You may be wondering what is cheaper in the current market, renting or buying your own place?
Over the last 12 months we have seen a handful of tenants vacate a property due to purchasing their own home in response the increase in rental prices. This article will explain what happens if you purchase a property mid tenancy, what is an early termination, some cost differences between renting and owning your own home, as well as some contact information for our expert team that can assist you!
You may have heard the term Early Termination or what is well known as a Break Lease. This is when a tenant who is in a fixed term agreement, vacates during their tenancy prior to the expiry date. For example, the lease agreement may expire on November 30th but due to purchasing a property, the tenant may have requested an early termination to vacate on May 30th. This can involve fees for the tenant which essentially go towards reimbursing the owner for any out-of-pocket expenses they have incurred. The fees that are generally charged can include the below:
- Rent until a new tenant moves in.
- The final inspection fee.
- Advertising costs.
- Reimbursement for the unused portion of the letting fee.
- Any other costs the owner may have incurred.
These fees need to be brought to the tenant’s attention so they are aware of what they could be liable for if they decide to proceed with an early termination. A form needs to be filled in and signed by the tenant to acknowledge these charges and once that form is returned, advertising can commence. If the owner decides not to re-let the property when the tenant vacates, these fees cannot be charged. However, it does open a door for negotiation due to the owner still being out of pocket for some of the costs.
Over the course of a few years, we have also seen some of our tenants purchase the property they are renting. In some cases, the owner may not be considering selling, but to the right person (or tenant) and for the right price, it may just be something they are happy to look into. If you absolutely love living in your current rental property, it is a great idea to touch base with your Property Manager to let them know that in future you may be interested in purchasing it if the owner is open to the idea.
After renting for many years, some people may not be aware of the additional costs that some homeowners pay so we wanted to put a brief overview below to help you!
| As a renter you may be liable for the below costs | As a homeowner, you may be liable for the below costs |
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To help get you started, it is a good idea to discuss your situation with a finance broker. They can help ‘punch some numbers’, give you an idea of what you can afford in regards to purchasing a property, help with your budget, compare lenders, and do all of the ‘nitty gritty’ work to make this a smooth process. Donna-Lee, our inhouse Credit Advisor at Celsius, is here to help. Feel free to reach out when you are ready to discuss what your next steps could be!
Celsius Property also has a very knowledgeable and experienced Sales Team. If you are interested in selling your property or perhaps, you’re just after an appraisal to see what your property may sell for in the current market, reach out to our team and they would be happy to assist. You can call the office on 08 6144 0700.
As always, the Celsius Property Management division is here to assist you with any queries you may have, please do not hesitate to reach out.
Warm Regards,