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How to renew a tenancy

Renewing a tenancy is one of the most straightforward aspects of managing a tenancy. But many landlords, particularly newbie landlords are also lost as to what to do. I thought I would revisit the topic.

The simple answer for most landlords is that you probably don’t have to do anything.
The way the law stands is that most landlords draw up a fixed term tenancy agreement such as the FREE tenancy agreement available to download through Property Hawk  will automatically become a statutory periodic tenancy running from period to period.

Landlord dates – when do I need to renew?

Where a landlord has a 6 month tenancy with rent payable monthly that starts for example on the 10th of February the term of the tenancy would run up to and include the 9th August. If no action is taken then from the 10th of August the tenancy would automatically become a statutory periodic tenancy running from month to month. The advantages of a statutory periodic tenancy rather than starting a new tenancy is that any Section 21 Notice that a landlord has served remains valid and also that you don’t have to go through the rigmarole of having to protect your tenants deposit and serving them with a Section 213 Notice.

Letting agent trap

One trap that many landlords especially newbie landlords fall into who are employing a letting agent is that often letting agents without explicit instructions will so called ‘renew’ the tenancy agreement. In other words they create a new fixed term tenancy agreement every 6 months and will charge the landlord and the tenant for the pleasure of each fresh new tenancy agreement. Make sure that you instruct them at the beginning not to keep issuing the tenant with new tenancy agreements if you are happy to keep the tenant on a statutory periodic agreement.

Advantages of renewing a fixed term tenancy

The main advantage for any landlord on renewing a tenancy agreement is that it gives both the landlord and the tenant the security of knowing that the property has been rented for the agreed fixed term. If the tenancy is allowed to lapse to become a statutory periodic tenancy then in the case of a monthly tenancy the tenant can in theory bring the tenancy to an end by giving the landlord a month’s notice (remember this needs to be a clear months notice). In the case where a 6 month tenancy has been renewed the tenant and landlord are contractually bound by the tenancy for 6 months giving both parties an element of certainty. Remember though, the tenancy is no guarantee that you will get the rent for the full 6 months should the tenant decide to disappear! Legally a landlord does then have the remedy of being able to go after the tenant for the unpaid rent. The other advantage is that in a rising rental market the creation of a new tenancy every six months gives a landlord an opportunity to revisit the rent to see whether they want to increase the tenants rent.

How to renew a tenancy in the Property Manager

To renew the tenancy within our free property management software, Property Manager 3.0s the easiest way is to end the tenancy at the end of the fixed term . To do this, just select the tenancy from the left menu tabs. End the tenancy on the last day of the fixed term of the tenancy and then create a new tenancy starting from the end of the original tenancy.

Editing the tenancy terms

Another way of dealing with the extension of a tenancy is to alter the terms of the fixed term tenancy to extend it. For instance, you could extend the terms of a six month tenancy to 12 months. You will need to get the tenant to sign the alteration to acknowledge that they are happy with the amendment.

 To do this in the Property Manager you just need to select edit tenancy. Click on, or select the tenancy you require and you will be shown the tenancy overview. You then will be able to put in the revised tenancy term and end date. This means that you will continue to receive the reminder for the end of tenancy on the correct date.

There are a number of options for landlords wanting to renew a tenancy. The secret is picking the one that works for you and not getting bounced into an arrangement that was not of your choosing.

If you need any specific legal advice on the matters raised have a look at our Landlords Bible or landlord forum.


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