Length of a Tenancy
How long should landlords grant an assured shorthold tenancy for?
It’s possible for landlords to grant a Assured Shorthold Tenancy Agreement for a fixed period, typically 6 months. These tenancies are referred to as Fixed Term Tenancies. At the end of the term, if the tenancy agreement is not renewed by the landlord, it then becomes a Statutory Periodic Assured Shorthold Tenancy (AST. )
The terms of the original tenancy agreement still apply, but the tenancy continues, on a period by period basis. For instance, if the tenancy agreement required rent to be paid monthly, then a monthly Statutory Periodic Tenancy would result.
The other type is called a Contractual Periodic Tenancy where no term for the end of the let is set and the tenancy agreement simply continues until either the landlord or tenant decide to bring the tenancy to an end.
Fixed term vs periodic tenancy agreement
I had always assumed that a fixed tenancy would have been better for a landlord.
However, having looked closer at the legislation on tenancy agreements, in reality there is very little difference in merit for landlords between the Fixed and the Periodic Assured Shorthold Tenancy (AST). The fixed term tenancy agreement has the advantage for the landlord and the tenant of implying certainty in respect of occupation dates.
However, in both cases the landlord still has to give two months notice (section 21) to the tenant and can’t obtain possession (before 6 months of the tenancy has elapsed) other than by satisfying certain of the prescribed grounds for possession.
Many landlords are under the impression that getting the tenancy agreement even slightly wrong or granting the tenancy incorrectly has potentially dire consequences for obtaining possession. Some of these concerns are fuelled by professionals such as lawyers and letting agents who have an interest in getting landlords to use their services or their (said in sarcastic tone) – very reasonably priced ‘tenancy agreements.
Landlords should not be complacent!
This concern to landlords is no longer valid. A residential tenancy since the introduction of the 1996 Housing Act is now assumed to be an Assured Shorthold Tenancy (AST) and therefore the worry that a landlord will end up with an Assured Tenant by accident has gone.
The bottom line is that legally a landlord can get their property back after 6 months by giving the tenant 2 months notice (providing of course the landlord hadn’t granted them a longer tenancy agreement ) Having said all that; landlords should not be complacent.
The law is all about detail and procedures. Whilst now if a landlord get these wrong it won’t be catastrophic; any subsequent action will still be more difficult and expensive for the landlord. Therefore, it’s always best for landlords to ensure that they know the legislation and that they get it right.
How long should a landlord grant a tenancy for?
Assuming a landlord goes for a fixed term tenancy. In my experience most landlords do; the vast majority of Assured Shorthold Tenancy (AST’s ) being for periods of between 6-12 months. I would recommend 6 months, particularly if the tenants are new to the landlord.
This way it is easier to for landlords to ‘get them out’ if problems arise. There may be some advantages for landlords to a longer let, say 12 months where the property is being managed. This is because the agent could charge a landlord a fee for renewing the tenancy agreement. It is also possible for a landlord to draw up a tenancy for longer or shorter periods; however there are implications for landlords in both cases.
If the tenancy was for substantially more than a year and the tenant remains for a long period. Unless specific steps are taken by the landlord to raise the rent, it will fall below the market level which generally increases as a result of inflation and rental growth.
If landlords wish to let for a shorter period, such as three months,landlords need to remember that; under an Assured Shorthold Tenancy Agreement (AST) the courts cannot order possession to take effect until after 6 months from the start of the tenancy. It could therefore be many months after the end of the fixed term before a landlord finally gets possession.
This however does not preclude possession being sought by a landlord on the following prescribed grounds – 2,8,10-15 or 17 – as long as the terms of the tenancy makes provision for it to be ended on any of these grounds by the landlord.
Alternatively if a landlord has no fixed time when they want possession, they can let on a Periodic Tenancy. This can be either weekly or monthly and will go on from period to period, unless either the landlord or tenant serves notice to bring the tenancy to an end.
What happens when a fixed term tenancy ends?
Landlords do not need to panic when the fixed term of their tenancy comes to an end. They have several choices. Either they can grant a new fixed term tenancy, grant a replacement assured tenancy on a periodic basis – called a contractual periodic tenancy; or they can do nothing. The tenancy will then become a statutory periodic tenancy and it will run on from one rent period to the next on the same terms as the original fixed term tenancy. So for instance a 6 month fixed term tenancy with rent due monthly will then continue from month to month. The tenancy can be bought to an end until the landlord decides to replace it, the tenant leaves or the landlord seeks possession.
Where can landlords get an Assured Shorthold Tenancy Agreement?
There are numerous Assured Shorthold Tenancy agreements available to landlords from a variety of sources. Landlords should ensure that these tenancy agreements are up to date and also grant the tenancy that the landlord wants. Tenancy agreements in a digital format can generally be amended to suit the landlords’ specific requirements and are therefore preferable.
It is still possible for landlords to purchase Assured Shorthold Tenancy agreements in the traditional hard copy format from legal stationers such as the companies stated below where forms cost approximately £150 per 100.