How do I renew rental agreement on the 12 month anniversary of tenancy?

Landlord Discussion
1

My tenants tenancy expires on the 31st July. I’m hoping they stay. If they do, what action do I need to take? Thanks.

2

I choose from these options:

  1. Do nothing. The tenant is then ‘holding over’ and the tenancy becomes a periodic tenancy governed by the original agreement. Advantage: nothing to do. Disadvantage: perhaps a little bit less certainty, also see below.
  2. Discuss with the tenant and if they agree, create a new tenancy using a simple ‘Tenancy by Reference’ document which simply states that there is a new Tenancy with such-and-such start date, rent, etc. but with all other terms the same as in the old tenancy which must be defined clearly by reference to the original tenancy agreement. Remember that tenancies cannot start before the date of the agreement. Advantage: simple documentation. Disadvantage: Even though the document is simple it is still a new tenancy and triggers all the the things one must do for a new tenancy.
  3. As for 2, but create a brand new tenancy agreement. Advantage: An opportunity to review the rent and bring the agreement up to date. Disadvantage: all the boring paperwork including the government mandated stuff.

We have 4 tenants, 1 of which is leaving this month but all the others are holding over under old agreements on the same rent they paid when they moved in, in some cases now 20% below current rental values. This can work well, particularly for landlords like us who don’t worry much about the amount of rent we receive so long as it comes in regularly and the tenant looks after the property. But if you let it go too long the disparity between the passing rent and the open market value becomes glaring and there is then a difficult conversation about a relatively large rent increase. For this reason we have decided that in future all agreements (after the first 6 month letting to a new tenant) will be annual and WILL be renewed with a new tenancy agreement, even if the wording is exactly the same as the old one.

The other thing is that a renewal is an opportunity to do a thorough inspection of the property and spend some time with the tenant gently probing to see whether their circumstances have changed or there is anything else you ought to know about. It’s a really good opportunity to review everything without the tenant feeling you are being intrusive.

1 Like
3

Many thanks, I like option 1.

4

Option 1 is preferable I would suggest, bug ghey won’t be holding over, they will have a valid periodic tenancy.