Assigning a Joint Fixed Term AST?

by Readers Question

9:45 AM, 16th November 2015
About 3 years ago

Assigning a Joint Fixed Term AST?

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Assigning a Joint Fixed Term AST?

My house is let to four people who jointly signed a 12 month fixed term AST last June. One of them now wishes to leave and will find a suitable replacement tenant – subject to references being checked by my agent. bad idea

The agent wants to tear up the existing contract and make a new 12 month fixed term AST. This seems a bad move to me as it delays the next rent review by 6 months and, if the tenancy is not renewed, means that I shall be looking for new tenants at the most difficult time of the year.

Is there any reason that the departing tenant cannot assign the existing tenancy to the incoming tenant?

The Agreement says that it cannot be assigned without my permission, so that’s not a problem.

Many thanks

Chris



Comments

Tessa Shepperson

11:47 AM, 16th November 2015
About 3 years ago

That is something which sounds sensible to a non lawyer but actually is NOT a good idea.

I wrote about it on my Landlord Law blog here http://www.landlordlawblog.co.uk/2011/09/12/individual-tenants-assigning-their-share-of-the-tenancy/

As you will see from the post and also the comments (particuarly the one from solicitor Giles Peaker) this is not really something that can be done.

So your agents do have a point and are not just trying to make some extra money from doing a new tenancy agreement.

The reference to assignment in your tenancy agreement is assignment by ALL the tenants together, not just one of joint tenants to another joint tenant (see blog post for explanation).

Mike W

12:21 PM, 16th November 2015
About 3 years ago

Chris, I am not a lawyer but in simple terms if all parties to the agreement (you and all tenants, not just one),are in agreement what is the problem?
I think the agent is looking for funds (who gets paid for a new agreement?) and what about the other tenants - do they want to commit to a longer period than they originally signed up for? My understanding of joint tenancies is that no one tenant can give notice for all tenants. That can lock all into an agreement that they all do not want. And again all should act reasonably.
I would suggest a side agreement, referencing and attaching the original lease and signed by all parties and independently witnessed should cover it. Dont forget about the deposit. Include a statement about whats happening with that.

Tessa Shepperson

12:27 PM, 16th November 2015
About 3 years ago

Having a new tenancy agreement (which can be for just the remainder of the existing term - there is no rule which says that terms HAVE to be six months or whatever) is the best solution.

If your agents insist on charging, then this is something the tenants will have to pay for. Or rather the tenant who is leaving as he is the one causing the problem. It is not something you should have to pay for.

You will also need to have a new inventory done as the incoming tenant will not want to be made responsible for any damage done before he moved in. Again the outgoing tenant will need to be responsible for the cost of this.

If the outgoing tenant is not prepared to pay - fine! Say that you do not agree to take the new person as tenant until renewal and the outgoing tenant will remain legally liable for the rent until then. His choice.

Recardo Knights

13:20 PM, 16th November 2015
About 3 years ago

The leaving tenant is in breach for leaving before end of AST, but in reality what would it take to make him pay up. Is he in a position to do so.
While the other 3 are not at fault would they be happy to pay the extra now the rent has to be paid by 3 instead of 4.

Is it a HMO, would a new comer make it so.

If the other 3 are in agreement for a newcomer to join, could this person not be a lodger with the agreement of the other 3 and the LL for the remaining term. Others on this site have more experience so hope they will comment.

I had a couple renting a 2 bed flat, when they split I let him take a logger with my consent, a mate. The lodger has signed a statement to say he has no tenancy agreement and is responsible for any damage. He pays the tenant and the tenant then pays me. He also signed to say he has to leave if asked by the tenant or the landlord.
Don't know if this is right or wrong but lodger's happy, tenants happy. and I'm happy. This has worked for about 7 months, and the tenant on his own would have struggled to pay the rent on his own at that time.

Romain Garcin

13:20 PM, 16th November 2015
About 3 years ago

It is possible to assign the tenancy to 'replace' a joint-tenant, but it requires the agreement and involvement of all of the existing joint-tenants.

