What Happens at the end of an AST?

[tony009]

Hi all again,

My tenant has just signed the AST for 6 months (starting today). Now i know im being forward-thinking, but what happens if the tenant wishes to stay-on for a further period of say a further 6 months? -Do i need to formally issue another NEW AST stating the new start/end dates OR do absolutely nothing at all ?

Best regards,

Tony.

[Trojan]

Hi tony009

OK, so your tenants are now signed up for 6 months. What happens at the end of this period?.

Firstly, I do not know your frequency of inspections, but I suggest you carry out an inspection at least a few days before the 5th months rent is due. This ensures that you know if the tenants are looking after the property, as you would expect. I don’t know, you may have already carried out more frequent inspections.

If you are not happy with the condition of the property and you wish to bring the tenancy to an end at the end of the fixed term, then you serve the statutory Notice to Quit (Section 21) on or ideally before the rent due date (when the 5th months rent is due). This has two months to run and expires on the last day of the tenancy, tenants vacate, you re-let.

The positive alternative, inspection is carried out, both parties are happy, you now have three choices.

1) Re-new for another fixed term lease of 6 months

2) Re-new for a period of anything up to three years, you cannot create an AST for more than 3 years, this must then be done by deed (if you have a mortgage, your lenders would not allow this)

3) Do nothing, let the tenancy lapse. This is known as a Statutory Periodic Tenancy; by its very title it denotes that it is a valid form of tenure. This type of tenancy can roll on forever. This type of tenancy is known as a “roll over” or “on a month to month”. The ground rules are that should the tenant wish to vacate they provide you with one calendar months notice to run from and to a due rent date. Should you wish the tenant to vacate, you serve them the Section 21 Notice Requiring Possession which must run for two months and must run from and to due rent dates.

All of the rules and obligations set out in the original lease still stand; this type simply does not have a fixed time scale and can be broken at short notice as described above. This type of tenancy does not compromise your legal position in any way.

The Statutory periodic tenancy is great for flexibility if you are not certain about how much longer you will let for. However, your tenants may not feel secure and may vacate at any time with the appropriate notice, sods law says this comes at the wrong time for you.

Fixed period tenancies anything form 1 to 36 months are great, but they are binding for both sides for the period set in the lease. However, if you have a long-term plan this can be ideal for you to work with. The only way to break this type of lease is of course by negotiation of both parties or by a court order if the tenants have breached the agreement and you have valid Grounds For Possession.

I hope the above has helped and thrown some light on the subject.

If you have any questions, post them on this board or email me, you have my email address now I think.

Regards

Trojan

[tony009]

Hi Trojan, Many thanks for the reply.

Just to elaborate & clarify. If i am happy with the tenant and therefore inform the tenant near the time of the end-date of the current tenancy that there is nothing to be further signed (if she also wishes to stay) then it will just run-on as a Statutory Periodic Tenancy -yes?

Do i not need to put anything in writing to confirm this?

Can i alter or change the inventory details according to the state of fixtures etc -what if damaged -how is the bond affected in the run-on into the SPT?

I am not certain about how long i will let for, my hope is at least 2 years then reclaim the property to sell (i was thinking of offering the first refusal obviously to the tenant).

Many thanks & please advise.

Kind regards,

Tony.

[Trojan]

Hi tony009

To help clarify:

If both parties are agreed to extend as a Statutory Periodic Tenancy (meaning a simple roll over on a month to month basis without a fixed term definition), then there is nothing new to sign.

I remember in the very early days of the Housing Act 1988, and a solicitor advising me on this very subject. He was very keen to emphasise that you never confirm this in writing to the tenants. However, many years later, I am now the person whom this solicitor comes to for advice on the AST’s, I supply his agreements for his portfolio and deal with his clients who ask him to prepare a lease. I personally feel that it can do no harm at all to confirm this in writing. A simple, short and sweet letter, “yes we will continue with the currently tenancy as a statutory periodic tenancy i.e. rolling over on a month to month basis” and perhaps outline the conditions of notice. We have an advantage as we add in the following into our lease laying out some ground rules for the “post fixed period”, they are as follows:

24) The Landlord may bring the tenancy to an end at the expiry of the fixed term or at any time after the expiry of the fixed term by giving to the Tenant no less than two months' written notice of the Landlords request

25) (i) The tenant may bring the tenancy to an end at the expiry of the fixed term by giving to The Landlord one months notice on the due rent date in writing of The Tenants request (written notice supplied by The Tenant shall be given to the Landlord or The Landlords agents)

(ii) The Tenant may bring the tenancy to an end after the expiry of the fixed term by giving to The Landlord one months notice on due rent date in writing of The Tenants request (written notice supplied by The Tenant shall be given to The Landlord or The Landlords agents

You could, if you wished to alter the Inventory / Schedule of Condition, this is not covered by an statutory laws and is more contractual. It is easier to deal with alterations of this kind as tenants vacate rather than the period during the tenancy. As musch as I can see you must keep on top of things, you don’t really want a deposit dispute while the tenants are in occupation, this could take you into direction you may not want to go.

SPT’s can run on for evermore, I have recently had tenants leave who’s lease ran on as an SPT for just over 10 years. This will not affect any court action should you need to take it in the future.

Does this help or have I gone on too much again about nothing?.

Contact me if I missed something.

Regards

Trojan