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What Happens When A Tenant's Lease Expires In NSW?

21/7/2020

22 Comments

What Happens When A Tenant's Lease Expires In NSW? Carnelian Property Management Newcastle

We are often asked what happens when a tenant's fixed term lease period ends. In this post, we specifically address a number of questions relating to what happens to the tenancy agreement at the end of the fixed term (rather than discussing the rights and responsibilities of a tenant choosing to leave at the end of the lease).

Below, we will cover the following questions related to this topic:

Does the tenant need to move out at the end of the fixed term lease?
Does the tenant need to sign a new lease in order to stay in the property?
What happens if a tenant stays on in the property without a new lease?

1. Does the tenant need to move out at the end of the fixed term lease?

A tenant does not need to move out simply because the fixed term lease expires.

The fixed term lease period provides a level of security and comfort for both the landlord and tenant, providing assurances around the rental amount, the duration in which the rent will remain unchanged, and an indication of the anticipated longevity of the tenant in the property.

However, the tenant does not need to move out at the end of the lease period without this being specifically and correctly communicated. This requires that either the landlord or tenant provides a written termination notice to the other party with the applicable notice period required to end the tenancy.

A landlord is required to provide 30 days notice to end a fixed term agreement, while a tenant must provide 14 days notice. Further details around what must be included in the termination notice are outlined on the NSW Fair Trading website.

2. Does the tenant need to sign a new lease in order to stay in the property?

As indicated above, a tenant does not need to move out at the end of their fixed term lease unless the tenancy is terminated by either the landlord or tenant, advising the other party that they wish for the tenancy to end.

Without either party giving notice to terminate, the tenancy automatically continues as a periodic agreement. A periodic agreement is simply defined in the Residential Tenancies Act as "a residential tenancy agreement that is not a fixed term agreement".

Section 18 of the Residential Tenancies Act states that a fixed term agreement continues after the fixed term ends as if the term of the agreement were replaced by a periodic agreement, and on the same terms as immediately before the end of the fixed term.

So, if neither party gives notice to end the tenancy, and the fixed term ends, the tenancy continues on the same terms as it did at the time the fixed term lease was expiring.

3. What happens if a tenant stays on in the property without a new lease?

This then leads to the natural question - what's the difference between being on a fixed term lease and not being in a fixed term lease any more?

The most significant differences are around notice periods required to end the tenancy, and rules around rent increases.

Notice Period To End A Periodic Agreement

When in a periodic agreement (i.e. not a fixed term lease agreement), the landlord may give a termination notice at any time. Unlike the 30 day notice period to end a fixed term lease at the end of the fixed term, under a periodic arrangement the landlord must provide 90 days notice to terminate the agreement.

However, if a tenant wishes to end a periodic agreement, 21 days is the minimum notice period required.

Importantly, if a landlord issues a 90 day notice to terminate a periodic agreement, the tenant only needs to pay rent up until the date they provide vacant possession of the property. The tenant is not required to pay rent for the full 90 days of the notice period, and the date they choose to leave (and finish paying rent) could be much sooner!

Notice Period To Increase Rent

While in a typical fixed term lease agreement of less than 2 years, the landlord or agent can only increase the rent during the fixed-term if the agreement sets out the increased amount or how the increase will be calculated. The landlord or agent does not need to give the tenant written notice of the increase.

For agreements with a fixed-term of 2 years or more, the rent can only be increased once in a 12-month period. A landlord must also give the tenant at least 60 days written notice.

Under a periodic agreement, rent can only be increased once in a 12-month period, and the landlord must give the tenant at least 60 days written notice before the increase starts.

We trust this article has helped to clarify some common questions around what happens to the tenancy agreement at the end of the fixed term. If you would like to know more to assist in the management of your property, contact us today.

22 Comments

Mark

16/9/2021 08:59:35 am

Hi if a Tennant has a lease expiring, say 15th October, can the landlord give notice on the 14th October asking the tenant to vacate the property? And will the tenant need to do so by the 15th?

Paul D link

16/9/2021 09:32:47 am

Hi Mark,

Thanks for the question.

