Assured Shorthold Tenancy with break clause vs Two-year Fixed Tenancy?
We are private landlords by default. For the past 5 years we have had a couple rent our property under an Assured Shorthold Tenancy agreement which includes a usual break clause.
We are now looking to renew the tenancy agreement for another two years, but the letting agent suggests that we enter into a two-year fixed tenancy agreement. The implications of which we know little about other than we can’t end the tenancy unless the tenants are in serious breach of contract AND we have to take them to court to resolve the breach.
Question: Should we stick to a tenancy agreement with the usual break clause or should we change to a two-year fixed-term tenancy agreement?
Your advice and suggestions will be most appreciated.
Thank you.
Xiaolei
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Member Since January 2016 - Comments: 298 - Articles: 1
11:58 AM, 3rd August 2022, About 4 years ago
do you have a mortgage on the property?
If so will the lender be happy?
Member Since June 2022 - Comments: 111
12:23 PM, 3rd August 2022, About 4 years ago
Have the tenants also asked for a Fixed Two year contract? Why not go onto a periodic Tenancy?
Are you paying the a agents more fee’s?
I guess they will charge a renewal fee hence why they are suggesting a Fixed two year term. I never pay renewal fee’s there is no need to.
If the tenants want to stay just agree between yourselves listening to want the tenants wants as they will not sign for a term they are not happy with. This has this has nothing to do with the agents.
Member Since October 2013 - Comments: 1310 - Articles: 10
12:55 PM, 3rd August 2022, About 4 years ago
I’d be inclined to stick with a 6 month AST which becomes a contractual monthly periodic tenancy at the end of the fixed term (ensure the wording of the AST is correct for this).
This gives you the best option for ending the tenancy (at any point after the fixed term) should you wish to do so, e.g. if the tenants are in breach of the tenancy conditions, or you wish to sell the property etc.
However, it also enables the tenancy to continue indefinitely on a monthly rolling basis for as long as both yourselves and the tenants wish to continue with this, and it reduces the costs to you (thus enabling you to keep the rent more reasonable) as you won’t have to pay letting agent tenancy renewal fees.
Member Since May 2015 - Comments: 2197 - Articles: 2
2:34 PM, 3rd August 2022, About 4 years ago
Reply to the comment left by Robert M at 03/08/2022 – 12:55
The first three contributors have said it all. If your current tenancy continues after the fixed period as a Contractual Tenancy then do nothing else set up a new contract which does continue as a Contractual Tenancy after the six month initial term.
Member Since January 2020 - Comments: 134
2:37 PM, 3rd August 2022, About 4 years ago
However, even if the AST agreement lapses to a periodic, you may still be liable to pay the letting agent whilst the existing tenant remains in situ.
Member Since June 2022 - Comments: 111
2:45 PM, 3rd August 2022, About 4 years ago
Reply to the comment left by Ian Cognito at 03/08/2022 – 14:37
OFT verse’s Foxtons in the High Court ruling states that if the letting agent did not highlight from the outset other than their standard T&c’s that there is a renewal fee then you do not have to pay any renewal fee if they do no further work.
Member Since January 2020 - Comments: 134
2:54 PM, 3rd August 2022, About 4 years ago
The trouble is when they DID make it clear. In such cases, the only way for the landlord to end the contract is to evict the tenant. This is clearly not in the best interest of either landlord or tenant and is something that needs addressing.
Anyone know of a campaign I can sign-up to?
Member Since October 2020 - Comments: 1171
3:16 PM, 3rd August 2022, About 4 years ago
I agree with the suggestion to let it go periodic. Generally better for the landlord as you have more flexibility and no admin/expense.
Member Since April 2019 - Comments: 36
4:17 PM, 3rd August 2022, About 4 years ago
I don’t believe you can increase the rent during the fixed term either so not very landlord friendly and much less flexible for both parties..
Member Since May 2021 - Comments: 31
4:33 PM, 3rd August 2022, About 4 years ago
Thank you all so much for your response – I am now clear that AST with break clause after 6 months is the way to go.
Xiaolei