ast question

[MICHAELA8668]

It's me again. I am full of questions right now.

I have done lots of reading about AST as a potential tenant wants a 12 month AST without a break clause and I want a break clause. I have downloaded the AST from here and it has no break clause. Am I therefore right in thinking a 6 month AST is the same as a 12 month AST with a break clause at 6 months?What I mean is do both allow me to ask the tenant to leave at 6 months if necessary.

Thanks in advance.

[Mortitia]

Basically, yes. I don't see what tenant is making such a fuss about - just ask them point blank 'do they want your flat or not' and close the deal that way.

Mortitia

[SPEEDTWIN]

You are in the driving seat and if you only want a 6 month tenancy tell them that. Dont let tenants dictate the terms. You could tell them you would consider a 12 contact after the first 6 months.

[Emmanuel]

If you go for a 12 month AST with a 6 month break clause would you still require some advance warning if they do want to leave after 6 months? A notice period? 1 month, 2 months? That is your choice. The notice can be served by you or the tenant any time during the term although in this case the tenant will have the right to stay in your property for at least 6 months.

Or do you want to work the break clause so that after 6 months the tenant has a right to exercise a break by giving 2 months notice. The problem in this scenario is that yes you get a minimum 8 month contract but your tenant really wants to stay for 6 months regardless of what he signs. My experience as a letting agent has showed me that this latter option can be used as a negotiation tool and means to push up the minimum term in a way that is transparent to the tenant.

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[MICHAELA8668]

Thanks for your replies. That makes it clearer. I can stiplute they hand 2 months notice after 6 months for the 12 month AST with break caluse whereas the 6 month AST just means they can leave after 6 months. Think I will go for the former. ALthough they have now sent a request list to the estate agent that I am a bit about so might have to reconsider them after seeing the list.

[Emmanuel]

Thanks for your replies. That makes it clearer. I can stiplute they hand 2 months notice after 6 months for the 12 month AST with break caluse whereas the 6 month AST just means they can leave after 6 months. Think I will go for the former. ALthough they have now sent a request list to the estate agent that I am a bit about so might have to reconsider them after seeing the list.

Your welcome Michael. Although the option is still there to have a 12 month contract with a break clause where the tenant has to serve notice at the end of month four in order to leave at the end of month 6. It is worth bearing all three options in mnd at the point of negotiation in my opinion.

Summary

Option 1

6 month AST

Advantages - exactly what the tenant has asked for and the agreement is the most simple of the three options.

Disadvantage - As the owner of the property have you looked out for your best interests by negotiating within the realm of what is fair and only making this option apparent to your proposed tenant when it is clear to you he will not accept any other option regarding the legnth of contract.

OPTION 2

12 Month AST 6 month break Clause (TYPE 1)

Advantages

Agreement headline may allow landlords with experience of negotiating strongly to push the minimum term to eight months where previously it may have been 6 months.

You get 2 months extra income.

Disadvantages

If you do not choose your words carefully you could end up in one of two negative scenarios.

1. The tenant is unwittingly signed into an eight month agreement when he/she was lead to believe he was signing into a six month agreement. The disadvantage is not that the tenant can leave, the tenant is in fact legally bound once the contrat is signed. The disadvantage is that it is morally incorrect to allow the tenant to sign up for eight months when you have not told him so.

2.The tenant does not sign up to rent your property because he/she thinks you will not let him stay for anyrthing less than 6 months.

Also one may wish to consider who will draft the clause for you? Will you have to pay extra money? How much extra and is the extra cost worth the benefit of rthe extra two months? Maybe you are cofortable drafting the break clause yourself.

OPTION 3

12 Month AST 6 month Break Clause (TYPE 2)

Adavantages - You can easily illustrate to tenants they can leave your property and its contractual obligations at the end of the sixth month (by their serving you notice at the end of month four)

Disadvantage - Who will draft the agreement for you? Will it cost extra money? If so, is that extra cost worth it

You get 2 months less income than in OPTION 2

OPTION 4

6 Month AST

Advantage - The main advantage here is the simplicity of the agreement. Your tenant wants to stay for 6 months here is a 6 month agreement - Done.

Disadvantage - Coud you have negotiated a higher term?

In regard to the tenant's remarks to the estate agent one could merely point that one has just taking on alot of work in recen weeks but is now ready to get the deal done today if they are serious. ie They could move in tomorrow if their references are ready. If their references are not ready then perhaps they are the ones who are disorganised!

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