenancies

Terms to discuss before finalising the tenancy agreement

After running an efficient marketing programme for your property you should receive tenancy applications from potential tenants. Once you have completed The Tenant Selection Process you will hopefully have chosen which tenants best suit your property.

Now it is time to negotiate the following terms of tenancy. The most important parts should be discussed over the phone when offering a tenant the property, so when they meet with you to complete the tenancy agreement there are no surprises.

1. Your tenancy application form will confirm the tenants requested start date. You should negotiate a start date that suits you both if this date is not possible. If there is a period in between your property availability date and when the prospective tenants want to move in then it is quite common to meet in the middle.

2. The weekly rent and bond should be confirmed with the tenant as well as any requirement to have the rent paid in advance. Weekly rent in advance is the norm but you should be flexible if your tenant wants to pay fortnightly or monthly.

3. The term of the tenancy should be agreed. There are generally two types of tenancies:
   
   Periodic Tenancies where there is a start date and no expiry date. The tenancy continues until either party gives the required notice to terminate. A tenant can give 21 days notice to vacate at any time. A landlord can give 42 days notice if they are selling or moving in themselves or 90 days notice in any other case. Refer to Section 51 of the Residential Tenancies Act for further information on terminating periodic tenancies.
    
   Fixed Term Tenancies have a start date and an end date. These tenancies can not be terminated by giving notice and terminate on the said date. The most common fixed term tenancies are 6 and 12 months. If either party breach terms of the agreement then you can apply to the Tenancy Tribunal to terminate the tenancy during the term.

4. The chattels need to be discussed. These are items or furniture included in the rental such as dishwasher, stove, alarm, fridge/freezer etc. If there are any chattels in the house that don’t work and are not included then these should be discussed and recorded at the beginning of the tenancy so there are no surprises.

5. Any other important terms should also be agreed. The most common terms include:

• Maximum number of residents
• Confirmation of who maintains lawns and gardens
• Pets or no pets
• There may be other specific terms that are unique to your property and these should also be discussed before completing a tenancy agreement.

Once you have negotiated the above details most of the hard work is done but a tenancy is not in place until you have a written tenancy agreement. A tenancy agreement is required by law to record various information. The Department of Building and Housing provides basic information including a basic tenancy agreement on their site.

The tenancy agreement should be completed as soon as possible and a deposit receipted. This is generally a weeks rent. Copies of the tenancy agreement should be kept by all parties. A property inspection should also be completed prior to the tenants moving in and a copy of the report provided to all parties.

Any experienced property manager will confirm that tenancy applications fall over at the last minute all the time. Tenants can change their mind, decide on another property or sometimes just feel that the relationship was not positive enough to pursue the property. Property management is about people. You need to complete the tenant selection and negotiation process as an exercise in customer service. The landlord will always have a lot more success if they provide a professional service with clear communication from day one! Tenants who know the landlord is professional and pro-active are generally tenants that are less likely to breach an agreement and more likely to stay long term.

Allen Realty is a specialist Auckland residential property management company with a growing network of local branches in Auckland CBD, Mt Eden, Greenlane and Manukau. Visit www.allenrealty.co.nz for information on our services or email simonallen@allenrealty.co.nz for more information.

You can read other recent blogs including The Tenant Selection Process, The Art of the Rent Review, Smoke Alarms in Rental Properties, A Landlord's Preparation for Winter, Reduce Moisture—Reduce Vacancies, Low Maintenance Gardens in Rental Properties and How Many Tenants on an Agreement?

Simon Allen | Allen Realty Ltd
REINZ Residential Property Manager of the Year 2011
May 2011 

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Property Management Testimonial

"Elena turned a potentially stressful situation into a non event. A tenant left leaving the property in a mess and with damage. Elena was able to turn the place around using the bond and re-tenanted within a short space of time leaving no lag in rent payments. 

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