Periodic Tenancies Explained, Including The Advantages & Disadvantages

Fifi,

The contract you signed with the agent will still be valid; an agency contract is not linked to a tenancy.

I can understand not wanting to scare off tenants, so I agree with asking them what they want to do.

If the agent's contract with you refers only to the initial tenancy and not to any follow-on, then I would argue that Housing Act 1988 says that the tenancy ends at the end of the fixed term, and anything that follows is a new tenancy, and that is what you understood by the clause.

Also, when you get the contract copy (making sure it has your signature and is not their latest standard contract), find out what the termination clause is and post back here, please; it may be unfair in law.

MdeB,

I've received the Terms of Business and by reading it, I think the estate Agent has covered all angles, so I will be obliged to pay them (ad infinitum it seems, there is not end to it) commission through any change of any tenancy agreement that follows on from this one. Sadly. I'm finding it impossible to cut and paste it, so I'm going to type it up for you word for word, leaving out the name of the estate agents and replacing it with (X). If you think there is a get out clause here somewhere, or a way to ever stop the continues payment then please do share. Thank you.

Here goes......

" By this agreement the Landlord is appointing (X) to find a person who will take the Tenancy of the Premises for at least an initial minimum period (or "Term"). The Landlord and (X) hope that such a Tenant will wish to continue in occupation after that minimum Term and will renew the letting, and as described below, (X) will try to secure this continued occupation. IN BOLD...... The Landlord agrees to pay (X) a commission for its services for which commission will be payable, not only in respect for the initial minimum Term, but also for any renewed letting and whether or not (X) has been involved in or helped secure such a renewal"

I've checked the Termination clause and they have this tied up neatly too!

Termination of Appointment

"You or we may at any time terminate our appointment by giving not less than 28 days prior written notice. Such notice given by either party does not affect our right to receive payment of our continuing charges as detailed under this Agreement including any extended or periodic Tenancy.

Either Party may terminate this Appointment immediately upon giving notice in writing to the other party if(in the reasonable opinion of the terminating party) any one or more of the following events is likely to occur:

a) A party making any voluntary arrangements with its creditors, entering administration or going into liquidation; or
b) A security holder taking possession, or a receiver or administrative receiver being appointments, over all or any part of the property or assets of a party; or
c) Any other similar or analogous event in any jurisdiction;
d) The other party commits a material breach of any part of these Terms of Appointment."

I'm guessing that I will need to thank you for all your suggestions of advice and I will regardless need to go ahead on this occasion and must be more careful in future, to negotiate clauses beforehand. They are naughty though as they only produce these documents once they have found a tenant and when both tenant and landlord really need to tie things up quickly to proceed.

I'm just wondering if there is ever an end to infinite commission by estate agents, in law.

Thank you MdeB.

@Fifi:

Those clauses appear to have it watertight, but that does not mean they are fair.

I still think you should follow my suggestion 5 at #141, because that will get more brains on it and they may see angles that I have not. There is at least one lawyer who posts on there as well as many knowledgeable landlords and tenants.

Hi,

Please can I have some advice on Section 21 notice.

I was initially served Section 21 notice; however, during the notice period, the property was sold to an investor buyer who wanted us to continue renting. New terms and conditions were discussed and 6-12 months tenancy period was verbally agreed with the new landlord through the letting agent and we were told the new contractual document will be issued in due course.

However, on completion of 2 months notice period, a statutory periodic tenancy continuation letter was issued by the agent. This letter had specific clause that 'your landlord is still required to serve not less than two months’ notice in writing'.

We were then told the deal fell through and the property is being put back in the market to find another suitable buyer.
We were verbally advised if it is going to be an investor buyer, they might want us to stay and continue our tenancy at the property. We were verbally told a new Section 21 notice will be issued when a new byer will make an offer.

About 5 weeks later we were told the property has been sold and the original Section 21 notice issued more than 3 months ago is still valid, and the landlord has the right to initiate legal proceeding to take the possession of the property.

We were told this is the case despite clear written clause in the Periodic tenancy document that the landlord is required to serve 2 months' notice. the agent said, he does not remember any verbal conversation with respect to issuance of a new Section 21 notice.

Please can someone advice on this.

Thank you.
A

@Zad,

I believe that the new landlord takes over exactly what the original landlord had, and therefore the S21 notice issued by original landlord would still be valid; but someone like Citizens' Advice or Shelter would be better placed to advise.

The purpose of the S21 would be to allow the existing landlord to gain possession if the buyer wants to live in the property; it is likely that a landlord-buyer would want to keep a good tenant, as replacement (in my experience) is costly and stressful.

If your last tenancy agreement was signed after October 2015, then I believe that a S21 notice has a validity of 6 months (i.e. if the landlord does not start court proceedings within 6 months of issue (4 months or less from the "possession required after" date in the notice), then he must issue a new S21 notice to gain possession).

@MdeB

Thank you, very helpful.

