When your fixed term tenancy period comes to an end, you have a number of options as a landlord.
- Renew the current tenant(s) with a new fixed term agreement (with or without a rent increase)
- Allow the tenancy to become a “statutory periodic tenancy” i.e. rolling (with or without a rent increase)
- Serve the existing tenants with notice to vacate the property
Step 1 – Plan well ahead of time
I start thinking about my tenancy renewals several months in advance and communicate with my tenants around 3 months before the fixed term tenancy comes to an end. It’s well worth planning ahead well before the renewal is actually due, especially as you’re required to give at least 2 months notice if you do want to give your tenants’ notice to leave.
Step 2 – Speak with your tenants
As I mentioned, I speak with my tenants about upcoming renewals around 3 months before the fixed term period comes to an end. They may already have plans to leave the property, perhaps to buy a property or maybe they are being relocated with work. Hopefully, it’s not the case that they’re unhappy in the property as it always pays to have a good relationship with your tenants, to deal promptly with repairs and communicate effectively at all times. Your tenant may well ask about renewing for another fixed term or they may ask if it’s possible for the tenancy to become a rolling monthly tenancy, also known as a statutory periodic tenancy. If they do decide to leave the property, at least you have plenty of notice to get the property readvertised at this stage, although I would advise against advertising the property more than 2 months before you want your new tenants to move in. Too far in advance and most tenants won’t want to wait that long and the interest will dwindle. Advertise on Rightmove around 6-8 weeks in advance and you’ll find this works perfectly, certainly in the areas that I work in.
Step 3 – Do you want to make a rent increase?
Rent increases are very much down to the personal preferences of the landlord. As a letting agent, I come across a variety of opinions on rent increases and every landlord is different in how they approach the matter. Some are of the option that the rent should be increased each time to the market rent, others keep the rent the same if they have a good tenant. Most landlords however, will keep the rent fair and perhaps a little under market rent if they have a good tenant in place but making increases gradually so that the rent paid doesn’t fall too far behind the market rent. This can actually be detrimental to your tenants, as if they do need to move at some point they will be in for a big shock at the rental prices for other properties, and it will be a big jump for them. A gradual increase and keeping the rent fair means that if they do move then it’s not a huge difference to the rent for other properties. Imagine if you needed to sell the property, your tenants may seriously struggle to find somewhere to live if they’re paying far too little in rent in your property currently.
Step 4 – Agree terms – fixed vs periodic
Again, this is very much down to landlord preference, and also tenant circumstances. Most of my landlords prefer to have a fixed term tenancy agreement in place, as it gives them some security and peace of mind. Some of my landlords actually prefer just to allow tenancies to become statutory periodic after the fixed term comes to an end. There are pros and cons with both options – a periodic tenancy means you can currently serve your tenants with notice at any point (using Section 21), but a fixed term means you know you have rent coming in at an agreed figure for the next 12 months. Really, I don’t feel the flexibility of the periodic tenancy is very necessary. If you have a good tenant, who is paying the rent, then of course you’d want them to stay for as long as possible. If you do have a problem tenant who stops paying the rent, you do have the option to use Section 8 to get them out of the property even within a fixed term. Of course, your tenant may have a set idea that they’d like one type of tenancy over the other, and this will be down to you to negotiate with them and come to a mutually agreeable solution. Either way, you can make an increase to the rent if you wish. On a fixed term agreement the tenants will be signing a new agreement, so the new rent will be stipulated on the AST agreement. If your tenancy becomes a statutory periodic tenancy, then you will just need to issue a Section 13 rent increase notice to your tenant.
Step 5 – Follow up
After renewing the tenancy, in whatever form that takes, then it’s always good practice to re-issue your tenants with the mandatory documents you should have provided them with at the beginning of the tenancy e.g. the ‘How To Rent Guide’, gas safety certificate, etc. I always re-send the deposit prescribed information, as well as a copy of the new tenancy agreement (if applicable) to the tenants.
If this all sounds like a minefield, then feel free to contact me. As part of my part managed and fully managed packages, tenancy renewals are all part of the service. I can also deal with renewals for let only landlords for a fee of £150. Either way, I am here to help so feel free to get in touch – angela@thepersonalpropertyshop.co.uk or call on 01279 940840.
Letting agent in Bishop’s Stortford
Letting agent in Braintree
Offering tenant finding services, rent collection or full management of properties in and around Braintree, Bishop’s Stortford and Dunmow.