Let's say D wants to leave and be 'replaced' by E, then the current tenant (A, B, C, D) can assign the tenancy to the new tenant (A, B, C, E).
The key is to remember that the 'tenant' is all the joint-tenants together, not just D who cannot do anything on his own.

Also, as this is a fixed term AST, a single joint-tenant cannot end or offer to surrender the tenancy, or action a break clause. All joint-tenants must do it jointly.

Tony Atkins

13:37 PM, 16th November 2015
About 3 years ago

I agree with Romain: you need to arrange a Deed of Assignment, in which the new tenant agrees to take over the departing tenant's responsibilities in the existing tenancy agreement. All the other tenants and the landlord must agree and sign too.

The NLA has a standard form for this; the RLA probably does too.

The deposit is a complicating factor. If the deposits are meant to be repaid to the Lead Tenant and she isn't moving out, that should be fine: when I did this, I just took an identical share of the deposit off the new tenant and "repaid" the old tenant his share (duly documented and the Lead Tenant was aware), and the new tenant was reimbursed by the Lead Tenant at the end of the contract. However if the Lead Tenant is the one moving out, I suspect you will have to contact your deposit company and ask what to do. There must be a common sense solution but the system really wasn't designed to deal with the needs of HMOs (which this house appears to be).

As regards the inventory, to save everyone the cost of having a new one done, I asked the new tenant to check the house with reference to the existing inventory and note any changes; these were agreed with the existing tenants and a settlement made, effectively resetting the house to a new starting point with signed amendments.

Steve From Leicester

14:15 PM, 16th November 2015
About 3 years ago

I speak as an agent when I say that best practice is to treat it as a brand new tenancy. A new tenancy will document the current and correct parties to the agreement, with the inventory updated to reflect any changes in condition, the agreed portion of the deposit returned to outgoing tenant, the remainder of deposit plus any supplement correctly re-registered to the correct current tenants and so on.

As all of this has arisen from a request by the existing tenants so they, not the landlord should pay for this work. If they don't all parties including the departing one remain joint and severally liable for rent, damages, dilapidations etc. And the outgoing tenant doesn't get his portion of the deposit back.

As Tessa correctly pointed out, this new agreement doesn't have to be for twelve months, or six, it can be more-or-less whatever length of time is agreeable to landlord and tenant.

Romain Garcin

14:27 PM, 16th November 2015
About 3 years ago

There are pros and cons.

One advantage of assignment is that there is no need for a new inventory or new deposit protection (unless the 'lead tenant' is the one leaving).
All the risks and issues are born by the new joint-tenant. Clearly a new tenancy would be in his interest.

Of course, a new tenancy now would attract all the legal changes from the 1st October, which the current tenancy is not subject to.

Ian Ringrose

22:01 PM, 16th November 2015
About 3 years ago

Anther option is to allow them to take in a lodger, while keeping the tenancy agreement the same. So the "outgoing" tenant still have to pay the rent etc.

PS you say "Delays the next rent review by 6 months" but with a new tenancy you can set a new rent! So that should not be an issue.

Steve From Leicester

10:55 AM, 17th November 2015
About 3 years ago

Here's an off-the-wall way of looking at it. Hands up if you've been through a divorce.

My goodness there's a lot of you . . .

Now a tenant leaving is obviously a lot less dramatic that splitting up with your spouse, but there are similarities, because what were once joint responsibilities now become individual ones.

Drawing up a brand new tenancy agreement is a bit like a clean break divorce settlement for a couple who have no kids and wish to go their separate ways. A clear break, everything settled in one hit, both parties move on.

Assigning the tenancy is a bit like signing over the former matrimonial home but not tidying up the other stuff that goes with it, whilst taking in a lodger as Ian Ringrose suggests could be compared to leaving the house in your name but moving out and agreeing to let your ex stay there for a while.

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