New AST questions post June 1st

by Readers Question

12:01 PM, 31st May 2019
About A year ago

New AST questions post June 1st

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New AST questions post June 1st

Firstly, the new tenants are a married couple with two children. The wife has no income. The letting agent has named both husband and wife as tenants on the AST even though the wife will be contributing no rent. The letting agent is advising that this is normal practice. I would have presumed that the husband would be the tenant in this case with the wife named as permitted to stay. Am I being overly cautious here? What is the normal/safe practice when you are aware in advance that only one party can afford the rent?

My second question relates to the clause below which is also in the new AST:

“In clauses 1.7.8.2 and 1.7.8.3 the Rent will increase by the amount stated for the annual increase in the CPI (Consumer Prices Index as published by the Office of National Statistics) as quoted for the month two months prior to the month of the increase. If CPI is less than 2%, the amount of the rent increase will be subject to a minimum of 2%. If CPI is in excess of 5%, the amount of the increase will be subject to a maximum of 5%.”

Here the letting agent is telling be that this cap on rental increases is new legislation post June 1st (but so far they haven’t been able to show me evidence, nor can I find any). Does such legislation exist?

If it does exist is it necessary to add it as a clause to an AST? I’m old enough to remember interest rates of 17% and CPI of 9%, and that was only 20 years ago!

My issue with adding this clause to an AST would be two fold, what would happen if interest rates, and subsequently CPI return to the levels we saw in the ’90 would I be unable to increase rent in line with increased costs? Secondly if legislation were to change what that result in this AST becoming illegal or unenforceable?

Many thanks in advance for any advice you can give.

Fiona



Comments

Gary Nock

14:20 PM, 31st May 2019
About A year ago

Hi Fiona.
1. It is normal practice to name all persons over 18 on an AST rather than as " permitted occupier" which carries no legal weight and leaves the landlord in limbo if they need to evict. If the wife after moving in says she has a part time job and gives her husband £10 a week towards the rent then suddenly she is a tenant. If an eviction notice is only issued against the tenant ( husband) and not the wife
(permitted occupier) when she turns up at the hearing and says she contributes and is a tenant then hubby is evicted but not wifey. And then wifey lets him back in.

So thats why everybody is a tenant over 18.

2. The CPI clause is rubbish. It isn't law and prevents landlords increasing rent to market rate. Have it took out and use a Section 13 Notice to increase rent instead.

Rob Crawford

16:06 PM, 31st May 2019
About A year ago

Hi Fiona, if the wife is included as a tenant and an eviction is required at a later date then you have a legal process in place to evict both at the same time. If she was listed as a permitted occupant she could argue at a later date that a tenancy is in place (under common law) and delay any eviction. There is a threat of rent capping being introduced so having a clause as stated is a good idea especially if rent capping is not retrospective. However, I agree that the cap applied to the clause is unnecessary and is not a currently a legal requirement. I would amend it to remove the cap. This way the clause is contractually agreed in advance so no need for a section 13 and so less likely to be contested.

Graham Bowcock

17:55 PM, 31st May 2019
About A year ago

Hi Fiona

We always name all occupiers over 18 as tenants; as Rob said, you then have a contractual relationship. If bread-winning husband disappears you still have someone who you can take action against and deal with on a formal basis.

I've worked with an agency who used Permitted Occupiers in their agreements but got them to stop. It's a bit meaningless in my view.

Smithy @hotmail

10:39 AM, 1st June 2019
About A year ago

I have a 76 year old tenant (she has been with me since 1994) - her great-grandson lives with her. He is 22 and has been with her since his dad kicked him out at age 18. (Up to 18 his dad could claim benefits for him apparently - once the benefits stopped he was no longer welcome.) G-Grandson is named as a 'member of the tenant's household' on the Tenancy Agreement. I am led to believe he contributes to the running of the household, but rent is paid by LHA and topped up by my tenant. G-Grandson is pleasant, polite and co-operative. His mobile is the only way I have to contact my tenant. He is also bone idle. I would not choose to have him as a tenant. But if he was not there, she would be by herself which I don't think would be a good idea.
I have another tenant where the 18 year old son is a 'member of the tenant's household'. The above comments have made me wonder if I should actually be listing these as tenants, although I would not particularly want to.

Ian Narbeth

18:10 PM, 1st June 2019
About A year ago

The cap and collar on the CPI increases is a good idea. CPI inflation is usually below RPI (but CPI is the more accepted basis). It is unlikely that inflation will go above 5% for the next few years but it might go below 2%.


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