Should I Renew My Tenants’ Tenancy Agreement?

Should I Renew My Tenants’ Tenancy Agreement?

Although most landlords and agents will be very familiar with the concept of a “standard” 6-month or 12-month tenancy, how tenancy renewals are handled can be considerably different from one agent to the next. In this article we look at the options that are available and the pros and cons of each.

OPTION 1 – Grant a New Lease

By granting a new tenancy to tenants, both Landlord and Tenant benefit from being able to modify the terms of the original tenancy agreement. From the tenant’s perspective this could include something such as adjusting the rent due date to fit with the date that they receive their salary each month, or from the landlord’s side it is often likely to involve an increase in the rent. The term of the new agreement does not have to be for the same duration as the original tenancy and can in fact be agreed based entirely on the mutual wishes of both parties. A break-clause can always be added if either party are unsure about committing for a further year, however the landlord may wish to restrict such a clause so that the tenancy cannot expire during quiet letting months (e.g. around the Christmas period).

Pros:

A good opportunity for the landlord to re-evaluate the rent payable.
Security for all parties with an element of flexibility if required, by virtue of an optional break-clause.
A new fixed-term tenancy prevents tenants from being able to leave a property at the end of their original fixed term without serving any notice.

Cons:

By signing a new tenancy the ‘Prescribed Information’ (in relation to Tenancy Deposits) must be re-served.
The tenants may be looking to leave shortly after the expiry of the initial tenancy, in which case they may not want to commit unless a very short extension is offered.
By granting a new lease the landlord would then have to wait until 6-months after the commencement date should they ever wish to gain possession via the courts.

OPTION 2 – Allow the tenancy to “roll-over”

As soon as a fixed-term tenancy expires the tenancy will automatically become a statutory periodic tenancy and the terms of the original agreement continue to apply. The tenancy will continue ‘from period to period’ until it is brought to an end by either party which in effect means that each time rent is paid a new tenancy period is created. If tenants pay rent monthly then the tenancy becomes a “monthly periodic tenancy” and therefore either party are required to provide one month’s notice under common law to end the tenancy (NB: if the landlord is seeking to obtain possession via the courts, they must also observe the requirements of the Protection from Eviction Act, which imposes the obligation to serve a minimum of 2 months written notice, regardless of the length of the rent period).

Pros:
This may be the best option when neither party are sure of their immediate intentions, e.g. where the property is being sold, or where the tenants are looking to vacate as soon as their own house purchase has completed.
It avoids the need for all parties to sign additional documentation.

Cons:
There is a risk that the tenants may change their mind about continuing their tenancy on a periodic basis and they could exercise their right to vacate at the end of the original fixed-term tenancy without giving explicit notice.
The required notice period imposed on the tenants could fall to just 7 days (in the event that they pay their rent weekly), which substantially increases the risk of void periods.
If tenants pay rent quarterly or 6-monthly, the minimum notice period on the landlord’s side will mirror this, e.g. if the tenant pays rent 6-monthly, the landlord would be required to give 6-months’ notice and this notice must also expire at the end of a 6-month rent period.

Summary

In conclusion, the best solution is largely dependent upon individual circumstances, however in our experience, in order to protect our landlord clients it is invariably better to opt for the grant of a new lease. This option prevents the tenants from leaving the property at the end of the original fixed term without serving notice and it also allows the landlord to maintain a minimum of 2-months’ notice from the tenant which will substantially reduce the risk of a void period between tenancies.

Alex Evans

You May Also Enjoy

Breaking News

Popping the Asking Price Bubble

Where in the Uk Can Buyers Snap Up Property Bargains and Where Properties Go for a Premium Above Asking Price   New research from fast selling property company, Upstix has uncovered the UK’s most surprising postcodes for snapping up a property at bargain prices this year, highlighting a widening gap between sellers’ expectations and the…
Read More
Rightmove logo
Breaking News

Highest demand to lease office space since pre-pandemic

The latest insights from the UK’s number one commercial property website Rightmove, reveals that the number of unique enquiries to lease office space is at its highest point since pre-pandemic, as businesses look for spaces that meet modern requirements. Demand to lease office space is 19% higher than the same period a year ago and…
Read More
Planning disputes on new build land
Estate Agent Talk

Planning consultations for major infrastructure to be streamlined

Robert Bruce, a planning and infrastructure partner at law firm Freeths LLP, said he: “Welcomed the change as a significant step to speeding up the DCO process and the focus on the quality and effectiveness of the consultation, rather than box ticking and a risk averse approach to pre-application consultation due to the current legal…
Read More
Breaking News

‘The property ladder pulls further away’ warns Open Property Group

For many first-time buyers across England, the dream of homeownership continues to slip further out of reach. Despite rising wages, soaring house prices are making it harder than ever to get on the property ladder. A leading UK professional house buying company ‘Open Property Group’ based in Buckinghamshire UK, has raised concerns over the ongoing…
Read More
Estate Agent Talk

How Long It Takes to Buy a House in the UK: 5 Common Delays That Can Slow Down Your Home Purchase

Wondering how long it takes to buy a house in the UK? The average timeline ranges from 8 to 22 weeks, but even that can stretch significantly due to unexpected delays, especially if you’re a first-time buyer or caught in a chain. That’s why working with experienced professionals like Belvoir — one of the UK’s…
Read More
Love or Hate Rightmove
Breaking News

Rightmove to host Renters’ Rights Bill webinar with Guild of Lettings

Rightmove is hosting a live and interactive webinar session with the Guild of Lettings to help agents get Renters’ Rights Ready. The webinar will take place from 10:00am – 11:00am on Wednesday 23rd April. Susie Crolla, Managing Director for the Guild of Lettings, will be joining Rightmove to help agents with questions they may have about…
Read More