Is a Month-to-Month Lease Better for Landlords?
A lease agreement is a legally binding document provided to the tenant that guides their relationship with the landlord. The lease must adhere to the terms provided for by local authorities, the provincial and the federal government. While there are many types of leases that landlords can make use of, we will be focusing on the consideration of a month-to-month lease.
A month-to-month agreement is a lease document that continues each month until either party provides a 30-day notice that they’re vacating the property. Most month-to-month leases are used when extending existing leases, but there are also properties where tenants are provided with month-to-month leases only.
A month-to-month lease is ideal if you value flexibility. This is especially true if most of your tenants are travellers or do not stay at a given location for a long period of time. But does it offer better value and certainty for landlords long-term?
In this article, our experienced team here at Leenan Property Management looks into the features of a month-to-month lease so you can know if it’s right for you!
How Is a Month-to-Month Lease Different?
A long-term lease agreement often lasts anywhere from six months to more than a year, depending on the property. It’s recommended for the property owner to send a lease renewal offer at least a month before its expiry. Some properties allow tenants to have a month-to-month lease instead of signing a fixed-term lease document, but this varies from property to property.
As the name suggests, month-to-month leases are renewable on a monthly basis. They have no scheduled termination date. Landlord-tenant law allows for either party to terminate the lease once a 30-day notice is issued.
Features of a Month-to-Month Lease
While it’s different from a fixed long-term lease, a month-to-month lease has clauses and conditions that are similar to that of a long-term lease. Both long-term leases and month-to-month leases have similar provisions on building restrictions, smoking, security deposits, and pet policies .
Other features of a month-to-month lease include the rent due date, automatic renewal clause, tenant and landlord information, penalties for late payment, property damage clause, tenant insurance requirements, rental charges and how they are collected , and other additional fees.
Advantages of a Month-to-Month Lease
1. Flexible End Date
Either party can terminate the lease whenever they decide, provided that they give notice beforehand. The flexibility of this type of lease is one of the biggest advantages of this short-term lease option. This is unlike the fixed-term where you will be required to provide a notice a month or more in advance, depending on the lease agreement terms.
As a landlord, you’re able to plan ahead to accommodate tenants looking to move in the near future. It’s also useful for new landlords who are not yet sure about the clauses. You can use the month-to-month lease before developing your fixed term lease agreement based on your experiences.
2. Ability to Raise Rent
You can use this type of lease agreement to raise rent without losing tenants. The rationale of charging more rent with a month-to-month lease is that there is more risk and expenses attached since a tenant can decide to move on short notice.
This, however, cannot counter the provisions of the landlord-tenant laws. The increase in rental amount and amount of extra rent charged by the landlord must adhere to them. Otherwise, you may find yourself in legal trouble.
3. Makes Evictions Easier
Imagine that you have a problematic tenant on your property who is in a long-term tenancy agreement. While you might have good reason to terminate the lease , the long-term agreement brings a challenge. You could even find yourself in a court of law.
The same cannot be said if a month-to-month lease is in place. The landlord will provide the tenant with a notice requesting them to vacate from the premises. This helps the landlord eliminate problematic tenants easily.
Disadvantages of the Month-to-Month Lease
1. Constant Change
Just as flexibility is an advantage, it also poses a disadvantage to landlords. Ideally, having long-term tenants puts the landlord at ease in knowing there will be no disruptions or movements. You can rest for a while. This is, however, different for month-to-month leases.
2. Less Income Stability
Having a month-to-month lease presents the issue of less stable rental income since the tenant could move at any time and even before you have a new tenant to occupy the unit.
You may end up incurring losses from having vacant units, which is something you want to avoid for a secure investment.
The short notice to find new tenants could also be stressful to the landlord. You may not be able to find new tenants within the short period which will affect your finances.
Are you in a dilemma on which lease agreement to choose for your Regina property? Call on the professionals in all matters that concern property leasing and management. Leenan Property Management can help you in deciding and crafting the best type of lease for your property. With our experience in the property industry, we will help you maximise the income of your property investment!