Advice Sought from Fellow Landlords – tenancy agreement periods and monthly payments

Advice Sought from Fellow Landlords – tenancy agreement periods and monthly payments

9:26 AM, 17th July 2012, About 10 years ago 90

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One of our readers has requested some advice from his fellow landlords reading this Newsletter. I could simply respond but I’m hoping that by publishing his request he will receive more than just my opinion.

“As an avid reader of the Property118 newsletter and the associated discussions I wonder if I may ask my fellow landlords a couple of questions related to Tenancy Agreement Periods & Monthly Payments (PCM).

The background being that my wife and I have entered the landlord position by default in respect of my daughters property (modern 2 bed terrace) – 80% for which we have provided a interest free loan.  She has subsequently got married and now lives in Singapore with her husband and one year old son.

Firstly what rental agreement period would you recommend – 6 or 12 month initial period and what do you see as the pros & cons of each ?

Secondly having had a previous tenant that occupied the property for approximately 3 years we carried out a complete redecoration last February and let it on a 6 month AST Agreement commencing 11/02/12. Since the prospective tenant was not moving to the area until this date and the redecorating was not complete before we agreed that February’s rent would be calculated on a pro-rata basis.  However since our previous tenant had given one months notice such that we were obliged to enter into a pro-rata calculation for January’s rent we determined that future tenancies should be based on a per calendar month basis.  It now transpires that our new tenant wishes to move to a more expensive apartment in the centre of town (Bristol) and has given one months notice but again mid-month and expects a corresponding pro-rata rent calculation, which was exactly what we were trying to avoid by making the rent PCM.  Whilst all references to pro-rata calculations were deleted from the standard agreement I do recognise that by dating the Agreement commencing 11/02/12 we have in some way or other shot ourselves in the foot and have therefore agreed to the tenants request to pay August’s rent on a pro-rata basis.  Accordingly for future tenancies my question is this, if we made the effective date of the Agreement 1st of whatever month was appropriate and regardless of when occupation actually commenced would this solve our problem of mid month terminations?

Your thoughts on the above would be greatly appreciated,  many thanks.  Donald”



Comments

by Puzzler

9:08 AM, 18th July 2012, About 10 years ago

P.S. My agent's policy is that rent is payable on 1st of the month. If starting before 15th then pro rata is payable for that month. If after then pro rata for the remainder of the first month plus full payment for the next. That way all rent is collected at the same time making it easier to track. At the end just pro rata is payable.

by

11:35 AM, 18th July 2012, About 10 years ago

No this is not the case, as M Latham has stated the law alredy exists in statute and therefore is not a debateable issue.
I appreciate your sentiments and agree with them, however if I had to to choose who was correct as far as housing law is concerned I would always defer to Mary.
Therefore perhaps some sort of intervention post would be more appropriate from her as she does know her onions!!!

by Mark Alexander

11:44 AM, 18th July 2012, About 10 years ago

Paul - if you Google search "LANDLORDS ONIONS" you actually get me, give it a try LOL.

Seriously though, Mary is right. So she should be though, she's a Landlords Accreditation Scheme trainer!

by Mark Alexander

13:06 PM, 18th July 2012, About 10 years ago

Take a look at this >>>
http://www.rentontime.co.uk/

by

12:06 PM, 18th July 2012, About 10 years ago

Hi Paul,

Many thanks indeed for yours and other members very valuable contributions which I have found very enlightening. However just one query on the above, which as a newbie landlord I am a little puzzled, and that is you refer to RGI - I assume this is some form of additional insurance, perhaps you could be so kind as to enlighten me on same and advise any pro & cons accordingly. In the meantime I am also considering joining RLA - do you have any views ? Once again many thanks to you and all others for your help and especially Mark for putting it in the newsletter. Cheers, Don.