However, what is the status of the written clause in the Periodic term tenancy confirmation letter that 'the landlord is still required to serve 2 months' notice in writing'. This letter was issued after the expiry of 2 months' deadline stated in the original S21 notice. Will this be taken into consideration if the agent decided to take matter further. Thank you Zad

@Zad

I would interpret the clause as being a statement of law (in a statutory periodic tenancy, the LL must give at least 2 months' notice), but the law also says that a S21 notice issued during the fixed term is effective for a subsequent spt.

To MdeB (re 147)

A huge thank you for your advice and time you spent on replying to my questions. I don't know who you are or why you do this, but it was so good to have someone just listen and offer up suggestions. Thank you.

In the meantime, I have continued to have some dialogue with both the tenants, asking them what they prefer vis a vis a new contract and also with the Estate Agents, sharing my thoughts that it seems rather unfair if their commission charge will continue to remain as high ad infinitum until the tenant moves out. I mentioned that once my tenants do move out, I may be obliged to choose different agents who will decrease their commission year by year etc if they do not want to negotiate this with me for new tenants. Well, to my surprise, they contacted me today to say that as a gesture of good will they will reduce the commission by 1/2% now that two years is over and the tenants which to remain for maybe another couple of years.

Feeling much better that I have managed to get them to reduce this slightly, as it feels as though they have made an effort.

Thank you again.
All the best

I am not able to locate a periodic tenancy agreement form on this site. I trust this page so I’m reluctant to just download one from somewhere. Could anyone advise me on this? Thanks ps. I understand that a contract is not necessary but I prefer it so my tenant understands the terms...

@Katalin #153:

Why would you want one?

@MdeB, I would if it’s a trusted one please!

@Katalin #155:
What I mean is I do not understand why you would want one.
What benefits do you think it would offer?

However, the only difference between a periodic tenancy agreement and a 'normal' tenancy agreement is the definition of the term.

You need something like:

For a normal agreement: X months from and including

For a tenancy that becomes contractual periodic after initial term: X months from and including and continuing monthly thereafter until terminated in accordance with

For a tenancy that is contractual periodic from the start: monthly from and including until terminated in accordance with

in #157, "including" should have been followed by an indication that the start date is required, but it was removed by the software. I will try again.

So "including" should read "including [date]"

@MdeB thanks for your help. I misunderstood you the first time, sorry. My tenant is not the best one and also not the sharpest one. I want him to have it in writing that he’s on a month to month rolling contract and if he doesn’t pay (which has happened lots of time so far) he’ll be out with one month notice.

Re #159:

It doesn't work that way.
The tenant can give one month notice, but LL still has to give 2 months notice via S21 notice AND S21 cannot be used during first 6 months since start of tenancy.

What you want is for tenancy to become statutory periodic (or contractual periodic, but it is too late for that now).

I realised this in the meantime and I bit the bullet and told the tenant that I was wrong and we don’t need a new contract. So I’ll just let it slide into statutory periodic. Thanks for your help, I appreciate it.

Hi,
I need some help and advice please.I'm a landlord and the first 2 years with my tenant we had an AST and the deposit was protected,but at the end of the second year we agreed to let the tenancy run between us as a "Rolling Contract" or [Periodic Tenancy as I now know]as the tenant wasn't sure of staying or any future plans etc..Suffice to say I lapsed the Deposit Protection and the periodic tenancy ran for a further 2 years!
The relationship with the tenant was absolutely fine throughout the 4 years and even up to exit, a months notice was given by the tenant the exit obligations were all met etc on both sides and the deposit was returned in full [£1400] albeit me mentioning that I had lapsed the deposit protection,still no problems.Now 10 weeks later I receive a letter before action [template] stating my failure to protect the deposit for the remaining year/s and pursuing me for up to 1 to 3 times the deposit amount!............Where do I stand?
Advice greatly appreciated asap.

@CAE

Please post to the correct blog post.

Cheers

David

I have had the same tenant for 20 years. He has always been on housing benefit which has been received every 4 weeks in arrears. However, due to finances I now need to sell the property. I do feel for the tenant as he thought this was his forever home but my finances are forcing me to sell.

When the tenancy started the tenant paid a small deposit and had an assured shorthold tenancy, which obviously is now a periodic tenancy. Twenty years ago there was no such thing as securing the deposit, energy certificates or the issuing of the various forms/notices at the start of a tenancy.

Please clarify which section 21 form I need to issue.

@jeany

There is only one Section 21 form to be used, the 6a but you must make sure that is the version with reference to Tenant Fees Act, best place to get is is from the Gov website as some local authorities are advising tenants to reject 3rd party ones even thought they are legal is properly constructed

https://www.gov.uk/guidance/assured-tenancy-forms#form-6a

You will need to comply with the prerequisites shown on the front page of the form

I am afraid that although the Deposit Legislation started in April 2007, that does not necessarily mean you did not need to protect it later.

There have been a number of amnesties, case law impacts and the deregulation Act, it will all depend on the number of AST's the tenant had and when they went SPT, have a look at the pages below and feel free to contact me using the information shown on those pages.

https://www.propertyinvestmentproject.co.uk/blog/i-havent-protected-my-tenants-deposit/

https://www.propertyinvestmentproject.co.uk/blog/tenant-threatening-legal-action-tenancy-deposit/

The following assumes that the tenancy IS an assured shorthold, and it became periodic before 6 April 2007.

