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Renewing an AST Agreement


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Hi there,

 

I read something recently that suggested you don't need to renew an Assured Shorthold Tenancy (AST) agreement when the period expires.

 

I have always renewed the AST for three reasons.  Firstly, it gives me the reassurance the tenant is staying for another 12 months, secondly I didn't think the various legal clauses would be valid once the tenancy agreement expired.  So for example, clauses around how to upkeep the house would be invalid?  Thirdly, doesn't this give the tenant reassurance their deposit has been secured for a further period?

 

If this is not the case I would love to know...this would save me several hundred pounds a year! :D

 

Many thanks in advance.

Wes :)

 

 

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HI Wes

 

You are right on point 1 as it does give tenant the assurance but 2 & 3 are covered when it goes statutory. There was an issue re deposits recently but that seems to have been sorted.

Regards Simon

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Hi Wes,

One other thing is when it goes into a period tenancy the notice/break period is pretty clear cut ie 2 months for the landlord & one month for the tenant. When you issue a new tenancy agreement this can cloud the issue if you renew for 12 months and tried to evict the tenant after say 2 months. I got into a bit of a pickle with my local council once who argued that even though I had a break clause in my re-newed AST they argued that I had to give the tenant a further 6 months.

I went to the NLA who agreed my break clause was valid. Thank fully It never got to court etc as the tenanct vacated the property but I'm still unsure how this would have played out.

mark-morris.jpg

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Wes

 

Renewing an AST does indeed give you the landlord and the tenant the peace of mind and certainty that, for the term signed for, there will be no movement from the property - in theory at least.  It does however restrict you on a number of matters:

 

If you are signing 12 month tenancies you are re-guaranteeing each time that the tenants are protected from eviction for the first 6 months of each new tenancy as they are covered by the Freedom From Eviction Act 1977 (as Mark above found).   Each time the tenancy is signed it is in effect a completely new agreement and everything starts from the beginning again - it is not a rolling process in the eyes of the law even if the tenants see it as such.  This is probably not a problem as they will have hopefully been good tenants by virtue of the fact that you are renewing the tenancy!

 

Your tenants are also protected from any rent rises for the first 12 months of any tenancy agreement - so unless you amen the rent at the beginning of the agreement you are not able to change it mid term.

 

If you have a change of heart or circumstances mid-tenancy there is no legal way of ending the tenancy agreement until the end of the fixed term.  There is no right of 2 month's notice and the tenant is perfectly at liberty to remain in situ until the end of the agreement.  The only way of removing them, after the 6 month point, would be by proving that they have manifestly broken their contract and serve a Section 8 notice and unless their misdemeanor is one of the mandatory grounds there is every chance that the judge hearing case would not accept it anyway.  That said if a tenant comes to you asking to leave mid term you are in a dilemma as by insisting they stay it could be asking for trouble as you would have a disgruntled tenant who may start causing problems such as late or non-payment of rent, negligence or willful damage etc and sometimes it is easier to manage their departure.  We have a set-up in our letting company that early departure is only permitted if the tenant pays the landlords re-letting fees and also pays rent and utilities up to the day prior to the new tenants moving in so the landlord is not financially disadvantaged.  Unfortunately there is no reciprocal arrangement for a landlord - indded I had a landlord who waited 5 months for the return of her property as 3 weeks after she moved in with her (now-ex) partner and we let her property she split up and the tenants elected not to move out until the end of their tenancy agreement.

 

Each time you renew the tenancy agreement you also need to re-serve the whole Prescribed Information , including the terms and conditions etc, as if it were a new agreement otherwise you will not be able to serve an eviction notice in the future and could be held liable for up to 4 x the deposit amount for not serving it correctly which could be a costly error.  Even if the agent makes the mistake you, the landlord, would be held liable in court and then you would have to sue the agent afterwards!

 

With regard to changing from a fixed term tenancy agreement to a rolling one - usually called a "Statutory Periodic Tenancy" this is a very normal process and the whole of the agreement, minus the fixed end date, remains valid and in force until the end of the tenancy.  There was until recently a problem for the deposits where the Prescribed Information had to be re-served at the rollover point - caused by the now infamous Rodrigues v Superstrike court case - as the Court of Appeal ruled that it was a new tenancy agreement and so the deposit was not formally protected properly but that has now be resolved and the original PI remains valid.  If nothing changes and the fixed term lapses and the tenant still pays the rent etc the tenancy automatically forms the STP which has the advantage of flexibility for both tenant and landlord.  I have STPs that have been running for 6+ years and not been a problem - I cannot see the tenant moving out but they have the option and the tenants know that I have no intention of moving them either but the option is there.  With an STP you have to give the tenant 2 months notice by serving a Section 21 Noticeand the tenant have to give you 1 calendar month's notice (or 4 weeks if they are paying weekly) to end the tenancy.

If your tenants have been in for more than a year and you want to raise the rent amount all you do is to serve a Section 13 Notice advising them of the intended rise with at least one month's notice and this keeps all these matters legal.

If you and your tenants want to extend the certainty of tenure you can have an AST for up to 3 years and in this instance you may want to put in a break clause point but it might be pertinent to take formal legal advice on this matter.  You may also be prudent to put in scheduled rent rises benchmarked against inflation or similar so that all parties are transparently aware of the rises at what date and by how much on each occasion.  If you want to sign for beyond the 3 year point you need to sign a completely different tenancy agreement which is not protected by many of the AST laws and is a matter for the more specialist and more experienced landlords.

I hope this helps?

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