What Options Do Landlords Have On Tenancy Renewals?
When the initial contract is coming to an end with your tenants you have a few options to consider when it comes to the renewal. In short you have 3 main options; don’t renew, renew for a new fixed term or extend the contract on a monthly basis. I’ll explore each option in a little more detail below;
Before the tenancy started you had to make a decision on the tenants suitability based on referencing and gut feeling whereas now you have first hand experience of them as tenants. During the initial contract yourself or your letting agent should have conducted property inspections so you know whether or not it has been looked after and will also know their track record of paying the rent.
If you have concerns regarding the tenant and don’t want to renew the tenancy then even with the contract expiring you will still need to serve a Section 21 notice giving the tenants a minimum of 2 month’s notice to vacate. This is why it is important to make a decision over the renewal 3 month’s before the contract expires so that if you decide to serve notice there is plenty of time to do so. You don’t need to state any particular reason to serve notice and provided that the tenancy paperwork has been completed properly and there isn’t any outstanding maintenance works you shouldn’t have any problems.
Renew for a Fixed Term
When you renew for a fixed term you essentially sign another contract in the same way that you did initially for either 6 or 12 months or even longer if both parties wanted. Depending on how long the tenants have been in the property then this is also a good opportunity to review the rent and look to increase it if applicable.
The advantage of a new contract is that it gives security of tenure to both parties so that the Landlord knows they won’t suddenly be left with an empty property and the tenant doesn’t face the prospect of only ever being two month’s away from needing to find a new home. On the flipside the main disadvantage is that both Landlord and tenant are left with less flexibility if either of them wants to end the tenancy sooner.
Extend on a Monthly Basis
If a new contract isn’t signed after a contract expires than a tenancy automatically becomes what is known as a Statutory Periodic tenancy. Under a Statutory Periodic tenancy all the clauses and conditions of the original tenancy remain in effect and the tenancy continues indefinitely until either party serves notice, with it still being possible to increase the rent by serving a Section 13 Notice. Landlords would need to serve two month’s notice whereas tenants only need to provide a month’s notice.
This is a great option if you are unsure about your longer term plans as it gives you a lot of flexibility. The downside is that the tenants could serve notice at any time so you could be left needing to find new tenants during a quiet month like December. The flexibility of this type of tenancy is popular with many tenants although it doesn’t suit everyone as some types of tenants and in particular families want the security of a longer fixed term contract.
I hope you’ve found this useful and it has helped give you an idea of the different options you have when it comes to renewing a tenancy. As always we love to talk so if you are ever in need of any property related advice please just give us a call on 01332 30 30 30.
Click Here To Read How Often Should You Increase The Rent?