How to Encourage Tenants to Renew Their Lease
The end of the year often marks the end of rental leases, and finding new tenants can be a time-consuming and costly exercise for landlords and property managers. That is why it is important to understand not only the reasons why tenants move, but the small things that landlords can do in an effort to make renewing a rental lease a no brainer.
Top 5 reasons tenants move
1. Cannot afford the rent
A renter often moves out when they are no longer able to cover the expense of rent. Be it through job loss or a sudden increase in expenses due to medical issues for example, the renter may suddenly experience poor cash flow. Through no fault of the landlord, the renter has to move out in order to find housing that is more affordable.
2. Job change or relocation
When a renter changes jobs or is relocated in their current position, they also may be forced to move out of their home. In the instance of changing jobs, renters may be looking to downsize or upsize in accordance with their new pay packet.
However, someone who needs to relocate for their job needs to move simply to be closer to their new job, forcing them to move out of their rental.
3. Maintenance issues
If a rental property is not being properly looked after, a tenant may become tired of the issues and look for alternative accommodation. If the renter has been on the ball and alerted the landlord of issues to no avail, or even if numerous issues arise with the infrastructure of the rental, a tenant may tire of the constant hassle and want to move out.
4. Renter’s market
Many renters relocate when the market is deemed to be a renter’s market. This is a good time for renters to search for new apartments or houses, as a renter’s market suggests that there are more places available than there is demand. Therefore, a tenant may move if they find a larger property or one with better amenities for a lower price than their current residence.
5. Changing circumstances
In the event of marriage, divorce or separation, tenants may need to move. This change in life circumstances may necessitate a property of a different size or just an opportunity to start fresh. With these changes in personal life comes a need to relocate in order to suit a renter’s new normal.
Key ways to ensure your tenants want to stay in your property
1. Incentivise tenants to renew their lease
Keeping quality tenants should be a priority, particularly if your current tenants look after your property well, pay rent on time and are not unrealistically demanding. In this case, perhaps you could agree to not increase rent if a lease is renewed. This could be especially valuable to your tenants if rents have been going up elsewhere around the suburb. If you raise your rent as well, then they are going to start looking at what else is available and, if they leave, it probably was not worth it.
2. Create a trusting relationship
It is easier to get somebody to cooperate if they like you, trust you, and are happy to deal with you. With a typical rental lease you have a year to create a relationship with your tenants. This can be done easily; make sure you handle repairs and complaints quickly and competently, return calls and messages promptly and, in general, be nice and friendly. By quickly resolving problems that are within your control goes a long way to keeping them happy and ensuring them that any issues that need ‘expert’ attention are being prioritised.
Make sure you have a regular property maintenance schedule to help prevent ‘issues’ from arising. Ensure you schedule in regular checks such as testing smoke alarms, replacing batteries where needed, look for leaks in the roof, around the water heater, toilets and sinks.
Working with your property manager to ensure a tradesperson regularly visits your property is also a good idea and will help create trust between you and your tenants.
3. Make your tenants proud of the property
Everyone likes to come home to a well-maintained property, and tenants are no different. Spending time making sure your property has good curb appeal will go a long way to making tenants proud to live there.
If your property is a house, professional landscaping and gardening maintenance are two of the best, most cost effective ways to increase the value of the property, from both financial and aesthetic viewpoints.
For example, if your investment property is a house, plant flowers and decorative shrubs in the front yard. If your investment is in an apartment, make sure the entrance way to the apartment is clean and tidy.
4. Offer a grace period when collecting rent
If the rental agreement states that rent is due on the first of the month, it is within the interest of both parties to have a grace period in place until at least the fifth day of the month. While landlords can make the time frame lenient, they should let renters know that payment after the grace period will not be tolerated.
Having a grace period accommodates for times when life circumstances get in the way and payment needs to be delayed a few days, rather than being delayed for weeks on end. Allowing for some leeway sends the message to tenants that as a landlord, you are not strict, just reasonable in your expectations.
5. Address complaints quickly
Aiming to resolve complaints within a week’s time is a good benchmark to set. For a landlord it leaves enough time to sort through the problem and for a tenant the short turnaround shows that the landlord takes their words seriously.
If a landlord earns a reputation of being quick to respond both efficiently and effectively, when it comes time to sign a new lease, renters will have to take into account how well they have been treated and consider if, should they leave, would another landlord be so accommodating.
Asking your tenants to renew their lease
Normally about 90 days before the lease is set to expire, the property manager or landlord contacts the tenants about renewing the lease. If you have been a great landlord, who has taken the time to look out for the property and the tenants, a renewal should be expected.
Asking tenants to renew the lease should not be about convincing them to stay in the property. Rather, the conversation should be open and transparent on both ends, with the tenant/s and the landlord/s detailing and understanding the needs and wants of both parties before a new lease is signed.