Our current tenant has decided to stay in the flat and we have decided to increase the rent for 10% and in line with the cheapest rental currently going at the building (50 flats!) The current rent is pre covid rate. The current tenancy agreement (12 months) will expire on the 30Sept. We would like to enter into a new agreement and do the assessment again (the tenant has a new job and potentially her mother does not need to be a guarantor). What is the best option in terms of renewing the contract? What are the benefits of rolling months vs new tenancy agreement for 12 months. How to protect ourselves the best? eviction etc. thank you
Its better for the landlord to allow the tenancy to become periodic. It means no admin required and greater flexibility if circumstances change.
thank you for your reply. could you please let me know the reasoning behing the periodic. cheers
- You wont have any admin, costs or risks of an error associated with tenancy renewal.
- If your circumstances or the tenants change and you need to recover possession, you can serve a s21 notice immediately and not have to wait until the end of another fixed term.
Thank you David,
I always thought that a fixed 12 month tenancy agreement is the best option for landlords. The cost of the new tenancy agreement with OpenRent is £49, referencing for the tenant and her mum £20+£20. Overall coast £89 to have a new contract for 12 months… it will be the same as last year…
Current agreement which we aim to keep reads: “Any time after 10 months from the start of the Tenancy Agreement either party can exercise the break clause by giving two months notice in writing to the other party. This means that the earliest time that the tenancy can be ended by this clause is after the expiry of 12 months from the commencement of the Term.” This seems to be very good for us… not sure what happens in the case if the tenant does not pay the rent at any time???
Though the OpenRent MUTUAL BREAK CLAUSE states: “The Initial Term of this tenancy agreement may be terminated by either party giving the other at least two months’ notice in writing, such notice not to expire until at least 12 months after the start of the Term. A notice
served by the Landlord under section 21 of the Housing Act 1988 shall be sufficient notice under this clause. The Tenant is obliged to pay rent up to and including the termination date, so if the tenancy is terminated on a date which is not the last day of a rental period, the rent due for any incomplete rental periods will be apportioned accordingly.” So it should not be a problem to serve the S21 notice… Am I missing something?
And the rent has gone up so we have to acknowledge this somehow in writing? How is any change in a contractual periodic tenancy on a monthly basis acknowledged??? Addendums ? We never did periodic tenancy so not sure of its value/meaning ets.
We would also be grateful for your views (or links) discussing the choice of contract, eviction and S21 abolition which i understand might happen 2025. thank you
Whats the difference between a 12 month tenancy with a 6 month break clause and a 6 month tenancy that goes periodic?
As Ive said, tenancies dont need renewing and there are significant disadvantages for a landlord in doing so.
thank you David, from what i understand (and have experiance) the difference is that with the 12months tenancy the tenant is more likely to stay full term 12months, so we avoid frequent letting and other cost related to this! the only disadvantage i see is that the rent is fixed and we cannot increase.I am aware of this and willing to take the risk. and yes we dont see any change in circumstances comeing our end…
I’d be surprised if your assertion about staying longer is true in practice.
- Will the Garantour from the Fixed term still be a garantour in rolling contract?
No. Guarantor is effectively released once the contract expires (end of fixed term). Tbh, having a guarantor is pretty pointless. Do you know any landlords who have successfully pursued a guarantor? Also the guarantee is not enforceable unless it is written as a deed which I believe it is not in the OR AST.
I’m with David122 on going periodic at the first opportunity.
it is interesing that both of you are so keen to go periodic but very limited reasons… which is a bit strange… it is either i am asking something so obvioius that you guys dont have time to explain or you are supporting interests of tenants more than landlord… thank you for your time anyway. cheers
Does Open rent have a template for rolling contract?
all of mine are periodic as well
Well Glenn1, there you have it. Both Colin3 and David122 are very experienced and knowledgeable landlords. They have given many people in the OR community great advice over several years. I too am a landlord of 15 years. By all means, go your own way. It’s a well trodden route. The route we all like is parallel and much prettier.
Nilesh, i am not disputing the knowledge, but for any advice i give I also share some knowldge so the person i advice understands… i would like to understnad… but it seems to be so difficult for you guys to spell out the advantages of rolling and disadvantages of fixed contract… why is that? Particulaly how to go smoothly from one ot another when the rent is increased… could any of you adress this please… thanks
As pointed out, no admin to move to periodic, rent increase just requires standard OR letter and the tenant to accept.
I have a tenancy moving from Assured to Periodic this month in fact after a 3 year term.
tbh the tenant would have preferred another Fixed Term but with the proposed changes to all tenancies moving to periodic anyway I thought I’d bite the bullet now and if I don’t like all the changes particularly any more landlord bashing from Mr Starmer I will just give 2 months and sell up.
Had enough regulatory changes and tax hits to last me a lifetime.
Hi Glenn. You’ve asked respondents to share their knowledge. I think the advantages of rolling periodic have been explained: less admin, less cost, less chance of mistakes, greater flexibility. Some landlords prefer the ‘certainty’ of a fixed term, but in my 22 years experience, this is illusory. If a T wants to leave, they will, and you’ll be hard pressed to enforce a deposit retention beyond lost rent for the short period it will take to re-let. It’s up to you whether you agree, but you won’t persuade most of us we’re wrong. Incidentally, to increase the rent all you need to do is either agree it amicably or send a S13 notice annually setting out the new rent. Being periodic makes this simple too.
The biggest disadvantage of fixed contract, you can’t apply for eviction with N5B form till the end of the contract. Tony has given you the whole list of reasons in a clear concise way. Hope it was helpful.
I allow all of mine to go periodic after the fixed term. No admin, re-assigning deposit, re issuing right o rent booklet etc… etc…, and as well as providing me with flexibility to evict & up rent as I need, it also provides the tenant with flexibility to move on if they wish, when they wish.