Paperwork is a necessary evil for every landlord and one of the most important documents of all is the tenancy agreement between the owner and the tenant.
There are several different types of residential tenancy agreements, including short-term fixed, long-term fixed and periodic leases.
Meldon D’Cruz, principal at Cruz Legal in Melbourne, said although residential tenancy laws differ slightly from state to state, such agreements are pretty uniform.
“State legislation sets out the obligations of the landlord and the tenant, certain consumer protections, such as depositing the bond with a bond authority, and rights to end the tenancy in some circumstances,” D’Cruz said.
Types of tenancy agreements
D’Cruz explained that there’s three common types of leases. They are:
- a short fixed-term lease; a set period from one month up to five years;
- a long fixed-term lease; a set period of more than five years;
- a periodic or “month-by-month” lease.
Most residential leases are required to be in a standard form and any variations from the standard may make them void, he added.
Differences between the three different types of tenancy agreements
Aside from the timeframe, there are subtle differences between the three different types of tenancy agreements, D’Cruz explained.
- A short fixed-term lease – which can run anywhere from one month up to five years – is required to be in a standard, written form.
- A long fixed-term lease – an agreement that exceeds five years – allow a little more flexibility in the terms of the lease, including the ability for rent increases, “top-ups” to the bond to match rent increases, modifications to the property and additional clauses to manage bringing the tenancy to an end.
- A periodic or “month-by-month” lease begins life as a short-term lease. After the initial fixed-term ends, the tenant can either sign a new lease or continue on a “periodic tenancy”. This means the tenant doesn’t sign a new lease, but the terms and conditions of the tenancy agreement still apply on a month-to-month basis. Either the landlord or the tenant can terminate the periodic tenancy with one month’s notice.
What must be included in a lease agreement
A residential lease should outline:
- the details of the landlord and tenant
- the amount of rent and how it is to be paid
- the length and type of tenancy
- the amount of bond required
- obligations on the parties, ie maintenance, cleanliness, use of premises, restrictions on sub-letting etc.
- any special terms agreed by the parties.
“Most states have similar residential tenancy legislation, although there are some variations around pets, disability access, short-term sub-letting and so on,” D’Cruz said.