How to negotiate a successful tenancy

What terms should a landlord discuss with a tenant before finalising the tenancy agreement?

On the completion of marketing your property to potential tenants, you will receive the completed applications. Once you have worked through The Tenant Selection Process you will hopefully have chosen a tenant who best suits your property.

Now it is time to negotiate the terms of the tenancy. We recommend discussing the most important aspects over the phone when first offering the property to the tenant, so when you meet to complete the tenancy agreement there are no surprises.

Here are a few things to consider:

  1. The start-date: The application form will show what the tenants have requested. If this date is not possible, negotiate a new start date that suits you both. 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. Payment of rent and bond: This should be confirmed with the tenant as well as any requirement to have the rent paid in advance. While weekly rent in advance is the norm, you should be flexible if your tenant wants to pay fortnightly or monthly.
  3. The term of the tenancy: Generally, there are two types of tenancies:Periodic Tenancies are 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. Please refer to Section 51 of the Residential Tenancies Act for further information on terminating periodic tenancies.Fixed Term Tenancies are where there is a start date and an end date. These tenancies cannot be terminated by giving notice and terminate on the said date documented in the tenancy agreement. 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: Discuss what items or furniture is included in the rental such as the 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. Agree any other important terms, which may include:
    a. Maximum number of residents
    b. Confirmation of who maintains the lawns and gardens
    c. Pets or no pets
    d. Note: 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 remember a tenancy is not in place until you have a written tenancy agreement. A tenancy agreement is required by law to record the terms of the agreement and all relevant information. Tenancy Services 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 one week’s rent). We recommend a property inspection be undertaken prior to the tenants moving in and copies of BOTH the tenancy agreement and property inspection report be kept by all parties involved.

Any experienced property manager will know that tenancy applications fall over at the last minute all the time. Tenants may change their mind, decide to take another property or 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.