New tenant but company paying the bills – Reader requests help

New tenant but company paying the bills – Reader requests help

9:25 AM, 15th July 2013, About 10 years ago 18

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How should I document the arrival of new tenant?

I let a 3 bedroom property to 3 professionals last year on a one year AST. Although all 3 were named as tenants on the AST it transpired that their company paid for all their bills including their rent.

The AST term expired earlier this month and I was asked just before then if I would mind going onto a month-to-month arrangement as the company were reviewing the project and the resource status, but they would stay in the property until least the end of August. They have been model tenants and the rent has been paid on time so no cause for concern from me and I agreed to the monthly arrangement.

I recently received an email from the employer informing me that one of the named tenants was leaving the project and would be replaced by another employee in the property.

Given that the tenants have gone from an AST to Statutory Periodic and one of the named tenants has left and been replaced by someone else, how do I capture and document this change of tenant?

Even though it may only be for a couple of months can anybody advise what the right admin process is to recognise the new tenant in the context of what is now a Statutory Periodic tenancy? The other two tenants on the original AST are still in residence.

Many thanks in advance.

ClaudioNew Tenant

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Neil Patterson

14:32 PM, 15th July 2013, About 10 years ago

Hi Claudio,
My understanding, and I am happy to be corrected, is that as you have a new tenant you should get a new AST signed by all 3 parties as the contract is not with the company. Alternatively if your lender allows have a contract drawn up directly with the company although this does not sound practical in this case.
You could currently be leaving yourself open with no AST in place.

Claudio Valentini

14:55 PM, 15th July 2013, About 10 years ago

Reply to the comment left by "Neil Patterson" at "15/07/2013 - 14:32": Thanks Neil, clearly the Company will not commit to anything beyond end of August, so it's unlikely that the tenants would sign up to anything longer than that either, given that the Company is paying the bills. Are you suggesting that I get a new AST ( just for the agreed period of time e.g. 1-2 months) with all the new tenants' details in place?

Neil Patterson

15:16 PM, 15th July 2013, About 10 years ago

It certainly seems like a hassle and is it or isn't it worth the risk?
At the moment you have a tenant who has not signed an AST.
As this question has only just been posted I am sure we will get plenty of expert views.

David Bender

16:20 PM, 15th July 2013, About 10 years ago

On a slightly different point - a word of warning. We had a tenant who was a Company Secretary and insisted that the contract was a Company Let. It worked for 2 years, she then left the company, the company refused to pay the rent even though the contract was with them. We obtained a court order, sent the (completely useless) bailiffs in (who couldn't find the company at their registered address (they were upstairs!), applied for the director's attendance at court (they didn't come) and eventually, after 2 years of chasing, they closed the business (and the administrators didn't let us know.). Why do I tell this tale ? - if you have a company let you must get a personal guarantee either from the tenant or the directors, or both, otherwise you have no real security if the tenants do 'a runner' and the Company just doesn't care.

18:41 PM, 15th July 2013, About 10 years ago

I think you'll find that unless you change the tenant via a deed than you have to issue a new AST; which means new DPC and PI.
Why not just allow the 2 existing tenants to take on the new one as a lodger.
Trouble is the old tenant has to stay on the AST and remains liable for it until AST is terminated or a new AST commences.
As you wouldn't stand a chance of any recovery for rent arrears; i would just allow the new tenant to be a lodger.
Make sure a lodger agreement is completed and a letter to the tenants that you give permission to the tenants to take on a lodger.
Make sure the lodger CANNOT lock their bedroom door as a de facto AST will have been created.
Effectively the lodger CANNOT be allowed to have exclusive use of the room; the tenants should be able to go in any time they like.
I'd issue a new AST which will last for 6 months but which you could accept early surrender.
You won't have any choice.
If they choose to leave what are you going to do about it!!........NOT a lot I would suggest!
All an AST does is prevent a LL getting rid of a tenant.
If the tenant chooses to leave early the LL cannot do anything about it and won't stand a chance at recovering the rent monies for the remainder of any AST fixed term..

andrew townshend

20:01 PM, 15th July 2013, About 10 years ago

i would agree with paul above, keep your existing 2 tenants, the new person is not a tenant, just a guest staying with your tenants, but do not accept any money from the third person, thats how i would play it.

Mark Alexander - Founder of Property118

21:23 PM, 15th July 2013, About 10 years ago

Reply to the comment left by "Paul Barrett" at "15/07/2013 - 18:41":

I do wish you wouldn't make such sweeping statements Paul. If the company signs a new 6 month AST they are liable and the landlord has every right to make claims against the company. Now if the company had no money there may be no commercial gain for the landlord to enforce an agreement. However, before you jump to conclusions and shoot from the hip, please consider that the company may be financially sound. For all we know they could be a FTSE 100 company. If that was the case would you still be offering the same advice?

Mark Alexander - Founder of Property118

21:25 PM, 15th July 2013, About 10 years ago

PS - i beleive the the required document to deal with this situation is a Deed of Assignment. Talk to the NLA or Tessa Shepperson at Landlord Law about how to get hold of one.

andrew townshend

22:33 PM, 15th July 2013, About 10 years ago

i do think some of you are over complicating this situation.

2:08 AM, 16th July 2013, About 10 years ago

OK as far as AST sweeping statements are concerned; advise whether any LL who uses this site who has ever pursued and been successful in recovering AST contractual monies due when a tenant has vacated early WITHOUT agreement from the LL!!
I would suggest about 10 LL in the past 5 years!!
I have experienced exactly the same circumstances and it is just NOT worth pursuing.
Yes one would advise the CT dept that the tenants are still liable until the AST has finished and you will have used the deposit for rent arrears.
But going to County Court to enforce a 1 month rent loss; never happens......well hardly ever.
This why the a sweeping statement is CORRECT.
I don't like the situation as I believe a contract is a contract; but the reality is tenants DON'T see it that way, they will leave when they want no matter what any silly AST states.
They know LL won't and don't bother pursuing such amounts.
Always remember the case with the farmer and some Yanks who had signed a 5 year tenancy.
The tenants wanted to leave early; the farmer tried to block the tenants from leaving.with a large container.
Guess who got their own way!!?..........................................and it wasn't the farmer!!!
This is the reality with AST's, so the sweeping statement is it not; which I don't!!
The best most LL can do is hope to receive early notice of the intention to leave early and obtain new tenants to take over when the former tenants vacate early.
This is why I do not bother with an AST longer than 6 months; anything longer means NOTHING; tenant will leave anytime they like!
Of course it is a shame that LL do NOT have ready means to seek practical redress when tenants fail to comply with their contractual AST terms.
BUT we are where we are!!
The County Court system is just NOT fit for purpose; which is why most LL don't bother with them apart from evictions.
I have attempted to use the 'system' on several occasions and it just doesn't work.properly.
The old adage of 'throwing good money after bad' occurs every time!!

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