by Mary Latham

13:33 PM, 18th July 2012, About 10 years ago

"Patients die while doctors differ" Good thing this is not a life and death discussion. It must be very confusing for Donald and any other landlord who is new to the business.
Here are two sources of important information on this subject
http://www.legislation.gov.uk/ukpga/1977/43 The Protection from Eviction Act 1977
http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf Guidance on Unfair Terms In Tenancy Agreements from the Officer of Fair Trading
It is no wonder that landlords and Letting Agents get it wrong because in any other UK business a Contract is a Contract and providing that both parties have signed the Contract the terms are, generally, enforceable. NOT SO FOR LANDLORDS. The end of a Fixed Term Tenancy Agreement is the end for the Tenant and he does NOT have to give any notice to leave the property, regardless of a term written into the Contract. It is not the same for a landlord, we MUST give notice of a minimum of 2 months, which cannot end before the expiry of the last day of the fixed term or 6 months whichever is later. This notice cannot be enforced by the landlord/Agent without a Court Order and even the Court Order can only be enforced by a Court appointed Bailiff.
If a landlord/agent writes a term into an AST that is unlawful it is not illegal but it is unenforceable. Some landlords/agents do put terms into AST's knowing that they cannot legally enforce them but knowing that most tenants will comply with the term if it is reasonable. So long as the tenant is not forced to comply with the term, under peril of loss of deposit etc., there is no real problem doing this but it is good practice to have a solid AST that contains only legally enforceable and reasonable terms.
In her 2008 review of the PRS Dr. Julie Rugg stated that "most tenancies end when the tenant is ready to move on" http://www.communities.gov.uk/documents/housing/pdf/1229922.pdf
Considering that there are 1.5 million landlords housing around 3.5 million tenants, the cases that actually get to Court are very few but when a landlord finds himself in litigation with a tenant he will be expected to prove himself innocent because the legal system will always protect the tenant/consumer. Good quality documents are a clear indication to the Court that the landlord knows his business and is trying to comply with the law, an AST is the foundation of the paper trail and we need to get it right.

On the issue of the rent due date look here to see why the rent due date is so important and why making this different from the tenancy start date causes so many problems for landlords http://www.legislation.gov.uk/ukpga/1988/50/section/21

by Industry Observer

13:38 PM, 18th July 2012, About 10 years ago

Just a comment for Mary Latham and, dare I say it, Eric Walker (Hi Eric).
A tenant CAN be obliged to give notice that they intend to leave at the end of the fixed term. I failed miserably in a battle with the OFT to defend just such a clause in an agreement I was involved with. The OFT of course do not like it and said the 1988 Act does not oblige the tenant to do so and therefore he doesn't have to. The weakness with that argument is that the Act doesn't say they don't have to either!!
When the OFT threatened an injunction unless it was removed my MD caved in and we removed it (now hidden in glossary of terms that the tenant will do their best to advise us if they are leaving end of term!!)
But the point is with correct constrruction of agreement and wording you can have such a clause and if you look in CARL documents in their AST you will find such a clause. That's because the constructor of that agreement fought the OFT to a standstill and they removed their insistence on removal.
It's only the OFT's opinion which the Civil Court will always accept as anything for a quiet life and a quickly cleared case list.
But it has never actually been tested in a Higher Court or record

by Mary Latham

14:21 PM, 18th July 2012, About 10 years ago

Industry Observer. If I am killed on a Zebra crossing, I may be right, but I am still dead!
The OFT carry weight in litigation and its safest to follow their guidance rather than rely on "an omission" in the legislation - unless you actually enjoy a legal battle to make a point - most landlords do not.

by Industry Observer

15:56 PM, 18th July 2012, About 10 years ago

A tenant DOES NOT NEED TO GIVE NOTICE AT THE END OF A FIXED TERM AST he can just walk away and this is why good communication is vital to avoid the void. A term in an AST cannot change the law and this is the law.
Sorry Mary I was simply responding to your capitals above and a statement that sounded as though there was no alternative. Given that the Judiciary hates the Legislature I wouldn't bank on a Judge always following what the Govt says - or in this case doesn't say.
It is simply not correct to say 100% that "this is the law" - it hasn't been tested yet in a high enough Court.
In your analogy by the way unless stepping out with no warning and mitigating circumstances the driver goes to jail!!

by Mark Alexander

16:04 PM, 18th July 2012, About 10 years ago

How certain are you that "it hasn't been tested yet in a high enough Court."

As for the analogy, driver going to jail isn't of much comfort to the deceased or seriously injured either.


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