Management Company won’t allow Periodic Tenancies?

by Readers Question

4 months ago

Management Company won’t allow Periodic Tenancies?

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Management Company won’t allow Periodic Tenancies?

I am the Leaseholder of a flat in a large, city-centre block – popular with mature students and young, single, professionals.

The management company are trying to force me to issue new AST’s every 6 months – presumably to bolster the fees they then charge.

The lease requires me:-
31.1 not to … part possession of part only of the property:
31.2 not sublet the whole of the property save that:
1) the grant of the assured shorthold tenancies for a duration of no more than 6 months are permitted without the consent of the landlord; and
2) the grant of assured shorthold tenancies for a duration of more than 6 months are permitted with the Landlords consent not to be unreasonably withheld or delayed

Based on this, I have assumed that I could let on a 6 month AST and then either renew with another 6 month AST, or rollover to a periodic tenancy – without requiring consent.

However, the management company have now said that a rolling contract would not be deemed as a valid AST – and that it must be on a signed period for 6 months or more.

I’m concerned that a new fixed period might be unsuitable for some tenants – also, I can’t actually force the tenant to sign the new AST. Is this reasonable/enforceable ? Does it mean that I would have to evict every tenant that said they wanted a new AST but then failed to actually sign it?

I believe that the management company are taking this approach so that they can milk the AST renewal fee ‘cash cow’ as much as possible…

The Lease has the following
32.2. within one month after the date of any and every subsequent assignment transfer mortgage charge underlease or tenancy agreement including any immediate or derivative underlease or tenancy Agreement of the Property assignment of such underlease or grant of probate or letters of administration order of court or other matter disposing of or affecting the Property or other devolution of or transfer of title to the same to give to the Landlord notice in writing of such disposition or devolution or transfer of title with full particulars thereof and in the case of an underlease (and if so required by the Landlord) a copy thereof for registration and retention by the Landlord and at the same time to pay to the Landlord such reasonable fees including value added tax for such registration (being not less than £65 plus VAT thereon) in respect of the registration of each such document or instrument so produced

In practice, they now charge “a not unreasonable” (sic) £90+VAT for each AST registration/retention – ie they expect me to pay them £108 every 6 months letting.

Does a rollover/periodic tenancy count as “an assured shorthold tenancy of not more than 6 months” (thus satisfying clause 31.2.1) ? If so, should it require registration/retention – and hence trigger the charge ?

I want to comply with the terms of the Lease – but I’m not sure that the management agent’s interpretation is reasonable, affordable or practical.

Does anyone have any advice or suggestions on resolving this ?

Thanks in advance for any help.
Dave

Comments

Neil Patterson

4 months ago

Hi Dave,

Logic would suggest a Periodic tenancy is better, because there is no fixed term and you can give notice.

However, in practice it is very common for the management company just to want to take a fee from you on a regular basis.

First make sure you pay the fee as they may take you to court and try to take the lease back, which is worse case scenario.

Then see if you can argue the point with the help of a solicitor, but the costs could spiral.

Also worth checking out the Leasehold Advisory Service >> https://www.lease-advice.org/

terry sullivan

4 months ago

unfair contract term--periodic ast is a valid contract--pls name tthe management company--freeholder?

max is £40?

new rules coming into force--check LAS

Ian Cognito

4 months ago

My standard agreement is a 12 month AST with 6 month break clause.

I occasionally renew by issuing a further 12 month AST, but with the 6 month break working only "one way". i.e. I cannot serve notice on the tenant until 4 months, but the tenant has no such restriction serving notice on me.

Ian Narbeth

4 months ago

Hi Dave
Subject to the usual caveat that I would need to see all the papers and understand all the circumstances, on the basis of what you say I think the management company is wrong. You do not require consent for an AST of up to 6 months. The fact that it becomes periodic when the initial term ends is trite. The tenancy is still an AST of up to six months. Otherwise on their analysis NO tenancy could be for less than 6 months because all are capable of lasting longer than six months when they become periodic.
I cannot see how the management company can insist that you grant new leases every 6 months. I suggest you ask them to produce the legal authority for their argument and point out that you are not obliged to give the tenant a new tenancy, the tenant cannot be obliged to sign one and that both you the tenant are happy with a periodic tenancy.
I suspect you are right that the agents just want to squeeze some fees for little work. £90 is more than a day's wages for many people.

David Price

4 months ago

Statute takes precedence over your lease, the management company cannot say that a rolling contract is not a valid AST. Ask it on which piece of legislation it bases its assertion?
A six moth AST can continue as a Statutory Periodic tenancy, a new tenancy and the default situation defined by statute (Superstrike Ltd vs. Marino Rodrigues). I believe that this conforms with the terms of your lease as being of less than six months. Watch out for Council Tax liability if the tenant does a runner for there is a condition of residency if the tenancy is less than six months.
Alternatively you can define, in your AST, extensions after the fixed period as Contractual Periodic in which case you avoid Council Tax problems but have then made the contract longer than six months as a Contractual Periodic extension is not considered to be a new tenancy.

silversurfer2017

4 months ago

I can't see why you can't give the tenant a 12 month or a 2 year contract after the initial 6 month period if you think he is reliable and wants to stay on but not sure for how long. This will keep your management company happy and cost you £108. At the same time you give your tenant a signed letter saying he can leave at any time providing he gives you at least one full months notice. You omit to mention this to the management company. Naughty but not illegal! If the tenant leaves before the end of the period and the management company raises queries then just say the tenant wanted to leave early because of personal reasons and you agreed.

Ian Narbeth

4 months ago

Reply to the comment left by at 21/12/2017 - 11:18
I can't see any need to be "naughty but not illegal". For many tenants and landlords a periodic tenancy provides flexibility. If you want to grant a longer lease with a break clause it is better to have the break in the lease than in a side letter.

money manager

4 months ago

I don't believe that a move to a periodic tenancy constitutes the grant of a tenancy, it is the statutory continuation of the pre-existing one and it should therefor follow that no notice fee is chargeable. I don't know if the above applies if your AST establish a contractural periodic extension.

David Price

4 months ago

Reply to the comment left by money manager at 21/12/2017 - 15:09
A STATUTORY periodic tenancy is a new tenancy, a CONTRACTUAL periodic tenancy is a continuation of the initial fixed term.

Shining Wit

4 months ago

Wow.
Thank-you to everyone who has responded. It has certainly given me a lot to think about.
I will respond again - when I have had a chance to digest the comments and suggestions received to date.
I have looked at the LAS website (see Neil’s initial post) – but can’t find any reference to the ‘new’ £40 limit. Please can anyone send me a more specific url – or search term – that I could use.
Many Thanks
Dave

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