When a fixed term tenancy is nearing its end what factors should we advise landlords to take into account when deciding what to do next?
First things first – ideally we should leave plenty of time and start the process at about three months prior to the end of the fixed term. If the tenancy has been managed by the agency there will be a lot of relevant information to review before the landlord is contacted. The history of the tenancy should be checked for any rent arrears and/or breaches, leading to an overall assessment about the suitability of the current tenants. It may be the case, for example, that despite no serious breaches being reported a tenant has changed jobs and a new reference should be sought to check that the rent is still affordable.
In addition, it’s important to have a clear picture on the local market conditions to be able to give an informed opinion on the current appropriate rent for the type of property being reviewed.
It is only then that we will be fully equipped to open a conversation with the landlord. It is always the landlord who should be contacted first since it is the clients’ wishes that we need to follow. The conversation should be an exchange of information about the landlords’ current circumstances, the market and the tenancy history.
If the landlord is happy to commit to a further fixed term, how long would be suitable? Does the landlord need more flexibility without gaining immediate possession? If this is the case you may advise him/her to allow the tenancy to roll over into a statutory periodic status (although this only happens with Housing Act tenancies). Remind the landlord that this means the tenancy will simply roll on from period to period on the same terms and conditions as the initial fixed term (apart from any break clause) until either party serves notice. The landlord will still be able to increase the rent via a Section 13 notice but only once a year in periodic status. If necessary, other terms can also be varied during a statutory periodic tenancy via a Section 6 notice. If the landlord does not want the tenancy to continue then, for Housing Act tenancies, a Section 21 notice should be served.
Whatever the outcome of the conversation with the landlord, the tenant should then be informed and they should be given all the necessary information in order to understand their position. Agents have a duty of care to fully explain the implications of the different scenarios e.g. the difference between a fixed term renewal and a statutory periodic tenancy. The agent may need to negotiate between the parties when a rent increase is requested and/or the landlord asks for a variation of other terms in order to grant a fixed term renewal.
Ultimately, as an agent our role is to facilitate a smooth process for both parties at the end of a tenancy, achieving the best and most appropriate outcome in accordance with our clients’ instructions.