In NSW, if a tenant is in a fixed term lease ending 15th October, the landlord can give notice on the 14th October and the tenant would have 30 days from then to vacate i.e. they would need to vacate by Saturday 13th November.

The tenant can choose to leave earlier than then if they wish, however they must pay rent up until the end of the fixed term or the date they provide vacant possession (whichever is later).

Hope this helps.

Davy

20/9/2021 02:34:20 pm

Hi there,
I am a tenant and my lease ran out on the 19th September. The landlord didn't approach me until less then a week ago about renewing the lease and I said no when they offered last week and now they're trying grill me for not giving notice about my departure and I have to pay a further 21 days rent. I cannot financially afford this, Is there any loop hole I can use to get out of this?

21/9/2021 08:51:48 am

Hi Davy,

In NSW you are not required to sign a new lease when your fixed term lease ends. If you do not sign a new lease, your tenancy automatically continues as a periodic arrangement, it does not mean you have to move out unless you or the landlord give notice to the other party.

Once a fixed term lease ends, if you don't sign a new lease, you can continue on in the property until either you give the landlord 21 notice that you will vacate the property, or they give you 90 days notice to vacate the property.

Hope this helps.
Paul

24/9/2021 07:04:42 pm

Hi, My NSW lease expired 2 years ago, all of a sudden they have sent me a 'Lease Renewal offer' for the same rent. They are saying the lease term starts over 12 months ago. I don't have to take any action on it do I? There is no termination letter.

27/9/2021 08:58:48 am

Hi Jo,

No, you don't have to take any action on it. Without signing, you continue on a periodic agreement as outlined in this article.

Lewis

27/9/2021 04:26:15 pm

If a landlord fails to provide an official notice of termination with all due details, but it is technically 14 within the lease expiry date, can they still show prospective tenants through the property without the tenants permission? Is this a breach of the agreement to deny access even though there was no proper notice of termination? Thanks, Lewis (NSW)

28/9/2021 12:32:27 pm

Hi Lewis,

Your situation may be more complicated than we are best to respond and we would recommend you call NSW Fair Trading for further advice.

It is the case however that a Termination Notice must:
- be in writing
- be signed and dated by the party giving the notice
- include the address of the rented property
- state the day the tenancy agreement is terminated (and by which the tenant will need to move out), and
- include the reasons for termination (if applicable).

Without this, the other party could argue the notice has not been appropriately served.

Good luck,
Paul

Emily

28/9/2021 07:07:29 pm

Hi
My estate agent is emailing and texting me nearly every day asking me to sign a new lease. My hestiation is that my current fixed-term lease does not end until December this year and I am not sure if i want to stay on. Is it common for estate agents/landlords to ask tennants to sign a new lease this far in advance? The rent increased by $30 per week in May this year so i am also concerned that the estate agent/landlord could try and increase the rent on me again if i don't sign it. Therefore, i'm not 100% sure want to stay on for an additional 6-12 months after December. I feel a little bullied into signing it with the amount of frequent "reminders" I'm receiving. I am planning to call the estate agent to discuss the issue, but firstly i would like to know my rights and where i stand legally before i make this call. Thank you for your help.

29/9/2021 08:31:36 am

Hi Emily,

Thanks for the question. It's not uncommon for an agent to contact a tenant 3 or so months out from a lease expiry to check on your plans and offer a new lease if you would like to stay. This assists with filling a vacancy quickly if you are planning to move out, and keeps the landlord informed of what they can expect at the end of the lease term.

The daily follow ups this far out sound a little extreme though.

You are under no obligation to sign the lease offered to you, however the landlord or agent can still issue a rent increase to you if the required notice is given.

For further assistance we recommend you call NSW Fair Trading to discuss your situation.

All the best,
Paul

1/10/2021 12:30:27 pm

Thank you for your reply, Paul. I really appreciate your advice.
I called the real estate agent and explained to them that I’m unsure what my plans will be in December and reassured them that I will be in contact should I wish to leave the property. They seemed happy with this plan and have not contacted me again.
Thanks for your help,
Emily.

