By Abiodun Doherty
There is no denying the fact that the pandemic and its fall out has had and is having a devastating effect on the economy of individuals and nations. Research has shown that there has been an increase in rent defaults and many that are paying their rents are either not paying as at when due or paying in instalments. Some of the reasons behind this trend is the fact that several people have lost their jobs or their income has reduced significantly. The ripple effect of this trend will affect other aspects of the economy and it does not appear to be abating anytime soon.
One of the prominent sectors that will be affected is rental real estate. There are many investors who are using their extra properties as a source of cash flow either to meet personal needs or to meet their financial obligations. Some have structured their real estate investment as an important part of their retirement strategy.
Combine loss of income or reduced income with spiralling inflation and those investors might be confronted with the perfect storm. Tenants are especially susceptible to suffering the brunt of the economic downturns if they can no longer pay their rents. This has led to some tenants being forcibly ejected from their homes.
Whenever there is a downturn in the economy tenants that are affected will do well to examine their options in the light of their current reality. When the regular income is no longer coming in or is reduced smart tenants often look at downsizing by moving to less expensive areas. This might be at the end of their tenancy or sometimes in the middle of their tenancy depending on the urgency of the situation. Since the tenancy is usually covered by an agreement it is important to explore ways of ending it without incurring financial or legal obligations.
The starting point is to review the lease agreement if you were given one by your landlord or his or her agent. Most tenancy or lease agreements usually contain clauses on how to renew or end the tenancy. One of the reasons for this clause is to provide the landlord as well as the tenant with the certainty of tenure.
The landlord is sure that for the period covered by the agreement his or her income from the property is secure. The law also does not want the landlord to have the power to determine the term of the tenancy anytime he or she decides without recourse to the contractual documents.
Some tenancy agreements require that the landlord be given three months to one-month notification in writing of the tenant’s intention to renew their tenancy or end the tenancy. The purpose of this is to reduce the vacancy time that the landlord has to handle. When a tenant moves out of a property there is usually a period between that and when a new tenant rents the property.
The landlord is not earning any income during this period. If the landlord only becomes aware of this few days to the tenants departure from the property he or she will lose valuable time and money before getting another tenant.
With the above understanding it is important that you approach the landlord or his agent well ahead of the time that you intend to leave the property especially if you intend to break a lease or leave before the end of your lease.
If you have someone that is interested in taking up a lease of the property it will be well appreciated by your landlord or his agent if you can connect such an individual with the agent. If you have a very good rapport with your landlord or his agent they will be happy to rent to anyone recommended by you knowing that it will save them the hassle of looking for a new tenant.
Another proposal that might appeal to your landlord is a win-win compensation system. If you are leaving before the end of your lease and you still have a few months left on your lease instead of requesting for a full refund of the outstanding rent if you have paid in advance you could offer a month pro-rata rent to be deducted by the landlord to cover for the period when the property could be vacant.
Landlords will usually pay back the unused rent paid in advance by the tenant. Even if the situation had degenerated to the point where your landlord has taken you to court,your offer of staying and paying for a specific period of time will usually still be accepted.
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