[WWYD] Verbal Rental Agreement in NSW - Landlord in Financial Trouble

edy4eva on 12/01/2021 - 00:03
Last edited 13/01/2021 - 22:28

First a background:
We rented our apartment in Sydney mid 2019 for one year. Tenancy became periodic until the end of November 2020 when we we contacted our agent negotiating lower rent upon a new fixed term agreement (at 25% reduction for 6 months) but did not receive a response.

So we began house hunting. We applied for a new place and were asked to provide a ledger from our current agent. Upon emailing the agent for the ledger, they called us back immediately (!!) and offered almost 30% reduction if we were to go for a 12-month lease. We agreed to that (over the phone) and discussed the start date, duration, rent per fortnight. We even discussed the new terms in NSW that allow a reduced break fee depending on how much of the contract term is left (e.g. 50-75% elapsed 2-week rent break fee, more than 75% 1 week rent)

Following that call and on the very same day we paid the new rental rate and followed up with a message to the agent confirming the payment and indicating that we await the new rental contract (never happened).

Yesterday and to our surprise we received a call from the agent saying:

  • Landlord wants rent increased by ~10% based on the OLD rate, so that's almost 50% increase on our agreed current rent!!! The argument put forward that they are facing financial difficulties and for a bank to agree on a refinance the property must be tenanted at that prohibitive rate (for comparison the same asking rate gets a much larger unit in the same complex, a unit that's 50% larger than ours got rented for about the same!).

  • Failing that the landlord would like to offer us 90 days notice to vacate.

  • The landlord is forced to sell (by the bank) and need us to allow multiple open times (at least twice on the Saturday!) until sold.

I did some research and found out that they cannot negate the verbal contract, cannot increase rent in the first six months, and certainly cannot give us a notice to leave this soon. BTW we had been good tenants with nothing but praise from the agent (who had always been very nice to us)

We love the place despite its shortcomings (on the small side, less than ideal ventilation). Few great aspects: it is modern in design, in great shape, with two A/Cs. Walking distance to everywhere around Sydney CBD. Ground floor north facing with a gate. Underground car park with zero stairs needed from/to street/carpark/unit, very quiet. And we had just got used to the area. There are no other units in the complex on the market, and anything similar in specs is VERY hard to find.

Any advice would be greatly appreciated!

Thanks

Edit/PS: we loathe and dread relocating, even more since having a child

Poll Options expired

  • 5
    Stand firm: a verbal contract is a contract
  • 94
    Pack and go somewhere else
  • 0
    Wait and see (for a new landlord or another place nearby)
  • 2
    Pack and relocate overseas (a sandpit idea for family reasons)
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Comments

  • AustriaBargain on 12/01/2021 - 00:20

    If there is no reference in writing, any emails or anything mentioning the conversation actually happened, then it sounds like they are going to call you a big fat liar trying to cheat them out of money with such an obvious shameful lie.

    • edy4eva on 12/01/2021 - 00:35
      +1

      The agent tried at first to treat the agreement as simply a verbal discussion without any signed paperwork, meaning that we are on periodic (which isn't the case since we entered into new fixed-agreement with a start date, duration, a reduced rent amount to be paid and the break fee).

      So I reminded the agent that it was still in fact a verbal agreement especially that the main elements were discussed and agreed upon. The agent did not try to deny it after that but claimed they were too busy to send the new agreement in the pre-Christmas period. After all, it is the responsibility of the agent to send the paperwork.

      The conversation yesterday moved towards how to find a way to help the landlord NOT default (looks like they have to do some talking about the effects of the verbal agreement).

  • Meho2026 on 12/01/2021 - 00:40

    You stuffed up not getting the agreed rent reduction in writing or by signing a new lease.
    Technically because you have no evidence of the agreed rent reduction, you should have been paying the original amount. You are actually in rent arrears.
    Just because the agent offered you a deal doesn’t make it enforceable if the landlord didn’t agree and no one signed a contract
    Sound like the landlord is in financial trouble and if that’s the case expect them to claim you have been underpaying your rent according to the written lease.
    Officially you are on a month to month lease.
    If you really don’t want to move then you have to come up with the cash for the rent increase otherwise get out.
    I can’t see how you would ever be successful at a tribunal with nothing in writing.

    • edy4eva on 12/01/2021 - 00:43
      +1

      Sure but the agent ended up agreeing that we are under a verbal agreement with new rent. Rental agreements do NOT need to be in writing and CAN be verbal.

      • Meho2026 on 12/01/2021 - 00:46

        Ok but I think you’re still screwed cos Im sure the landlord can end the lease in financial strife
        The landlord applies to end the tenancy on hardship grounds

      • AustriaBargain on 12/01/2021 - 00:49
        +1

        Get the agent to acknowledge the specific agreement over a text message or email. Even if it's you outlining the agreement and them sending back a reply that says "yes", anything at all.

        • edy4eva on 12/01/2021 - 00:53

          Good advice. Will try and word something via email outlining the verbal agreement and asking them to confirm the fact

      • jellykingdom on 12/01/2021 - 07:53

        Good luck trying to get the landlord to agree to a verbal contract that he wasn't a part of. You'll just end up in small claims court

  • SF3 on 12/01/2021 - 00:46
    +3

    Prepare for pack and go :(

    I can't see this ending well if you don't re-start the see what else you can rent process, despite how much you like the current place, unfortunately. Landlord seems too wishy-washy.

