Landlord’s Guide to Renewing a Tenancy Agreement

The process of renting your property to tenants may seem relatively straightforward and hassle-free compared to the maintenance of the property and resolution of problems that tenants may have throughout their stay. It is, however, important to know the correct steps to take once the original tenancy comes to an end, so you can protect your best interests and decide whether to renew a contract or allow the tenancy to transfer into a periodic one.

What is an assured shorthold tenancy?

Most tenancy agreements are held in the form of an assured shorthold tenancy (AST) contract, which is a fixed-term contract (there is a set time that the contract lasts). If the AST contract expires, and neither you nor the tenant have taken any action to renew or terminate the contract, the tenancy becomes a statutory periodic tenancy.

a small house, documents and calculator on a table with two men talking in the background

What is a periodic tenancy?

A periodic tenancy, rather than being a fixed time contract like the AST, will continue to exist on a monthly basis, until either party to the contract gives a notice of termination of contract. The notice period will usually be two months for the landlord and a month for the tenant.

Assured shorthold tenancy or a periodic tenancy?

In accordance with what you are looking for it could be in your interest to not renew a tenancy contract, and thus once the fixed term tenancy ends, you as the landlord may be quite happy to go forward with a periodic tenancy as it contractually obliges you to only a couple of months, rather than 6 months or even a couple years. If, however, you are looking for the tenancy to be secure and risk-averse, renewing the tenancy via a new fixed-term contract will be your preferred option. It will provide you with a more secure income, and the option to renew terms of the tenancy.

Making changes to the contract when renewing a tenancy

In renewing the contract, you will also have to add the length of the new tenancy, as well as any updated terms and rent increases. In renewing your contract, make sure that no clauses in it clash with current legislation, as new law could make clauses that were previously in the contract void or illegal. Furthermore, in addition to the modifications to the content and terms of the new contract, you will need to re-protect the deposit, in addition to supplying all information regarding the protection of the deposit to your tenant. Do bear in mind that you will be limited to charge additional fees for the renewal of your contract in accordance with the Tenant Fees Act and your tenants’ rights, which you can find out more about here: What fees can you be charged for as a tenant?

a tenancy agreement on a table with a pen and keys on top

Should you increase the rent when renewing a tenancy?

One of the main opportunities that a tenancy renewal presents, besides extending the term of the contract itself, is the chance to increase the rent of your property if need be. There is unfortunately no easy way to go about increasing the rent, therefore you will have to be straightforward with your tenant and provide sufficient time to negotiate a new price or alternatively provide notice for them to vacate the property.

Ultimately renewing a tenancy agreement will depend on what you are looking to gain from renting your property out. If you do not mind a high turnover of tenants, and possibly void periods in the occupation of your property, you may not want to renew a tenancy. If however you are looking to have your property occupied by a tenant at all times, or maybe are looking to alter the terms and rent of the tenancy, then renewing a tenancy agreement will be the way to go.

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