You are not required to protect the deposit; there are no penalties for not having done so.
However, a valid S21 notice cannot be issued if you hold an unprotected deposit.
Your options are
1: return the deposit;
2: protect the deposit.
Then issue S21 notice (at least a day later).

"The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015" introduced requirements for:
- EPC
- GSC
- How to rent
However,section 1 says they apply ONLY to tenancies granted on or after 1 October 2015 AND not to statutory periodic tenancies that arise following the end of a tenancy granted before 1 October 2015.
Therefore they are not relevant and it is not necessary to serve them.
BUT courts and tenant advisers may not understand this subtlety, so if you can serve them, then do so (and do not issue S21 notice until at least the next day).

The form of S21 notice to use is also open to debate.
The Government advice is that you do not need any special form for an old tenancy.
However, there is a subtle legal argument that says only the prescribed form is valid.
Therefore I would suggest using the prescribed form 6A.

BUT using form 6A may also confuse tenant advisers and judges, as it is written for tenancies that started after September 2015 (so it suggests that GSC, EPC and How to Rent must have been served before S21 is issued).

Given the potential for courts to mis-understand the requirements for an old tenancy (i.e. believe that the GSC, EPC and HtR requirements apply) and incorrectly reject your S21 notice, and my feeling that you are not familiar with the law or the legal processes, it may be advisable for you to engage a solicitor experienced in landlord and tenant law to guide you through the process and to make appropriate representations should the judge fail to appreciate the (lack of) requirements for a pre-2015 tenancy.

If the tenancy became periodic after 5 April 2007 and before 1 October 2015, then the approach is the same, but you were required to protect the deposit and you may be open to penalties for not protecting the deposit.

If the tenancy became periodic after September 2015, then the GSC, EPC, and How to Rent are mandatory and you will be open to penalties for not protecting the deposit). Also a GSC (if required for the property) must have been served before the periodic tenancy started; if not, then (subject to the result of an appeal scheduled for January 2020) you can never issue a valid S21 notice.

If the tenancy started before 1997, then it may be an assured tenancy. If it is an assured tenancy, then S21 cannot be used.

I didn’t update the information with mydeposits when my tenant moved beyond the 6 months of the agreement into a periodic tenancy. They are now saying the depost is un-protected and I have to put in a new protection, which will be late. My bad, they warned me but is this the case?

Hi, we moved to the current property on 15/07/2018 and in February 2019 our landlord issued the section 21 and gave 2 months time to leave until 06/04/2019. but still now we haven't moved out. now we have received a defence form from the court to fill and send it back. Our assured tenancy agreement ended on 15/07/2019. We still keep paying rent every 14th. Now we have found a property which will be available to move out on 23rd of November 2019. Do we still need to give landlord 1 month notice ? If yes when we should give the notice to move out on 23rd of November?

@Shan

The terms of the SPT are identical to the preceding AST except in term and notice requirements, where you must give a months notice if you pay monthly.

However, considering that the Landlord has issued you with a notice to quit I am sure that you can arrange to leave of a mutually agreeable date.

I would say that it would be sensible to give your notice, next week on the 22nd October 2019, it at least means you can't be held for longer (assuming your payment period is monthly).

It may be that your Landlord's S21 was invalid, there are strict prerequisites such as deposit protection, Prescribed information, EPC, How to Rent document and Gas Safety done properly.

That is something I would be please to help you with via the forum private message as this is an open blog. This may be necessary to avoid you getting hit for costs and his Court fee if you do not have a valid defence.

IF you wish to contact me via the forum please use the instructions in post 703 on the page below

https://www.propertyinvestmentproject.co.uk/blog/i-havent-protected-my-tenants-deposit/

Hi

I am having serious issues with my landlord, I think I am in a periodic tenancy now as my fixed term ended.

How can I get In touch with you to explain my situation.

Kindest regards

If you wish to contact me via the forum please use the instructions in post 703 on the page below

https://www.propertyinvestmentproject.co.uk/blog/i-havent-protected-my-tenants-deposit/

I have recently purchased a property in England with sitting tenants. The tenants are on a Statutory Periodic Tenancy. Once I take over the property, I want to move them to a Fixed Term Tenancy of one year.

What kind of notice period, if any, do I need to give them to move them to Fixed Terms?

Thanks,

Matt

@Matt

There is very little benefit of moving them to a fixed term unless you are trying to get them onto an agreement with new terms.

To end the SPT, this is normally 2 months notice but currently due to the pandemic it is three.

You may find that the tenant prefers their current situation and you can propose a rent increase on an SPT.

You refer to the tenant as a sitting tenant, I recommend you check their protected rights if the tenancy is very old.

If the tenancy is pretty normal then the tenant may be happy to move to an AST as they are currently on 2 to 3 months notice and an AST might give them a year or 6 months assured tenancy.

With their consent you do not really need to give notice at all, just ask them if they are prepared to sign a new AST that ends and replaces the current tenancy (created in law when they did not leave at the expiry of the last AST).

