Long-term tenants now are a reality for many landlords in Canada. And that’s a good thing — for the most part.
However, there are some downsides when tenants stay year after year. Tenants can gain a sense of entitlement — “I’m paying your mortgage, so the least you can do is give me new appliances,” or a sense of ownership, “This is my home, not yours!” And, some landlords stop managing the property leaving tenants on their own.
These tenancies usually start out well but can slowly decline. In one example, the first year went great. Toward the end of the second year, the tenant missed a rent payment. Then, the landlord couldn’t get the tenant on the phone. After stopping by, the landlord learned from a neighbour that the police had been around. Inside, was a 6-inch high layer of needles and trash. To top it off, two unauthorized guests were living upstairs.
Long-term tenancies require a different perspective from landlords. One problem is that standard leases designed for one year don’t always work well with long-term tenants. When there is an expectation that the tenant will leave after twelve months, issues like annual rent increases might be ignored. Property inspections tend to lag. Also, needed upkeep is postponed until the end of the lease term. Maybe that can wait a year, but it can’t wait five years.
Fortunately, there are steps that landlords can take in the tenancy agreement to avoid common problems with long-term tenancies:
1. Prohibit tenants from making changes to the property, with the exception of tenants with disabilities who need accommodations. The more personal touches the tenant adds, the greater the sense of ownership, which can cause conflicts with the landlord. The same goes for allowing or requiring tenants to do their own repairs.
2. Address future rent increases. Tenants should see in writing that rent will go up each year. That way, tenants are not focused on arguing their way out of it.
3. Tenants’ relationships may change over the course of the lease, so adopt guest policies that allow the landlord the right to screen long-term guests and add new occupants to the tenancy agreement.
4. Contact information may change over the course of a long-term lease, so to the extent allowed by law, require tenants to update phone, email, employment and emergency contact information.
5. Lay out a schedule for routine property inspections throughout the term of the tenancy — no matter how long that might be.
6. Include a Notice to Tenant and report rent payments to a credit bureau. Long-term tenants need to understand that they cannot unilaterally decide to withhold rent payments, and that there are consequences for late or missing rent payments regardless of how long they stay at the property.
Run any lease changes past your attorney and ask for any further suggestions that protect your rental property investment.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
Click Here to Receive Landlord Credit Reports.
Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.