Our users tell us that one of their main worries as landlords is to stay on top of their legal responsibilities. We wanted to help, so we’ve asked Tessa Shepperson at Landlord Law Services to come to the rescue with a “how to rent checklist”.
The result is the “Landlord duties” series, five articles to provide guidance for landlords at different stages of their tenancy. Each article is an abbreviated version of the content available on Landlord Law Services: if you want to delve deeper, you can access the full content by signing up to their service.
This fifth article is about how to end a tenancy agreement.
In our four previous checklist articles we discussed preparing your property to let, choosing your tenants, setting up the tenancy and managing the tenancy during the course of its duration. We now look at what you need to do at the end of a tenancy agreement.
What happens at the end of a fixed-term tenancy?
All tenancies come to an end. If you have given your tenant a fixed term (of 6 months, a year or any other agreed duration), that tenancy will automatically end at midnight on the last day of the fixed term.
In the vast majority of cases – and in particular, if the tenancy is an AST – if the tenants remain in the property after the fixed term has ended, a new ‘periodic’ tenancy will arise automatically.
For ASTs this will be under section 5 of the Housing Act 1988. You don’t have to do anything to make it happen. For example, there is no need to sign any new documentation, it will just happen if the tenants are still there after the fixed term ends.
Bearing this in mind, you should review all your tenancies a few months before the fixed term is due to end.
In normal times this would be two months before, as that is the notice period for a section 21 notice if you want them to leave. This is not the case at the time of writing (the section 21 notice has a notice period just now of six months). However, notwithstanding this, two months before the end of a tenancy agreement is still a good time to review your tenancies.
Review the tenancy and consider the next steps
Bearing in mind your future plans, as well as the plans and behaviour of the tenants, you need to decide whether you want the tenants to go or if you are happy for them to remain at the end of the tenancy agreement.
Things you will want to take into account are
- Their history of rent payment (is it good or poor?) With Hammock you will have access to the full payment history of your tenants
- Have they been a satisfactory tenant?
- Do you need the property back for your own purposes? (e.g. to live in yourself or to sell)
If you are not willing for them to remain, then you need to find out if they will be leaving voluntarily at the end of the tenancy agreement or if you will have to evict them through the courts.
If you want your tenants to go
At the time of writing, asking your tenants go is not practically a short term option. Due to the COVID-19 pandemic, there are currently substantial delays in the Courts and landlords should not expect to recover possession (save in very serious cases) in less than a year.
You may therefore wish to reconsider your decision, particularly if the tenants are not willing to vacate voluntarily at the end of the tenancy agreement (eviction through the courts would be your only option then). If you are not sure of your rights, your best course of action would be to obtain some legal advice on your situation (the Landlord Law Telephone Advice Service gives you direct access to 30-minute advice from a specialist solicitor).
If you would like the tenants to remain
First, you need to find out what their plans are. This can be done during an inspection visit (if this is possible due to COVID-19 restrictions) when you can discuss things with them amicably. Depending on their decision you should proceed as follows.
If the tenants wish to remain
If they wish to stay, then you need to consider whether:
- It is appropriate for you to use a renewal form, or
- If you should create a new tenancy, or
- If the tenancy should continue as a periodic tenancy
When making a decision between a renewal form and a new tenancy agreement, read your current tenancy agreement carefully to see whether it does in fact contain all the clauses you need. You should use a new tenancy agreement if:
- You are unhappy with the current tenancy agreement document, or
- There has been a change in the law which needs to be reflected in the tenancy agreement, or
- There has been any change in the tenants (for example if one tenant is leaving and is being replaced by someone else)
If any of the three points set out above apply, you should provide a new tenancy agreement. If you do decide to create a new tenancy agreement, remember to check on the most important items to consider in this article.
If none of the above applies then you may want to consider using a renewal form. This is a much shorter document which confirms the new fixed-term, sets out any new rent, and provides for all the terms and conditions in the previous tenancy agreement to continue to apply.
If you are happy for the tenancy to continue as a periodic tenancy after the end of the tenancy agreement, then you don’t need to do anything (just read on).
How does a periodic tenancy work?
Contrary to what many people think, there is nothing wrong with periodic tenancies, and some tenants have lived in their properties for many years on a periodic basis.
Periodic tenancies are particularly suitable if both you and/or your tenants are uncertain of your future plans.
For example, if your tenants are likely to be moved by their employer to another part of the country but don’t know when, or if they are in the process of buying a house but the completion date is as yet unknown. In those circumstances, they will not want to tie themselves down to another year’s contract.
If your tenants don’t want to commit to another fixed term, you cannot force them to sign a new tenancy agreement. You will just have to accept the situation. If you wanted a new fixed-term agreement just to increase the rent, note that you could always do this via the statutory notice procedure.
If you were to consider a renewal form, keep in mind that there are commercial implications, when a letting agent is involved. Tenants who sign a ‘renewal’ often trigger the charge of a ‘renewal fee’ from the letting agent. Less scrupulous agents may even encourage renewals when they are not really appropriate for this reason.
Do you need to provide any documents on renewal?
Apart from any new tenancy agreement or renewal form, the only document you need to re-serve because of the renewal is the ‘How to Rent’ Booklet. And you only need to re-serve this if it has been updated since you last served it on the tenants.
You will also need to serve, in due course, copies of any new inspection certificates for electricity and gas safety. However, the requirement for service is not triggered by the renewal of the tenancy: these certificates have to be served at the appropriate time (you can set expiry dates for these and other documents in Hammock, and you’ll be reminded when the time for renewal comes).
You may need to record the new fixed term with your deposit scheme, depending on what their rules are. You should also get new forms of guarantee signed if there are any guarantors. This is particularly important if the rent has gone up as this will automatically terminate any guarantees (as the guarantors did not guarantee a tenant in a tenancy with the higher rent).
Please note that if there is a change of tenant, this should be treated as a completely new tenancy. This means that all the documents discussed in our earlier article must be served, and any guarantees must be renewed.
If the tenants wish to leave
You should do the following:
- Arrange a checkout meeting. Ideally this should be with the same inventory company which did your check-in meeting. You need to identify any damage or other losses you will want to claim for against the deposit. It is important that this is done close to the departure date as otherwise the tenants can claim that the damage was done after they left
- Take meter readings
- Notify utilities (if utilities were put into the names of the tenants)
- Obtain a forwarding address for the tenants
- Ensure all keys have been returned
- If there are deductions to be made from the deposit, try to agree these, otherwise consider using your scheme’s adjudication service
- Put in place arrangements to find a new tenant.
- Check your insurance ‘void’ period – if the property is likely to remain empty for longer than the void period covered by your insurance you will need to arrange for this to be extended
This is the end of this short series of articles. Note that more information and guidance on all the issues discussed can be found on the Landlord Law service.
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