Many
private landlords encourage long-term tenants. They are usually more reliable
with the rent. And if a tenant does put down roots, they’re more likely to look
after the property. Long-term tenants tend to cause far less hassle and a
landlord can more or less leave the tenant to their own devices. The less tenant turnover the better for most
landlords.
If you share this philosophy, when a tenancy comes to an end, you’ll be hoping to renew
it. You’ll want to keep the tenant in your property for longer. If they’ve been
a good tenant that is. Assuming this is the case you have two options at the
end of a tenancy:
1) Do nothing. Allow the lease
to roll into a periodic tenancy.
2) Draw up and have your
renter sign a new tenancy agreement.
Benefits of a periodic tenancy
At the
end of their fixed-term all assured shorthold tenancies rollover in a
periodic tenancy. Some landlords will always let this happen. Others allow it
to happen almost by oversight. But there are advantages to this.
Firstly,
it gives you greater flexibility. And is considerably less hassle than actually
renewing the tenancy. Once a periodic tenancy begins the landlord has greater
control. You can serve a Section 21 at any point which means you’re able to
regain possession of your property within eight weeks. This is a great help if
the tenant turns rogue or you decide to sell or renovate the property.
By
allowing the lease to roll over you also save yourself the time and possible
expense in drawing up a new tenancy agreement. You may also think it best to
just leave well alone if everything is running smoothly. If the tenant is
paying their rent and looking after the property do you really need to bother
with renewing the tenancy?
Benefits of renewing a tenancy
If you
have a great tenant it can make sense to offer to renew the tenancy. This
provides greater security for you both. The tenant gets the security of a new
fixed-term and you know you'll have a guaranteed income for the next twelve
months.
Another
reason for renewing the tenancy is you're able to change the terms of the
lease. In other words, you're able to increase the rent. However, you do need
to balance the increased revenue against the possibility of losing the tenant
due to the higher rent.
The documents you need to serve
If you
do renew a tenancy there are documents you must give to your tenant. This is
always the case with any new tenancy. If you're renewing the tenancy your
renter may already have copies. But you should give them another.
·
Energy
Performance Certificate.
·
Gas Safety Certificate.
·
How
to Rent Booklet - make sure you have the current edition.
·
Prescribed
information on deposit protection scheme (see below).
If
you're renewing the lease you'll also need:
·
Tenancy
agreement. Not a legal requirement but an airtight tenancy agreement protects you
and the tenant.
What about the deposit?
If you
renew the tenancy you only need to re-register the deposit if the terms change.
If the terms (the rent most notably) and the deposit amount remain the same
there's no need to notify your scheme. However, if the tenancy agreement has
changed you should notify the scheme you use and will need to re-register the
deposit. There is a caveat here. Terms and conditions may vary between schemes. Check with the deposit protection scheme
you use to confirm whether you do need to reregister the deposit.
Changes in legislation
If you
do decide to renew a tenancy there are two recent legislation changes you must
take into account when drawing up your tenancy agreement. The Tenant Fee Ban
and the new deposit cap.
The tenant fee ban
If
you're renewing a tenancy you must ensure it complies with the Tenant Fees Ban.
Any fees agreed before June 1, 2019, will still be valid until May 31, 2020. But
that only applies to exist contracts. Any new tenancy agreement, and that
includes renewals, must comply with the tenant fee ban legislation. You can
find out more about this here.
The deposit cap
Since
June 1, 2019, there is a new cap on deposits. You don't have to refund the
difference if a lease moves into a periodic tenancy. However, if you sign a new
tenancy agreement with your renter you must make sure the deposit you charge is
within the new rules. To discover the maximum deposit, you are able to charge
you can use our free calculator. You'll find it here.
MakeUrMove
can take the strain out of renewing tenancies. All our property management
packages include tenancy documentation and renewals. Click here for more details.
