Many landlords, and indeed letting agents, don’t see the benefit and value in renewing a tenancy once it reaches the end of the initial agreed fixed term. That’s not to say that they serve notice and end the tenancy, but that a fixed term renewal isn’t put into place and the tenancy becomes a Statutory Periodic Tenancy.
Statutory Periodic Tenancies are sometimes beneficial to landlords as they give greater flexibility in the timeframe in which the tenancy can be ended. However, it is often this flexibility which is the greatest negative also as the law requires tenants to give only one month’s notice (taking effect from a rent due date), where the landlord is required to give a minimum of 2 months’ notice to end the tenancy.
Click here for advice on reducing void periods, property damage and rent arrears.
So What Are The Benefits In Renewing A Tenancy?
Each time a tenancy is renewed it is an opportunity to review what has been agreed.
- Rent Review – Typically, a renewal gives us the ability to review the rent to make sure that it is keeping pace with the current market conditions – making sure you maximise the return on your investment. To keep this fair we advise reviewing the rent annually; any increases should be referenced with inflation statistics (e.g., RPI or CPI) to ensure they are not excessive.
- New Fixed Term – You have the benefit of knowing that your rental income is secured for a defined period of time. This can give you greater ability to forward-plan your finances (and relax more when you go on holiday!).
- Stability – In much the same way that you can relax, your tenants can also. They are more likely to stay longer when they don’t have the potential stress that you could give notice to end the tenancy at any time.
We begin our renewal process 3 months before the end of the fixed term. It’s at this time that we review the tenancy to make sure that all is as it should be. For our fully-managed landlords we check the following:
- Routine visit reports – to make sure the property is being well looked after.
- Any evidence of rent arrears or late payments.
- Maintenance history and property access – Is all running smoothly or are the tenants high-maintenance and demanding?
- What is the current rental value for the property?
Armed with this detail we can give you the information you need to make an informed decision about renewing the tenancy and the terms you wish to offer.
We start this process with 3 months to go to give plenty of time to serve notice to end the tenancy if you do not wish to offer a renewal to the tenants. If you do want to renew, we also have plenty of time to negotiate the renewal with the tenants.
Any questions? Click here to ask James, our property investment expert dedicated to getting the most out of your property investments.
Renewal Tenancy Agreement
Once everything has been agreed we will take care of the legal paperwork and, where possible, we send the tenancy agreement electronically to the tenants though our e-signature software. This is great modern way to speed up a process that used to rely on post and take much longer.
If you have any questions relating to this or any other lettings-related matters, please go to our contact form and we will be happy to help.