If the deposit protection was not done properly for previous tenancies then they may think why not sign a new one on the off chance that it is another failure. If there was a failure to carry out a gas safety certification within 28 days of the SPT and the previous one had expired, then the tenant would be mad to agree as the fault cannot be rectifies and no S21 can ever be issued. So as long as there was no S8 grounds they cannot be evicted in such circumstances.

Hi

I need to get a definitive answer as to whether the agreement I made with a tenant, whilst still within their first fixed 6 month signed AST agreement period, for them to continue to remain in the property for a maximum of 3 months when the AST agreement date expired, would be classed as a 'contractual' periodic tenancy.

The key point I am trying to establish is that if our agreement did actually constitute a contractual periodic tenancy, as opposed to a statutory periodic tenancy, then a new tenancy did not start but it continued on from the previous 6 month fixed tenancy.

This agreement was confirmed by email only, there was no new signed agreement. The terms of notice were originally to remain as the fixed AST (more for the tenant's benefit) and rent amount did not alter.

The tenant, who was looking for another rental property, as her circumstances had changed, was not under any obligation/contracted to remain for the full 3 months.

When she mentioned that she may need to leave mid-way through the month to secure another property, we agreed to this requesting that she give us 7 days notice instead of a month. In addition, we even agreed to pay her back part of his final month's rent.

After reading the article published on this website, "Periodic Tenancies Explained", my view is that it was a contractual periodic tenancy.

I would be grateful to hear what you think on this matter and can provide more detail if required.

I have a query regarding the term of an AST 12 month tenancy agreement. If the AST 12 month agreement states it’s a 12 month agreement which starts on the 01/11/2020 shouldn’t it end on the 01/11/2021? The contract states it’s a 12 month with a start date 01/11/2020 and ends 31/10/2021, I always thought that the 12 months run and ends on the same day but you must vacate the property by 12noon. Can anyone help me understand this better or tell me I’m right.

Great site by the way!

I am in the process of dispensing with the Letting Agents I have been using and as the current tenancy expires in a months time want to start managing my property myself.

The current tenant is exemplary and wants to continue staying in my property. He mentioned that he wouldn't mind me putting a 6-month break clause into my new tenancy agreement to ensure that I would get at least 6 months rent. Having read your advice that 'to be fully enforceable in law, break clauses need careful drafting with a high degree of legal expertise' I was considering simply issuing was going to simply issue a 6 month tenancy agreement and then in accordance with your item 1) make 'it clear in the original tenancy agreement that the tenancy will become a “contractual periodic tenancy” after the fixed period.

However as the tenant can be easily described as 'good' I don't really feel the need to have flexibility or to 'let things dangle and have wiggle room'! So if I was to simply issue a 12 month tenancy agreement what is the down side for me as a landlord? Shirley the tenant can still just give me a months notice anytime and vacate, or does the 12 months tenancy period mean he *has* to pay 12 months rent?

I agree that this is a great website.

I have a tenant who paid me upfront for a 12 month tenancy agreement. I would like to let the tenancy agreement go into a statutory periodic at the end of the tenancy in July 2021. I am however unsure what the 'period' will be given the tenant paid me 12 months rent upfront rather than month by month? Does the statutory periodic run on a month by month basis even though the rent was paid 12 months in advance? The tenancy agreement does state the rent is £XXX per month.

Many thanks
Helen

Hi Helen, once the fixed term expires and if you start accepting rent on a monthly basis then the periodic term will be month-by-month. If you accept another year up front, then obviously it will be like a 12 month fixed term again.

Thank you Eric for your prompt and clear reply. Have a great day and keep safe.

Hi all

this is the first time I have posted and wondered if you can give me some advice, Where may I find "cut and paste" clauses written in solicitor language.

I really need to add the clause being discussed that allows landlord to insist on 2 months notice

I

@Jon

Copy and Pasting additional terms to an existing tenancy is not a good idea because there are bound to be other terms that contradict the new term you are pasting.

I would advise you go back to your own Solicitor and ask them to draft you a "contractual periodic tenancy" so that the tenancy continues after a defined "initial term" until cancelled formally by break clauses, which themselves have the 2 month allowance you are seeking.

The Solicitor will need to fully examine all clauses that may affect the new terms to make sure that they do not introduce a vagueness that may require interpretation by a Judge and not go your way. Overall the contract needs to be equal to all parties, so you can't have any position (e.g. arrears) that mean you need to give less notice.

Also note that you can't change common law, i.e. what happens if a periodic tenancy is created.

If I were a tenant and unhappy with contractual periodic I would just give notice to end the tenancy but not leave, that would then create an SPT in law. The same applies if you activate a break clause, if they do not leave, an SPT is still created if they do not leave. So some might think it is a waste of time to bother changing the tenancy.

What most landlords do is put in unenforceable terms, because they know tenants are often ignorant of the law. However, they only have to speak to the Council housing dept or shelter or do a bit of googling to establish the facts. Any term that goes against common law is deemed an unfair contract term and if the contract is not defined well may invalidate other terms.

To be honest most landlords are more worried about how many months they will have to give, until the end of May an S21 requires 6 months notice from the Landlord, it will be reducing to 4 months notice from June, under S8 the months of arrears required will be 4 months but that kicks in from August. These are a tapering off of the Coronavirus regulations which will next be reviewed in September.

