Appropriate timing for renewal of 6 month leases?

by Readers Question

8:48 AM, 24th September 2019
About A year ago

Appropriate timing for renewal of 6 month leases?

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Appropriate timing for renewal of 6 month leases?

I would like some advice about the timing for renewal of 6 month leases. I have set up a 6 month lease for 2 separate tenants renting an en-suite room each in our flat. (We keep a 3rd en-suite room there for ourselves when we are in the city and share the kitchen with the tenants).

We would like to renew the lease every 6 months as we plan to increase the rent in 12 months time and do not want the difficulty of having to issue a ‘rent increase’ letter if we carry on with a periodic lease after the first 6 months.

Is 2 months in advance (ie 1 January) the correct time to advise each tenant that we would like to offer a new 6 month lease at the same rent from say 1 March. If the tenant agrees, do we then issue the new lease in January which we and the tenant sign for and date it in January, even though the lease start date is 1 March 2020?

Then again, 2 months before 1 September we would advise each tenant that we would offer a new 6 month lease with the new higher rent amount. If they did not wish to take up the new lease they would then have the 2 months notice to leave?

With our other rentals we usually carry on the lease as a periodic after the first 6 months, but as we were keen to have tenants in quickly (we had just purchased and renovated the flat), we offered the rental at a discount.

Thanks in advance for your help.

Marie


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Comments

paul robinson

7:46 AM, 25th September 2019
About A year ago

Yes, just ask your tenants 2 months before the end of the current if they wish to stay for another 6 months, at the set rent. If they don’t want to, then you can give them their notice via section 21. You can sign the paperwork whenever you like.

Remember that is section 21 is scrapped block fixed term tenancies will no longer be guaranteed to a landlord, the tenants will have the right to just continue on a periodic, despite from my experience all parties are happy with blocks, due to the benefits it brings to all parties.

Tony Hodge

8:55 AM, 25th September 2019
About A year ago

If you have good tenants, why would you want to increase rent and take the risk of tenants leaving and incuring the cost of getting new tenants and potential void periods.

Paul Shears

9:40 AM, 25th September 2019
About A year ago

Reply to the comment left by Tony Hodge at 25/09/2019 - 08:55
A reasonable annual rent increase, in my opinion, is always justified. I base my rent increases on the local market and I always inform my tenants of this. It only takes a few minutes on the internet to check the truth of my claim. Nothing is ever said. If you don't do this, and have long term tenants, you will end up being the cheapest landlord in the country.

Graham Bowcock

9:44 AM, 25th September 2019
About A year ago

Marie

I think that you're complicating your desire for simplicity.

Rents do not necessarily rise each year, they are determined by the market which may have risen, fallen or stayed static.

If you enter a new tenancy every six months you will have to make sure that all the compliance is right each time, on the basis of a new tenancy. It would be easier just to do a rent review and document that.

I always reckon that when a tenant leaves it costs about three months' rent in covering void, letting costs and any works (there's always something to do). It therefore seems sensible to me to try and keep good tenants as long as I can. I do occasional reviews (rents in my area have gone up markedly), but one of my selling points is that I stay just below the market so as to encourage the tenants to quickly complete the rent review. It saves me time and money, the tenants can see they are getting some discount and everybody is happy.

Don't throw the baby out with the bathwater, as my mother would say!

Chris @ Possession Friend

10:37 AM, 25th September 2019
About A year ago

DON'T ( That's in capitals ) Renew Tenancy agreements. let them run on as they automatically do, as periodic tenancies.
This saves having to prove the service of all the required Prescribed Information, and allows for the service of a Section 21 ( whilst we still have it ) any time after the initial fixed term has expired.
There are ways of increasing rent, either by Serving a Form 4 ( if there's nothing in the AST about increasing the rent ) or by simply writing to the tenant and TELLING them its going to increase to x amount. { proving delivery - service }

If there's any mention of Landlord being able to consider a rent increase in a Tenancy agreement, the tenant Can NOT appeal the increase to the First Tier tribunal
[ Contour Homes Ltd v Rowen, 2008 ]
The point about increasing rent for an acceptable longer term tenant made by Graham is acknowledged, but know what you CAN legally do, nevertheless..

paul robinson

10:48 AM, 25th September 2019
About A year ago

Reply to the comment left by Chris Daniel at 25/09/2019 - 10:37
There are quite a lot of benefits on renewing tenancies, doing blocks means everyone know where they stand and a landlord won’t find themselves looking for a new tenant with Just 1 month notice. I’d rather issue prescribed paperwork (let’s face it it not complicated) and know the rental is sorted for 6, 9 or 12 month period. Quite a lot of tenants like the security too and Aldo benefit from lower rent due to increased security and work for the landlord.

Highland Lass McG

11:20 AM, 25th September 2019
About A year ago

Hi
Thanks very much for the advice. We do usually carry on with a periodic tenancy because good tenants are invaluable.

To avoid using Form 4, is it ok just to write to each tenant in approximately 12 months (when demand is very high in the area and the current rent is a good bit below the market rent) and just advise then that the rent is going to increase to £?.

If they wish to continue with the periodic tenancy they can advise me that the increased rent is acceptable and I would not increase it for a further year. It would still continue as a periodic tenancy with no need to re service the prescribed information.

For the future, with new tenants, do I just need a sentence in the lease advising that the rent may be reviewed from time to time when the lease is a periodic tenancy?

Michael Barnes

12:04 PM, 25th September 2019
About A year ago

Your arrangements may make your property a HMO.

Rob Crawford

12:24 PM, 25th September 2019
About A year ago

Reply to the comment left by Chris Daniel at 25/09/2019 - 10:37
I would add that you ensure the AST rolls over as a "contractual" periodic and not a "statutory" periodic. Check for a clause as such in the AST agreement.

Chris @ Possession Friend

12:28 PM, 25th September 2019
About A year ago

Reply to the comment left by Rob Crawford at 25/09/2019 - 12:24Yes, quite Rob , since the Leeds v Broadley Council Tax case, the Landlord associations AST's have reflected this. [ Fixed Term continuing as Contractual periodic, instead of Statutory ]
But this serves as a caution for landlords who may not be so 'up to speed' with some of these issues and use a letting Agent's AST
( Not all I've seen reflect tenancies going into Contractual. ( which is a continuation of the fixed term and not legally a seperate tenancy )


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