Jack

30/9/2021 09:09:17 pm

Hi there, our 12 month fixed-term lease has just expired. Prior to the lease ending, the agent asked if we would like to sign a new lease at considerably higher rental. We declined and counter offered a new, longer lease at a more reasonable increase. There was no reply from the agent, and the lease has expired. Have we now entered into a periodic lease, and would any rental increase need a 60 day notice period, and any end of lease require 90 day notice, even though the suggestion of a new lease at higher rent was raised by the agent prior to lease expiring?

Thank you.

1/10/2021 09:08:49 am

Hi Jack,

You are correct that if you were on a fixed term lease which has expired without you signing a new lease or either party giving notice to end the tenancy, you will continue on a periodic arrangement.

You are also correct that a rent increase would require 60 days notice, and end of your lease would require 90 days notice to you or 21 days notice from you to the landlord / agent.

All the best,
Paul

Liam

6/10/2021 08:42:41 am

If I have entered in a periodic agreement and the landlord gives 90 days notice of termination of lease I understand that I can end that sooner but would I still have to provide 21 days notice or can I provide less notice?

6/10/2021 09:48:24 am

Hi Liam,

If you are in a periodic agreement and have been given 90 days notice to vacate, you are able to hand back possession at any time before the date you have been requested to vacate.

You do not have to give your own notice, you only have to pay rent to the date you return possession to the landlord / agent, and it can be before the 90 days notice is up.

If you are planning to leave before the 90 days notice is up, it is best to advise the landlord / agent of this in writing so they are clear of your intentions.

All the best,
Paul

Brett

6/10/2021 09:12:44 pm

Hi Paul,

We sent our landlord an email with plenty of notice (6 weeks) before the end of our fixed term tenancy stating our intentions to leave 14 days after the end of the fixed term.

In response we received a letter terminating the tenancy and requiring vacant possession at the end of the fixed term and will not allow us to stay for the additional two weeks until our other property becomes available.

Can they serve us this notice after we have already provided them with notice to end the tenancy at a later date? Our notice was provided as an email, not a written letter.

Thanks,

7/10/2021 11:23:36 am

Hi Brett,

That's great that you gave your landlord plenty of notice of your intentions.

However, because the original fixed term agreement has an end date prior to the date you have said you would like to leave, the landlord is not obligated to extend your vacate date to a time thereafter. They are able to terminate the tenancy at the end of the agreed fixed term as long as the required notice is given.

While you are only wishing to stay for an extra 14 days, the same rights apply as if you were giving notice that you intend to vacate 3 months after the end of the fixed term. The landlord is not obliged to extend your tenancy beyond the agreed fixed term.

Hopefully you can come to an agreement given the short term of the extension you are seeking.

Kind regards,
Paul

Tristan Gold

9/10/2021 06:44:25 pm

My lease ends on the 19th october.
The realestate is apparently negotiating with the landlord about rent increase and only a 6 month lease term.
If they give me on the 20th the new lease to sign with rent increase and my current lease ended on the 19th does that mean I don't have to pay the raised amount of rent for 60 days as I would technically be in a periodic agreement so require 60 days notice of rent increase.

11/10/2021 09:07:33 am

Hi Tristan,

That is correct. In this situation, 60 days notice is required to increase your rent.

All the best,
Paul

Tristan

11/10/2021 09:56:55 am

Thank you so much for that info paul

Mona

13/10/2021 04:20:16 am

Hi, my fixed term lease ended in April 2021. Since I have been extending my stay and advising my landlord of extension every 3 monthly via email. No new contract has been signed. Am I in a periodic tenancy? Does my landlord require to give me 90 days notice to terminate the tenancy? If the landlord gives only one month notice what steps should I take? Thanking you in anticipation. Mona

13/10/2021 03:28:57 pm

Hi Mona,

Presuming you are based in NSW, then yes if your fixed term lease ended in April 2021 and you have not signed a new fixed term lease, you are in a periodic arrangement.

This means your landlord or agent must give you 90 days notice to terminate the tenancy. NSW Fair Trading will be able to assist you further if you require assistance.

Kind regards,
Paul