    90 days can go by quickly.

    Unless you want to be the buyer in the forced sale?

    • edy4eva on 12/01/2021 - 00:50

      Contemplating that. Not sure if the equity in my place interstate is sufficient in lieu of a deposit. My partner will have to take out the mortgage because I'm a SAHD. The landlord will also have to accept a chop on the price instead of waiting out for a buyer in a market that's currently beginning to stall.

  • garetz on 12/01/2021 - 01:41
    +2

    Since you have insider information maybe you should consider purchasing the place.

  • trustnoone on 12/01/2021 - 05:25
    +3

    I'm going to guess the guy can no longer afford the mortgage so either they try to get you to pay for the mortgage (hence the increase) or bank takes over it so they have to sell ASAP.

    I'd bail if I was you, because either you try to push that you have a contract, have to go to court etc etc, just for them to be unable to sell and bank takes over and I'd guess it would be an annoying issue.

    Or you bail, they try to sell/find a renter at that price. Considering rental price has gone down so much I'm guessing it will be difficult to happen and thus they have to sell anyway.

    Either way you'll likely find a cheaper place and nicer and annoying as it is maybe a nice change.

    Just my 2c take a photo of everything because they may very much be in need of money right now and eyeing your deposit. Also I read you don't need to show more then 2 times a week?

    You do not need to agree to more than 2 showings per week.
    https://www.tenants.org.au/factsheet-28-sale-of-rented-premi…

  • ilikeradiohead on 12/01/2021 - 06:06
    +2

    I'd leave.

    The landlord isn't thinking this through. If it's a renters market (I'm not in Sydney so I can't comment) the 30% decline could very well be the market rate. So you leave, they lose $X per week for several weeks until they find a tenant. If they had agreed to the (original) 25% drop, they need to find someone within 3 months at the original price to be square. If they still take 3 months to find someone AND lower the price, then they're ever worse off than before.

    Plus, if they have to sell, an occupied place is bringing in income, an empty place isn't, putting it on the 'new' owner to find someone.

  • jellykingdom on 12/01/2021 - 07:52
    +3

    I would tell them right away that you're leaving right away. You aren't on a lease anymore, so check what the minimum notice period is. I think it may actually only be 2 weeks at this point (they changed some of the laws, so it starts at 4wks early in the lease period, and then decreases, from what i can remember). And put that in writing! You might find they cave immediately.

    Also, the real estate agent doesn't give 2 shits about you. Or the landlord for that matter. They just want their money, and the least possible amount of work. As soon as one of the other person becomes a headache, they don't want to know about it

  • whooah1979 on 12/01/2021 - 08:20
    +7

    Why stick around when they don't want you there? Give the minimum notice, leave and let the landlord stand there with their empty prize.

  • Fredfloresjr on 12/01/2021 - 08:47
    +1

    GTFO there.

  • TheMindsetTraveller on 12/01/2021 - 09:02
    +2

    If you love this property enough, I would stick around as long as you can and buy the property when it comes onto the market.

  • brad1-8tsi on 12/01/2021 - 09:07

    If you didn't sign anything, don't have written correspondence, witnesses to the conversation or a recording of the conversation then you will find it difficult to prove anything.

    By all means fight it but what will that cost in terms of money, time and stress?

    I'd walk away and then the landlord will really find out about financial stress. He'll probably be on ACA crying in his pretzels about crap tennants.

  • lgacb08 on 12/01/2021 - 09:17
    -1

    How about telling the owner you agree to the new price but they give you back the difference under the table every pay cycle so you both win, but make sure you set out the arrangements so you can come out financially ahead.

    • sparkles on 12/01/2021 - 10:33
      +3

      The landlord is in dire financial straits with the bank circling. The property manager is a liar who reneges on their word. Why on earth would you trust either of them on a "deal" like this? Sounds bound to fail.

  • burningrage on 12/01/2021 - 10:00
    +1

    Whats WWYD? I can't keep up with this lingos!!!

  • sparkles on 12/01/2021 - 10:27

    Ask for the ledger again. The landlord may be trying to price you out so they can sell as vacant possession. I'd start packing now, you are out no matter what happens, whether it's in a month on your terms or 90 days on theirs.

  • suti on 12/01/2021 - 13:19

    you keep on paying the lower -30% rate, the agent pays the balance to get up to +10%. It's their stuff up. in the meantime find somewhere else.

  • capslock on 13/01/2021 - 20:43

    Stay in the apartment during the inspections and do your ironing or whatever. It makes it awkward for potential buyers and it may dampen buyer interest. You may then be able to buy it a lower price.

  • edy4eva on 17/04/2021 - 16:15

    As a final update, we ended up moving 12 days before the vacate by date, handed the keys.

    Was about to go with the option of relocating overseas if it wasn’t for the covid situation.

    The landlord made a last minute offer to resign a 12-month lease while upping the rent to 600 in order to stay, by then it was too late as we had already signed up a new lease on a new place. They were advised the property could bring in extra value upon selling if was occupied with a new contract.

    Turns out it wasn’t financial trouble or covid but because of divorce that has led to the forced sell 🤷🏼‍♂️

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