The Advantage of Long Term Leases
While 12 month leases are the current norm in Victoria, more than one in five tenants have been in their home for longer than five years.
As a result of recent market and legislation changes, the option of taking up long term leases could be on the horizon, providing greater certainty both for tenants looking to put down roots as well as landlords seeking more stable incomes.
While 12 month leases are the current norm in Victoria, more than one in five tenants have been in their home for longer than five years. This shows there is already a significant portion of Victorian tenants who are making a rental property their long term home.
Millennials represent the largest demographic of the rental market, accounting for almost 30 per cent. Research by Ernst & Young Australia found that 66 per cent of millennials believe they will never own their own home, meaning a significant portion of the rental market are individuals with the expectation they will be a lifelong tenant.
In early 2017 the state government announced new legislation to provide greater security for both tenants and landlords. The changes would remove the current cap restricting rental agreements to a maximum of five years. ‘The lease can be as long as the tenant and landlord agree to with all the terms and conditions,’ says Daniel Andrews, Premier of Victoria.
…66 per cent of millennials believe they will never own their own home, meaning a significant portion of the rental market are individuals with the expectation they will be a lifelong tenant.
Expected to be implemented as early as 2018, these initiatives aim to increase the supply of stable housing for tenants and support their ability to establish themselves in a community, with the additional benefit of a guaranteed income stream for landlords.
The new long term lease agreement may include tailored terms such as allowing tenants to install fixtures and revised notice periods for inspections. These factors will assist with making tenants feel more at home in their rental property.
While it’s likely that long term leases will only cater to a small subset of the rental market, seeing as landlords and tenants alike generally prefer the implicit flexibility of shorter leases, tenants who participate in long term leases may enjoy a greater sense of security and belonging to their community.