Landlords with arrears of over a years rent and/or documented ASB can bring a claim sooner, but Court delays are massive, there will be a telephone hearing to determine if an in person hearing is required and there are still ways they can delay proceedings but is better than it was.

@Landlord

As I understood Jon's question, he was trying to get his tenant to be required to give 2 months notice as he himself has to give 2 months notice.

As you know, when a fixed tenancy ends a new Statutory Periodic Tenancy (SPT) is created in law, if rent is paid monthly it requires one month's notice for the tenant to end and 2 months notice from the Landlord.

As you may remember, before the Deregulation Act 2015, Contractual Periodic Tenancies (CPT) were popular to avoid avoid the creation on an SPT so that there was only one tenancy and thus only one set of sanctions if they forgot to protect the deposit.

Most Landlords went back to a fixed term tenancy and allowed the tenancy to roll over to an SPT, but there is another reason for using a CPT. When a tenant abandons a property that has rolled over to SPT the tenant is deemed to no longer have in interest and therefore not liable for the Council Tax, the obligation of same then transfers to the Landlord until a new tenant takes possession.

A CPT prevents this obligation to the Landlord because the tenancy only ends when the tenant gives notice, even if they abandon it, essentially because the tenancy from the start was a month to month tenancy, just one with a minimum period (the initial term).

This legal position was ratified in the High Court in 2016 before MR JUSTICE EDIS in

LEEDS CITY COUNCIL vs STEPHEN BROADLEY

http://www.bailii.org/ew/cases/EWHC/Admin/2016/1839.html

As I said in my post above a tenant can still end their CPT by giving notice and if they then remain in the property after that notice, the CPT will be terminated by the end of the notice period but them remaining will create a new SPT.

Thanks to everyone that replied. I guess in a nutshell the question is "can I ask a tenant to give two months notice when the fixed term ends". I have read that this can be done if the AST states the AST on the day the fixed term finishes enters into a contractual periodic, and not a statutory periodic.

I appreciate the best way to do this is to go to a solicitor but I dont think its needed. Having the clause in the agreement that states tenants notice has to be received on the "rent day" and not any day they choose is only a case of adding a line of text (i.e. if rent day is 5th April and tenant hands in 1 months notice on 15th April the notice period starts on 7th May)

Most ASTs say that the end of the fixed term with mean the start (or the inception) of a Contractual Term (not statutory ) which gives a number of benefits, the question to you guys is can one of those benefits be "the tenant is required to give two months notice"..... I would love an answer that says something on the lines of " As per the June 2020 change you cant do that" :) or "there is nothing stopping you from doing that".

Really appreciate your help guys, I have got a free legal helpline as part of my insurance but he may as well be talking in Swahili as still cant work it our haha

@Jon

It is fine to think you do not need a Solicitor as long as you are prepared to suffer the risk coming out of a poorly drafted term.

Any term that breaches common law, which itself includes case law, can be voided as an unfair contract term and without other terms properly isolating that term the whole contract can be invalidated.

I think you will find that the trick in your 2nd paragraph will be deemed an unfair contract term in certain circumstances.

There is also consumer legislation governing how much you can hold them liable for if they leave early with little or no notice. Sites like openrent show that you can get a property re-let in days and so give rise to a challenge in any idea of holding them liable for financial loss and those laws also limit the amount of interest to a few percent above base rate for the handful of days.

You can't just put something in a contract and say it is legally binding, the term has to be compliant with a plethora of laws, other laws may give them cause to break a contract, yet other laws may give them ability to sanction you 3 months rent per tenancy and another may sanction you for 12 months rent.

So paying a professional (a Solicitor) to draft a tenancy agreement that meets your stated needs is small price to pay because if they screw up you can hold them liable for any loss you suffer due to their negligence.

As I explained above, a contractual periodic should not have a "fixed" term, but rather an "initial" term, it is this kind of thing that a good Housing Solicitor will know about, because they will follow case law regarding housing, they will know cases that turned on one word in the Act or one word in a loss at the appeal court that became case law.

Most terms and law itself is constructed in an IF THEN ELSE IF manner, it has to account for every scenario but does not override other common law and it needs to be seen as whole. If two terms contradict then a Judge may deem the meaning is different to what you intended. If you think things are in Swahili now, wait until you are on the receiving end of a 400 page brief your tenant's Solicitor has made and you have just to weeks to file your defence which they can respond to but you can file no more and have to wait until you are in Court. Where you will be told if you did not file in your original bundle your document is not going to be allowed by the Judge.

I would avoid making your contract situational, if it is too confusing the term may be struck out as being unfair or unclear. Any term you create also has to be equal to both parties to be deemed fair.

There are some ways to use common law to your benefit, like having a six month initial tenancy where rent is paid in advance every three months, you allow the contract to become statutory periodic and because it inherits the terms of the preceding contract the rent is still due every three months. This means that you are obliged to give 3 months notice to end the SPT but so is the tenant.

