Why should I renew my tenancy agreement?

When an initial fixed term tenancy comes to an end, it automatically roles on to a month to month or “statutory periodic” tenancy. This kind of tenancy is uncertain for the landlord and the tenant, as a tenant can give one months’ notice to vacate (in line with the terms of their tenancy), whilst equally the landlord can serve the section 21 notice giving the tenant two months’ (during COVID 19 three months) notice to vacate at any point.

Also, the landlord can serve a section 13 notice to increase the rent during the periodic tenancy provided they give with one months’ notice, or landlords can offer a new contract at any point in time. These notices are hard difficult to oppose and unless they apply to the first-tier tribunal for a rent review, the tenant must pay the increase from the date on the notice.

Many landlords and tenants are unaware of this; however, some are aware, they don’t see the benefits of negotiating a further fixed term renewal once the initial one ends.

Landlords benefits for renewal:

  • A landlord has a continued, fixed, guaranteed source of income. Most renewals are for 12 months however, you can suggest 6 months, 18 months, 24 months, anything up to 35 months and 29 days as anything over 3 years must be created by a deed rather than a tenancy agreement.
  • A rent increase can be negotiated as part of the new contract, thus increasing your monthly income but also reaching an increase your tenant is comfortable with and will not force them into looking for somewhere else.
  • The certainty that you will not have to begin the process of negotiating a deposit, carrying out maintenance/cleaning at the change of tenancy, locating new tenants and paying set-up fees for at-least another 12 or 24 months depending on what is agreed.

Things to remember if you are a landlord and decide that you would like to manage your property yourself, you have to comply with the latest legislative changes and issue a list of appropriate documents to the tenant and re-register deposit if required.

Latest legislative update for the year 2020 can be found here:
Benefits for tenants;

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