I had this same thing happen in Victoria in my IP. At the end of the day, apparently they can switch to a month-month in vic automatically however you can not continue the lease after a month and they will either have to sign a lease or find somewhere else to live. At the end of the day, are they good tenants and would you rather them stay than have someone else? Or what is the risk of long periods of vacancy?
My problem was the owner of the real estate managing my property had put is nephew in my house, so he was told all sorts of little things he could get away with. I was happy with them staying month-month, although its not 1st preference, until the rent starting coming all over the place at which point i said either sign a 6 month minimum lease or get out. My property manager told me i was a little unreasonable but at the end of the day i treat my IP as a business and i have other things to worry about than to chase my rent which was being ignored due to the nature of the tenants.
My property manager has since improved 150% after a few encouraging words on what kind of a service I am paying for and after riding them for a bit they realised i wasn’t joking and things have improved tenfold. Needless to say, said property manager will actually be getting his christmas gift this year which he went without last year. :-)
In NSW leases there are a few ways to inhabit premises. Fixed term lease where the tenant must stay for that whole period and then vacate or if vacating early (breaking the lease agreement) then the tenant must pay the costs involved to change tenants during that period.
Or, that fixed term lease has a clause that allows the tenant to stay there after the fixed term has expired on a month to month basis. Usually if a tenant wants to stay there but only on a month to month basis, it means they are not considering staying there long term and they are considering moving. You can confirm this by offering them a 6 or 12 month fixed lease, if they refuse you know they will move.
Talk to your PM (not Tony Abbott) your property manager for their opinion about availability of replacement tenants at this time. If you are self managing, check the local area agents for the number of vacancies. Is there some reason your tenant might want to move ? Ask the tenant in writing if there are any urgent maintenance issues.
Since your userid is “Melb Invester”, I am assuming the property is in Victoria.
When a fixed term lease expires, you can either ask them to sign a new fixed term lease, or allow it to lapse to a month-to-month basis.
One big problem is that you are not allowed to force them to sign a new fixed term lease. A tidy way of dealing with it is to explain that for insurance reasons, all your tenancies need to be on fixed term leases (not all insurers will cover rental default unless the tenancy is on a fixed term lease.)
The month-to-month thing a nuisance, because your obligations as a landlord, and notice periods you have to adhere to when giving tenant notice to vacate remain the same, whereas the tenant enjoys the ability to bail out with only 28 days notice. This would be quite inconvenient if the tenant decided to move out during a quiet time of the year, so you might prefer to insist on fixed term leases.
Another thing you could try is when it comes time to discuss a lease is to put the rent up to compensate for the ‘risk’ involved with your tenants not being on a longer term lease. I ended up doing this with my tenants, my agent said it was time to put the rent up and i suggested that if the tenants want to sign a longer lease i would be more than happy to keep the rent at the same price. However they could stick around month by month at an increased cost to them.