Can Guarantor give notice to end tenancy that has become periodic?

Can Guarantor give notice to end tenancy that has become periodic?

10:08 AM, 8th June 2021, About 2 weeks ago 22

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We have stood guarantor for a rental property for almost 2 years to allow the tenant to build up their credit rating. Up to now, the AST has been renewed every 6 months, and we have had to resign as guarantor. The landlord has now decided not to renew the lease and allow it to proceed as periodic. We do not see the need to stand guarantor any longer as the tenant has a credit rating now.

The tenant does not want to move and is happy for the current situation to continue. We would prefer not to be guarantors any longer than necessary as it affects our credit rating in terms of acquiring new mortgages for other rental investments.

Can we give notice on the tenancy as we are joint and severally liable?

Many thanks

Steven



Comments

by Robert Mellors

11:31 AM, 9th June 2021, About 2 weeks ago

Reply to the comment left by John Frith at 09/06/2021 - 10:34
I think there may be a difference when is is a contractual periodic, as opposed to a statutory periodic, as I know this affects liability in relation to Council Tax.

My ASTs state that upon expiry of the initial fixed term, then the tenancy continues as a contractual monthly periodic tenancy. This means that the tenant remains liable for the Council Tax during their notice period, (not just to the date they actually move out). I believe that it has been accepted by the courts that a contractual periodic tenancy is a continuation of the previous tenancy, so it is not a new tenancy. - Perhaps a solicitor can confirm this?

If the fixed term has ended and a contractual periodic tenancy now exists, then it is my understanding that the guarantor remains liable for any debts relating to that tenancy (if the tenant themselves does not pay).

I believe it may also be possible for the Deed of Guarantee to incorporate terms which hold the guarantor liable for future tenancies to the same person, if certain criteria are met. It's all about transparency, and making sure that the guarantor is made aware of the possible liabilities that they are agreeing to when they sign the Deed of Guarantee.

by Paul landlord

16:22 PM, 9th June 2021, About 2 weeks ago

Re the last few comments:-

The NRLA tenancies become Contractuals these days not Statuatories and its been that way for a long time now. They 'schpeil on a bit' in their clauses on AST and Guarantor paperwork about seeking replacements etc etc but ultimately it still allows the guarantor to walk after the fixed term with no obligation to continue, leaving you potentially stuck with tenants without you having your back covered.

Ultimately I sarcastically but politely pointed out to the phone advisor that under their agreements then, that the guarantor is only as good as the fixed term, so my fixed term better go down as five years if I want the security a guarantor should bring to the table!! Although they weren't advising that term obviously, they couldn't argue with my atatement.

The deed of guarantee I use has extreme clarity to the obligations of the guarantor and conditions including that their liability doesnt end after the fixed term under any circumstances and the liabilty continues through to vacant possession etc.

As said before the NRLA advisor told me that this 'could' be seen as an unfair condition and void the guarantor agreement completely.

They didn't quote any change in case law to back this up. I get the impression they are erring on the cautious side in favour of the tenant and guarantor at the expense of their members. NRLA selling us out- never happens does it??

I will continue to use my deed until its proven either way.

by Ian Narbeth

9:17 AM, 10th June 2021, About 2 weeks ago

Reply to the comment left by Paul landlord at 09/06/2021 - 16:22Paul
The adviser at NRLA seems not to have been briefed. I wrote about this here
See my comment on 8 October 2020 at 13.57.
The old form of guarantee was IMHO a disaster. It failed to protect landlords after the end of the contractual term and it encouraged landlords to evict their tenants for no reason because the guarantee itself allowed the guarantor to get off the hook. Thankfully the new NRLA form of guarantee is better drafted.

by Paul landlord

9:31 AM, 10th June 2021, About 2 weeks ago

Reply to the comment left by Ian Narbeth at 10/06/2021 - 09:17
Hi. You seem to be quite knowledgeable on the subject and this seems to be getting confusing (unless its just me!), so as to simplify and of course answer the original poster without repeating all the posts again, does that mean that our take on the NRLAs documentation regarding guarantors only being accountable for the fixed term and their advice from a couple of months ago stand? Or am I taking it from your comment that there has been a redraft of NRLA paperwork since then on the matter and the guarantor remains liable for the full duration of the tenancy without 'easy outs' regardless? Many thanks

by Ian Narbeth

9:40 AM, 10th June 2021, About 2 weeks ago

Reply to the comment left by Paul landlord at 10/06/2021 - 09:31
Hi Paul

The pre-October 2020 NRLA guarantee allowed the guarantor to give notice to terminate the guarantor's liability after the end of the fixed term. I quoted from NRLA's email in my 8 October post.

