Fixed-term Tenancies

There has been a lot of media attention on the property management industry as most of the changes to the Residential Tenancies Act 1986 came into effect on 11 February 2021. Unfortunately, as with any change, there has been some misinformation circulating.

It has been reported that the Residential Tenancies Amendment Act brings the end to fixed-term tenancies.

Harcourts wants to assure landlords that fixed-term tenancies and the renewal of fixed-terms are just as relevant as they have ever been, as both landlords and tenants seek security of tenure.

The important change to be aware of for both landlords and tenants is that for fixed-term tenancies granted from 11 February 2021, the landlord must provide a reason to terminate the tenancy and the notice periods are longer. The reasons to terminate a tenancy are specified in the Act.

Your Harcourts property manager has been trained on the changes to the Act, and if you have any questions or concerns, we encourage you to speak to your property manager.

Holiday Home or Residential Tenancy?

The Residential Tenancies Act 1986 no-cause termination was removed from the Act from 11 February 2021.

The removal of the no-cause termination removes the ability of landlords to rent properties for fixed-terms of more than three
months and terminate the tenancy so that the landlord can have use of the property for a holiday season.

“A landlord may terminate a periodic tenancy by giving at least 63 days’ notice if the owner of the premises requires the premises,  within 90 days after the termination date, as the principal place of residence for at least 90 days for the owner or a member of the owner’s family.”

Using a property as a holiday house for the summer is unlikely to qualify as a principal place of residence and meet the above conditions. There are options available to landlords as short fixed-term tenancies of not more than 90 days do not automatically convert to periodic tenancies at the end of the initial term, however there is the potential for additional costs and risk associated with these shorter fixed-term tenancies. This includes the lack of demand from tenants for these type of tenancies and the potential for
higher vacancy periods.

Landlords who want to rent their property for a short fixed-term, should discuss the associated risks with their Harcourts property manager.