This works great if your tenant is a lovely tenant you hate to lose and they are ignorant
of their rights, but I have had so many clients over the years who really regretted it when the tenant turned out to be a professional bad tenant. One paid offered to pay rent every six months and wanted the tenancy defined as such, which is was. The Landlord let them take possession on payment of the deposit, they said that their mother was sending a wire transfer for the 6 months rent. That never materialised but the 6 month notice requirement applied. The landlord issued S8 and S21 both of which were frustrated by legal interference, mistakes on paperwork etc.

Was this person a drug dealer looking to grow weed in every square foot of the property, no it was a very respectable software developer, company director, with a wife and child in a property that rents for £5k a month. Of course they begged the Landlord to let them in early for some perfectly plausible reason and the Landlord only saw the £5k he had and the £30 promised.

In a contract with a large prepayment of rent the wording of the contract is important, was the contractual payment term 6 months or was it a monthly term with 6 months upfront. A Court may deem both to be the same regardless of what you put into the contract, especially if the second payment also prepays 6 months in advance.

There is a way to construct a tenancy as a sort of credit agreement but I am not going to get into that now, suffice to say that it created some very interesting case law.

What you need to realise is that housing and law charities will often back a tenant if there is a matter of law they they want case law to be made so that it helps their other tenants, just as there are Landlord organisations who will help some landlords.

An example of this was the case law that made it illegal for an agent to reject a female tenant because they were in receipt of benefits. The tenant was supported by such charities.

You can slow things down by using Section 196 of the Law of Property Act 1925 saying that the notice to quit must be served by registered post to a given address but the same Act also provides that it can be served at their last known abode or place of business.

There might be another contradictory term that says they have to inform the agent and so an email to them would then suffice despite the 196 term.

This is what I mean about ambiguity and this is what a good housing Solicitor will try to avoid.

Most of all you are just kidding yourself if you think you can hold tenants to every word of a contract. There is simply far too much law and case law, you can take them to Court but if they win you pay their legal fees.

Still you might be able to claim from their deposit through the deposit protection scheme, but they can refuse to be part of their ADR which forces you to take them to Court and if you do not do that in a timely manner then the deposit can be returned.

"There is nothing stopping you from doing that" (whatever "that" means) but whether you can enforce it is another matter. The classic one is the clause where if you are late paying rent you can be evicted with 3 days notice and a 30 day notice in other situation. All the tenant has to do is ignore you, change their locks and tell you to serve a legally compliant notice.

I have explained the importance of getting the wording right, e.g. initial term nor fixed term (just one example). I have explained how you need to make sure that no other term contradicts, either in implied meaning or by being vague because a term put in by a Solicitor FOR A REASON was deleted (by you). I have explained how there is a ton of case law that can impact the interpretation by a Judge. I have explained how the loser pays the other sides legal fees. Paying the small price to a solicitor for the drafting of a contract is cheaper than paying for the Solicitor to defend or enforce a poorly constructed contract. You can join landlord organisations that give you a template agreement but they are not accepting any liability for it. I had to defend a Landlord on a NRLA Contractual Period a while back, I have no idea of the age of the contract but the wording was not how I would have drafted it. It does not mean there was anything wrong with it per se, just I could see holes in how it might be interpreted based on my own experience.

So you pays your money and makes your choice or you just hope that your tenant is ignorant of the law and nobody tells them within 6 or 12 years what the situation really is.

Is it all worth the hassle, you might want to read the article below

https://www.propertyinvestmentproject.co.uk/blog/your-tenant-wants-leave-early/

Wow David thankyou so much I honestly didnt expect such in depth educated response... Im really grateful and bless you for taking the time.

I have not added nothing and subtracted nothing from the AST as yet it reads :

THIS APPEARS AT THE START
A fixed term of 6 months. Commencing on and including XXXX 2021 To and including XXXX 2021 ("the Initial Term") And then continuing as a monthly contractual periodic tenancy until terminated in accordance with this agreement.

THE TERMS THE ABOVE REFERS ARE AS FOLLOWS:
Notice to end the tenancy at or after the end of the Initial Term

If either party wishes to end the tenancy on or after the final day of the Initial Term, they may give notice in writing to the other as follows:

The Landlord must give notice of no less than two months, such notice to expire any time on or after the final day of the Initial Term. A notice served by the Landlord under section 21 of the Housing Act 1988 shall be sufficient notice under this clause.
The Tenant must give notice of no less than one month, such notice to expire the day before a Rent Payment Day or on the final day of the Initial Term.

If neither party serves a valid notice to terminate the tenancy at the end of the Initial Term, the parties agree that at the end of the Initial Term the tenancy will continue as a contractual periodic tenancy on a monthly basis.

I guess what I was asking previously is I know its dumb to change "one month " to "two months" if i don't know what I am doing, but if I did employ a solicitor, is it ACTUALLY LEGAL for that solicitor to put my desire for a 2 month notice period in to the contact ?

The reason I ask is was a tenant once upon a time with Northwood, and that clause of 2 months was in their contract. As none of the new clause state specifically about the termination period ... is it still legal. I kicked off to high heaven with Northwood and "I fought the law and the law won" hehe

@Jon

I am not going to get into editing a document by blog especially with selective excerpts that are full of the exact vagueness, ambiguity and unfairness I was referring to, including unenforceable terms.

