Switching from annual to rolling tenancy – RISKS?

by Readers Question

4 years ago

Switching from annual to rolling tenancy – RISKS?

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Switching from annual to rolling tenancy – RISKS?

I’ve had a tenant for the last two years on a yearly tenancy. I have just issued another tenancy for another year because I have always felt more secure issuing a new tenancy every year. However the tenant has asked for a rolling tenancy.  Switching from annual to rolling tenancy - RISKS

Firstly, what are the implications of putting in a rolling tenancy? Does this have any legal problems to be aware of, if and when the tenant vacates the property, or any other issues that I should be aware of?

Can the present tenancy, which has just been signed, have a letter endorsed to say it is a rolling tenancy, assuming I go down this route.

Comments on this situation would be appreciated.

Rex



Comments

Mark Alexander

4 years ago

Hi Rex

I previously did what you have been doing and for the same reasons. However, a landlord of 40 years persuaded me otherwise.

Once a tenant is on a rolling contract it it much easier to get them out if you have problems, especially if you serve a section 21 notice early into the tenancy but explain that you will not enforce it through the Courts unless there is a problem. It also reduces admin and costs associated with deposit protection.

My fear was that tenants would leave during times when it would be difficult to re-let the property (e.g. Xmas) but this hasn't been a problem.

The downside of course is that a tenant can exit with just one months notice. This would be a major problem if your property is most attractive to some markets which are seasonal, e.g. student lets.

On the whole though, I am much happier with rolling contracts.

I prefer long term tenants and to provide assurances to my tenants that I will not evict them unless they default on their tenancy I offer them with a Deed of Assurance. My average tenancy period is now over 5 years!

See >>> http://www.property118.com/deed-of-assurance-1/32440/
.

N S

4 years ago

Are rolling tenants not a problem with mortgage conditions? Both of my buy-to-let mortgages state that I can't have a tenancy for greater than 12 months??

John Daley

4 years ago

Hi Rex,

In addition to Mark's comments your tenants moving from a fixed to a periodic tenancy will reduce your costs and the time taken to recyle the tenancy and it also reduces the chances of your tenant departing at the end of the term certain.

Lots of tenants will stay far longer if they are not forced to make a decision, reducing voids and the costs of tenancy changes.

Ian Cognito

4 years ago

Reply to the comment left by "John Daley" at "21/10/2014 - 15:30":

Hi John

One of the reasons I use a 12 month AST agreement is that my version includes a mechanism for an annual rent review.

Of course, the tenant is not obliged to "renew" under the terms set out in a previous agreement. However, I do find that a gentle and timely reminder which refers to a paragraph clearly set out in the current agreement makes broaching the subject very straight forward.

Furthermore, if I subsequently hold the rent or apply only a very minimal increase, my tenant will normally be especially pleased with the outcome.

That said, I would never try to implement an increase without first making an appraisal of the competition.

Sorry if I'm digressing from the opening question!

Michael Barnes

4 years ago

A rolling tenancy does not make it a tenancy longer than 12 months. In effect it is a 2-month tenancy.

The mortgage terms are to make sure that the mortgage company can get tenants out if you default; with only two months notice needed thay have no problem.

Michael Barnes

4 years ago

The only problem I am aware of is if your tenant moves out before giving you back posession, then you become liable for the Council Tax. If tenant does not pay it, then you have to, and then claim it back from the tenant.

N S

4 years ago

Reply to the comment left by "Michael Barnes" at "21/10/2014 - 16:55":

Doh - yes that makes sense!

Ray Davison

4 years ago

Reply to the comment left by "Michael Barnes" at "21/10/2014 - 16:58":

Michale you are correct. However tenants also move out during fixed terms (An agreement, what is that?) and the council will likewise charge the landlord.

Romain Garcin

4 years ago

During a fixed term tenancy with a term of 6 months or more the council has no legal ground to charge the landlord for CT in case the tenant is no longer resident.
A landlord should point that out then appeal to the VOA.

Re. fixed term tenancy v. periodic tenancy, one aspect to remember is that the tenant has no obligation to give any notice that he will be vacating at the end of a fixed term tenancy.
In general, a landlord has also more power to increase the rent during a periodic tenancy (through s.13 notice).

Peter & Di Cole

4 years ago

We do an Lease Addendum each year for our tenants which is quick to do as it's a one page document. We can also stipulate any extras such as each party giving two months' written notice and put the rent up occasionally at the bottom of the form. We get the tenants to sign it, send back to us then we sign and send them a copy back.

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