You’re a landlord whose tenant has reached the end of their fixed term. They have proved to be a good tenant and you would like them to stay. What are your options?
1. Do nothing
Contrary to what many people think, it’s not actually necessary to give the tenant a new written tenancy agreement. Under the Housing Act 1988, tenancies will run on, on a weekly or monthly basis, depending on how the rent is paid, after the end of the fixed term under the same terms and conditions as the preceding written agreement. This sort of tenancy is called a periodic tenancy. Some people think that the tenant will turn into a squatter (i.e. an unauthorised occupier) if they stay on, but this is quite untrue. They will still be a tenant.
Sometimes, if either you or the tenant are not sure how much longer you want the agreement to run for (perhaps if you’re considering selling the property but you’re not sure exactly when), a periodic tenancy will be the best option. It’s more flexible as you don’t have to wait until the end of the fixed term to end it.
If you let your property through a letting agent, they will generally do a ‘renewal’ as a matter of course. If you want the tenancy to run on as a periodic tenancy, it’s important that you tell them this. Otherwise, you may find that your agent has renewed for a new fixed term and is charging you a renewal fee.
2. Give your tenant a new tenancy agreement
Although it’s not strictly necessary to make a new tenancy agreement, there are some circumstances where it’s a good idea:
- If you want to increase the rent. Increasing the rent by getting the tenant to sign a new tenancy agreement is the best method of a rent increase, as it cannot be challenged by the tenant after they have signed the tenancy agreement.
- If there is any change in the parties to the tenancy agreement. For example, if one of the tenants has left and a new tenant is taking their place, or if you, as landlord, have sold the property on to a new landlord.
- If you want to change the terms of the tenancy agreement. This is a good idea if you find that your tenancy agreement is an old one (which may not take account of recent legal developments) or if there is anything you want to alter.
- If you want the security of a further fixed term. This can be beneficial for both you and the tenant. You know that his property is let (and that you will receive rent) for a specific period and the tenant knows that they cannot be evicted during that time.
Download the latest tenancy agreement here.
Find out more about tenancy deposit schemes here.
For more expert guidance on how to prepare a property, find a tenant, create a tenancy agreement, deal with deposits, and, ultimately, how to evict a tenant, read Lawpack’s book, The Complete Guide to Residential Letting.