I already answered your question about just changing one month to two months in earlier posts, If you have a decent contractual periodic contract it is viable but that excerpt would not seem decent by my definition and experience. The language does not look as if constructed by a Solicitor.

If you do appoint a Solicitor make sure they at least have a decent housing department, you don't ask them to change dog shite agreement you already have, you say "I am looking for a contractual periodic tenancy agreement and these are the things I need (in plain English) it to include".

As I have explained, some Landlords put all kinds of shite in their contracts, they know they are not enforceable, but they figure that most tenants are ignorant of the law so it acts as a deterrent.

Examples might include saying that the tenant can't change the locks or that they have a right of non emergency access to the property or that they are liable for certain repairs that housing law says the landlord is responsible for.

When such a tenant takes the Landlord to Court or vice versa, it just makes it easier for me to demonstrate bad faith on the part of the Landlord, so the Judge takes that into account.

As previously explained, the best reason to use a contractual periodic tenancy is for the avoidance of Council Tax liability.

With regard to 1 month / 2 month, I refer you to the last two lines of my previous post.

ONce again David thankyou for the reply.

Despite what might seem like a disregard of what advice you gave, I didread what you put quite a few times, and I took your advice. Actually tore up the shitty OpenRent AST and invested in a custom 26 pager.

Its made all teh difference for peace of mind, its bomb proof!!!!

For anyone asking the same question on here, that stumbles across my post and Davids posts... David was absolutely spot on. The only way you can possibly get two months notice out of a tenant that is initally on a 6 mth fixed term , is to put it in the AST and hope they dont check.

Found a case of MRxxx Vs Northwoood (northwood charged me for leaving early as didint see the 2 mth notice period in their AST), Northwood lost :)

Just don't use the word fixed term, call it initial term or minimum term

Dear Sir

Please can you advise whether my tenant can pay 6 months upfront if I let his current AST go into a contractual periodic at the end of the Fixed Element (27 January 2022). The rental agent says I have to pay for a new 6 month AST otherwise my tenant has the right to pay monthly EVEN though he does not meet the Financial affordability criteria and is happy to pay 6 months rent upfront. My tenant originally paid 12 months AST rent upfront and then another new AST of 6 months rent upfront and now he wants to pay another 6 months upfront from 28th January 2022.

Please see below what is written into his current AST:

The Term shall be from and including 28th of July 2021 to and including 27th of January 2022 (the Fixed Element)
and then the tenancy continues as a monthly contractual periodic (the Periodic Element) until ended following either party giving notice. Please see clause 2.5 as it contains important information about what you must do to end the tenancy.

Any advice most helpful but also to avoid paying for yet another new 6 month AST.

Many thanks

Helen

@Helen

Do you really need the agent, are they just fleecing you for costs?

He can only charge the tenant £50 for such an agreement, make sure he is not double dipping by charging you both for the same thing.

If you or the tenant give notice to end the contract on 27th of January 2022 but the tenant remains in the property, a Statutory Periodic Tenancy will be created by virtue of Sec5 the Housing Act. This would not need to be a Section 21, just a notice to end the tenancy, I do not know what termination period is in the contract.

As the rent period is 6 monthly, under Section 3 part (d) the periods of the SPT are the same as those for which rent was last payable under the fixed term tenancy.

this will also mean that your notice period for a S21 Eviction notice is 6 months. So you would tell the tenant that you have to issue these every two months with each one replacing the next so that they always have two months notice. In an SPT the tenant can give one month's notice to end the tenancy

Another disadvantage of the SPT is that you may become liable for Council Tax if they do a runner leaving unpaid Council Tax and don't tell you.

@Helen make sure that you or your agent has fully complied with the Deposit Protection for each tenancy. If the first tenancy was protected and Prescribed Information served in relation to the deposit then as long as the deposit remains in the scheme, then all subsequent tenancies are deemed protected. This is by the S215 additions of the Deregulations Act 2015, but if you do not have evidence of compliance you risk being faced with sanctions of between 1x and 3x the deposit for each tenancy, including the SPT.

If you have failed before but comply now, then subsequent tenancy agreements will be covered.

Search the three schemes yourself online using Tenancy 1 dates and amounts, then ask the agent for a copy of the Certificate and the PI, keep hold of them both, ideally PI is signed by the tenant. Do this first, you never know when you are going to fall out with an agent and even if they are supposed to protect the deposit, you can only hold them liable if you have evidence they took on that obligation.

Thank you for the information below .

For clarity - here is the clause referred to for termination / break clause in the Current AST :

“2.5 Break Clause
2.5.1 This agreement creates a single tenancy that starts with a Fixed Element and then becomes periodic. This would normally guarantee both parties the rights and obligations for the Fixed Element and a minimum of one period. The following two clauses allow either party to terminate the agreement earlier than that date, but not before the end of the Fixed Element (the date quoted in 1.6.1 as “to and including (date)”).
2.5.2 The Landlord may bring the tenancy to an end at, or at any time after, the expiry of the Fixed Element, subject to any statutory limitations, by giving to the Tenant at least two months’ written notice stating that the Landlord requires possession of the Property. A notice under section 21 of the Housing Act 1988 will suffice to implement this sub-clause.
2.5.3 The Tenant may bring the tenancy to an end at, or at any time after, the expiry of the Fixed Element by giving to the Landlord at least one month’s written notice stating that the Tenant wishes to vacate the Property. A letter will suffice to implement this sub-clause. While the tenancy is periodic the one month’s written notice must expire the day before a Rent Due date .”