I do not know what the NRLA advisor you contacted had in mind but as the email from James Wood to me makes clear the NRLA do not now think that it is unfair to keep the guarantor liable after the end of the contractual term.

by Paul landlord

10:14 AM, 10th June 2021, About 2 weeks ago

Reply to the comment left by Ian Narbeth at 10/06/2021 - 09:40
Hi ian. I thank you very much for your reply there and im sure that I'm sure all followers of this will find this information useful as do I. As we all know we are under a constant barrage of attack from many sources and ensuring that our paperwork is in order is just one 'brick in the wall' for our extremely limited defences!

by steventayfield

16:36 PM, 10th June 2021, About 2 weeks ago

Hi All. Thank you all for for your input and knowledge on this subject. From what I have seen posted here it looks as if the definition of a guarantor that I found seems to be correct. "A fool with a fountain pen."

We certainly won't be standing guarantor for anything else. But as a Land lord also we will be requiring guarantor going forward.

Regards
Steven

by Landlord Phil

10:38 AM, 12th June 2021, About A week ago

I had a court case for non payment of rent on a periodic tenancy. The guarantor claimed his responsibility ended once the AST became periodic. The magistrate disagreed. He had to pay. Why? Because he was named as guarantor on the AST & had equal responsibility to the tenant. As has been previously stated, good tenants an turn bad. If I was the landlord in this case, I simply wouldn't accept your wish to end the guarantor arrangement. A credit rating means nothing if payments stop. Some of my best tenants have ridiculously good credit ratings, but the loss of a job means they couldn't care less about their credit rating. Having no income really changes peoples values. So having a guarantor makes sense. Who knows how jackyll & hyde the situation could become.

by Ali Mussani

16:11 PM, 13th June 2021, About A week ago

I am a landlord, but twice I have been asked by people I know to be a guarantor for them with other landlords. I will set out below my two different experiences:
1. I signed as a guarantor for a young lady with a disabled child, she was good as gold, always paid on time and spent a lot of money upgrading the flat at her own cost. In this case the landlady was what I would consider to be stingy, one harsh winter the boiler packed up and she would not get it fixed for 6 weeks, considering the tenant had a disabled child, so the tenant withheld the rent until this was fixed, in the meantime the landlady applied for possession under Section 8 and I was named on the legal action papers as guarantor. I had clearly put on the tenancy that my guarantee was for the first 12 months only right at the start. The landlady's barrister called me into a private room and asked me to settle the outstanding rent and all the costs as he knew I had numerous properties all over London, I basically told him to go to hell and go ahead with the case and showed him the guarantee I had signed and as it was the third year of the tenancy I had already been released because the landlady and her agent, who was also there, had accepted my conditional 12 months guarantee before they signed their part of the tenancy. The tenant was so good she said I will pay the outstanding rent only, no legal costs, over 6 months. They had to back down as she also had a lot of email proofs of disrepair.
2. The second one I had signed as guarantor for my friend with the agent who was also my friend, again I had signed only on the basis of the first 12 months. The tenant was paying regularly, but when it came to renewal my agent friend said that the tenancy was being renewed as a periodic tenancy for another 12 months and that I was still considered to be the guarantor, I told him to check the form I signed where I had clearly put "Only for the first 12 months", he said it didn't matter and I was still liable. I followed up with an email and told him in no uncertain terms that if he were to continue renting to the tenant on a periodic or new tenancy it was at his own risk, he backed down.
That was my experience, whether I was right or wrong as guarantor I don't know, but I certainly had good grounds, but as a Landlord I would not have accepted a guarantor putting the same condition as I did.

by Chris Byways

8:50 AM, 14th June 2021, About A week ago

Slightly different angle on guarantor’s liability, any comments appreciated.
Tenant keeps flat nicely except won’t ventilate, and dries clothes in condensing tumble dry (which give out a lot of moisture) and on radiators etc. So big Lifestyle condensation on windows and some on walls. 6m AST would go the Contractual Periodic, but gave 1m notice for end June when 6m up. So far OK, no reason for any loss of deposit.
However 4 days before deadline to give notice advises Environmental Health of “damp problem” and “unfit for letting”, and said they were giving notice to leave. But gave me 3 hours +1m, on a BH, and no mention of any issues. So why report it then if leaving, and not have reported to me!
Agent says can’t market until resolved. No defect in building whatsoever. Not advised to me, everything reported attended to immediately. EH tell her it’s Lifestyle and didn’t even let me know of Report. I only learn from agent. I invited EH to vIew (this coming Thursday), I’m proud of this recently refurbished flat.
So until EH view and declare in writing ‘no problemk or tenant admits they ‘misspoke’ and there is no problem I can’t re-let at least according to the (find a tenant, not managed) agent.
So two questions: 1) do I have a claim for the extra delay in re-letting for loss of rent from deposit/Guarantor until 1m after their vindictive accusation is resolved?
2) Guarantor (father) and tenant requests I do not even copy tenant with any email ‘as she is busy with work’. As the AST is with her I’m happy to reply to Guarantor on her behalf but feel its right to cc her?
Chris


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