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 Recardo Knights

9:45 AM, 9th October 2012, About 9 years ago

Hi Mark & Paul
Again thanks for the advice, the AST's are no problem for me as I do the renewals myself every year.
A question that was not answered is if an Ast rolls over to a periodic does the deposit protection still have to be renewed every year as no new Ast was taken out.
Giving new AST's to existing tenants has worked for me in the past but if I can avoid paying to do Deposit protection every year on the same tanant by going on to a periodic tenancy I will do so. The only changes to the new AST is the start date, and end date. Same tenant, same rent, same property, old deposit,but need NEW DPC.
I have read Mary's post in the past, and I will go over them again. Thought the main change in April was protection time was increased from 14 days to 4 weeks.
The tenant in question has now withdrawn her notice as she cannot afford to move. Still 1 month in arrears, but she informs me she is ging on a 2 week holiday next month.
Regards
Recardo

by Mark Alexander

10:27 AM, 9th October 2012, About 9 years ago

Hi Recardo

No, you do not have to repay the deposit when the tenancy rolls over to statutory periodic.

I have added a new article today which I think you should take a look at >>> http://www.property118.com/index.php/new-business-model-for-landlords-and-letting-agents/32839/

by Industry Observer

10:37 AM, 9th October 2012, About 9 years ago

Mark
I disagree entirely with your comments on s13 and likely tenant reaction, either a rent increase is justified or it isn't. If it is why shouldn't the tenant pay it and if it isn't why ask them for one?
But the point is this increase by exchange of emails and "...that is all that is required by the Law"
Really?
I am aware of cases where a tenant has gone into arrears after an 'informal' rent increase along the lines you suggest and the Judge has not allowed the 'increased' monthly rent to be claimed, only the last onbe signed for in an agreement or a s13 Notice (which is the whole reason the Notice exists, otherwise why bother to have it available?)
By all means have your cuppa and agree the way forward - but then formalise it either with a new agrreement, or an Addenum, or if an AST, a s13 notice.

by Industry Observer

10:42 AM, 9th October 2012, About 9 years ago

Mark
Seems to be a lot of understandable misunderstanding here (so to speak).
The real crunch issue is the re-issue of the PI details EVERY TIOME a new tenancy is granted either by a new agreement or, much more importantly, by the tenancy going Periodic. It may be silly, but it is very clear that s5 of the 1988 Act specifies that a periodic is a new tenancy (it says so about 10 times in 8 sub-clauses) and so the deposit must be re-protected.
Whether that needs a new protection certificate is entirely down to the Schemes and their rules and requirements, and that is what enables them to charge a fee for repeat protection. The Statute says nothing on tht score.
But it does say that the PI must be served again (as part of the protection process) and that is where the vast majority of private Landlords (and many agents) fall down and are badly exposed post LA 2011 to being pursued for a penalty award.

by Mark Alexander

10:49 AM, 9th October 2012, About 9 years ago

Extract from an article written by Tessa Shepperson, Solicitor at Landlord Law and advisor to many Landlord Associations:-

"However, this is not the only way rent can be increased by agreement. For example, you can get the tenant to sign a copy of a letter informing them of a rent increase indicating their consent. Then even if they don’t sign anything, but start actually paying the increased rent, this will also show their agreement."

Link to full article >>> http://www.property118.com/index.php/how-to-increase-rent-the-proper-way

by Mark Alexander

10:59 AM, 9th October 2012, About 9 years ago

I would be very interested to be privy other "named" professionals opinions on this. If the start of a Statutory Periodic Tenancy really does require the deposit to be re-protected then I'd suggest most landlords have a major problem - me included.

by Mark Alexander

12:02 PM, 9th October 2012, About 9 years ago

PS - I have invited NLA, TPOS and RLA to comment

by

14:07 PM, 9th October 2012, About 9 years ago

Hi Recardo/Mark,
Speaking for TDS, landlord members do not pay again when
the tenancy rolls over to statutory periodic. Payment covers the life of
the tenancy agreement. You would only need to protect the deposit
afresh if there were material changes to the agreement, such as rent.

Just
remember to login to your account and update the details of the tenancy
before it does roll over to statutory periodic, otherwise protection will
end on the existing end date.

Regards,

Chris, TDS

by Industry Observer

16:16 PM, 9th October 2012, About 9 years ago

Chris@56b7e4f279bdd99d9dced65c2c8f99e8:disqus
There may be no additional payment needed, indeed other than as required by the various Scheme Rules there may be no fresh protection certificate needed eithr - the Statute certainly does not require it.
But what of the Prescribed Information what is your advice there Chris if the tenancy goes periodic?

by Industry Observer

17:21 PM, 9th October 2012, About 9 years ago

A periodic tenancy is defined, for better or for worse, as a "new" tenancy. Reference is made in s5 of the 1988 Act to "the coming into existince of a new tenancy" or extremely similar words.
So a periodic is a new tenancy. What do you need to do whenever there is what is legally defined as a new tenancy post the 2007 TDP regs coming into force - protect the deposit.
Not at all bothered about the physical protection, the money itself, this as posted by Chrid from TDS is for example protected for life with TDS. With mydeposits you pay every time, and with DPS as ever it is all free.
What matters is that TDP is a two pronged attack, two specific actions needed:-
1. Protect the deposit - probably already done or easily done.
2. Serve fresh PI - why, because it is a NEW tenancy.
Ask Tessa I think you'll find she agrees, David Smith I believe certainly does but either way whether intended or not iot is what the Statute demands. A tenancy going periodic is what I would call a "protectable incident" and any protectable incident means protectiuon and PI serving.
The only way to be 100% safe from being pursued on this by a tenant claim is to re-protect (if a Scheme demands it) AND serve fresh PI even if identical to the original. Remember in Suurpere v Nice July 2011 one of the Appeal Court Judges specifically commented on the poor quality of the PI served by the Landlord's agent.
And was equally adamant that for DPS it was not sufficient to simply point the tenants in the right direction to find the Scheme Rules (T&C for DPS) for themselves but they actually had to have it served on them as part of the PI detail.
There is no doubt that a tenancy going periodic creates a new tenancy even though in effect no-one does anything. It is as if the parties had never met before as far as the landlord's TDP obligations are concerned.
Have a good trip and don't lose too much sleep over how many PI forms you have not served post 6.4.12 that you should have done!!


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