Questions:

1) does the above mean that if I let the current AST go into a ‘contractual periodic tenancy ‘ ( as per the wording of the current AST ) and with the tenant paying me a further 6 months rent in advance - then I would have to give the tenant 6 months notice to end his tenancy under section 21 AFTER the 6 months has expired that his has paid for upfront ?
I am getting so confused as the current AST says I would have to give 2 months notice after the ‘fixed element ‘ of 6 months ( paid in full upfront ) :-( ???

2) where does it say that the tenant has to pay £50 for any new AST rather than me paying £210 ( including VAT) ? Is £50 a legal requirement ?

3) the agent is strongly recommending I enter into a new 6 month AST so that the tenant can pay 6 months in advance and it mitigates the landlord risks . I am not sure what they mean by ‘risks’ . Do you know please ?

Thank you so much

Helen

@Helen

Let me try to simplify things.

A brand NEW Assured Shorthold Tenancy normally has protection of notice not being able to be given in first 4 months and that notice must be 2 clear months, so this effectively give a minimum term of 6 months and a day UNLESS the contract has a fixed term with no break clause which may make it longer. Subsequent tenancies do not have the 4 month limitation but rely on what is defined in the contract as long as the tenant always gets the 2 months’ notice on the 6A Section 21 form.

An SPT is an AST but created by law, it carries on all of the terms except TERM and NOTICE and it is created when a tenancy expires but the Tenant remains in the Property.

As I read your first question I thought you were suggesting that your AST says the Tenant has the right to pay monthly after six months have passed. I have not seen the whole agreement and if you want me to look at it I suggest contacting me via the forum.

1a. I have not read all the terms of your agreements and it would be clutter to paste it into a blog post, it may also be copyrighted, so use the forum private message option.

1b. You have quoted the Break Clause and a fixed element which some might call an initial period, the break clause says how to end the agreement not how rent is paid. Try not to conflate the two.

1c. Both parties may agree to end a contract and replace it with another, you could do it next week if you want, as long as you both agree then you do not need to wait for a break clause.

1d. Based on new information provided I would hazard a guess that your contract has payment frequency of monthly payments defined but requests the first six months up front. That does not make the "period" months. What makes it six months is the payment frequency being defined as 6 monthly.

1e. The break clauses you quote look as if they are designed to mirror legislation on a pay monthly contract. Your contract will not "go into", it appears to “already be” a contractual periodic tenancy, designed not to need to be renewed.

1f. So NO if you stick with current agreement you do not have to give 6 months’ notice for S21, the terms of that contract apply, if you end the contract and let it go to SPT then the Housing Act rules apply, they inherit the terms of the preceding AST, so if the payment term "period" in your contract is monthly then the notice as 2 months landlord 1 month tenant. If it is defined in the contract as six monthly then so is the notice.

So really you need to decide what you want, agree it with the Tenant and put it in the new tenancy agreement if the current agreement differs from what you want

The current AST does NOT say you would have to give 2 months notice AFTER the ‘fixed element ‘ of 6 months it says either party "may bring the tenancy to an end at, or at any time after the expiry of the Fixed Element"

So if the initial fixed element runs to 27th of January 2022, then the S21 notice could be served 2 months before 27th of January 2022, e.g. 26th November 2021. That would bring it to an end on 27th of January 2022.

2. What you agree with the Agent for the cost of a Tenancy agreement is up to you two, but under the Tenant Fees Act 2019 only permitted fees may be charged to a Tenant and the renewal maximum is £50 unless they can show the Court that their costs were substantially higher, e.g. if the contract had to be sent by UPS to a Royal Prince in Saudi Arabia at the Agent's expense.

3. Well advanced rent mitigates some risks, but it is important that it is advanced rent and not a deposit, the limit for deposit is 5 weeks rent. For example I had a tenant who paid a deposit yet also asked to pay 6 months upfront, but he was still paying monthly from month 1, as the 6 months’ rent was used for the performance of the contract it was deemed as part of the deposit and needed to be protected. Your contract can be constructed so that the tenant pays every six months, or you can have a formal arrangement where regardless of what is defined in the agreement you both agree he will pay 6 months up front.

The financial risks of an SPT are as I said in my last post on Council Tax, but on an SPT you can serve a S13 to increase rent, tenant can challenge but they will look at the market.

You might want to reduce the advance rent to 3 months, there is also a complex way to structure advance rent as a finance agreement for tenants that have bad credit. These have to be very carefully worded.

It sounds to me like the agent just wants a fee from you, normally a contractual periodic is used so you don't need to renew.

If you want to reach me via the Forum please follow the instructions on post 814 on link below for how to contact me.

https://www.propertyinvestmentproject.co.uk/blog/i-havent-protected-my-tenants-deposit/