Tenancy agreement – how long?
Most landlords use an Assured Shorthold Tenancy agreement to let their property.
So how long should I let a rental property for?
Firstly, many landlords assume the minimum length of a tenancy under an Assured Shorthold Tenancy has to be 6 months. Not so. It is perfectly legal to let your property for less than 6 month. In fact there is no minimum period for an AST. Until February 1997 the minimum was 6 months, however this requirement was removed by the Housing Act 1996.
It’s therefore perfectly legal to go for a short let. The downside though is that with anything less than 6 months a landlord can’t use a Section 21 to obtain accelerated possession until after 6 months of the tenancy has elapsed. If the tenant stops paying rent after month 2, it may well be another 4 months before a order of possession of a rental property is obtained. If you are worried about this exposure to risk one way around this issue is to take a large rental deposit to cover this period. Landlords can go here to download their free tenancy agreement.
Standard tenancy length
Most landlords opt for a standard 6 month tenancy. This gives them the flexibility to remove the tenant with the much less non fault based method of possession through a Section 21 Notice at the end of the fixed term tenancy. We provide users with a free Section 21 Notice. The reason being is that the Housing Act directs the judge to give possession to the landlord. I have heard of cases where some judges give the tenant over a month to vacate the property after the date that possession was sort, although it is more normal for the judge to allow between 14-28 days for the tenant to move out.
Average length of tenancy
The average length of a tenancy is 9 months. Therefore in many ways it makes sense for a landlord to grant a slightly longer tenancy. One of my longstanding tenants always likes a 9 month tenancy. The advantage to a landlord is that it cuts down on the paper work of having to renew a fixed term tenancy every 6 months.
Shorter or longer tenancy
A longer term tenancy can be advantageous to some landlords in the respect that in periods of low rental demand, when they expect rents to fall; it protects your rental level for a longer period. Conversely, when rents are rising, a long term fixed term means that your rent could well drop behind the market. By presenting yourself as amenable to a longer term tenancy, you may be more successful in attracting a long term tenant. This is certainly always my goal. Long term tenants mean less chance of costly voids and a greater likelihood that you will not get a tenant who fails to pay the rent.
Long term tenancies give a chance for you to develop a relationship and trust with your tenants and that certainly makes the day to day management of the property and tenancy so much easier.
Another aspect of the longer term tenancy is if you are having your tenancy managed by a letting agent. Now letting agents love 6 month fixed term assured shorthold tenancies. Why? Well it means that they get ‘dosh’ twice a year for renewing them. Not only can they charge the landlord a renewal charge but they will often try and fleece the tenant too. Arguably they are only doing what the landlord wants and are maintaining the tenancy. Make sure that as the landlord that this is what YOU want at the outset. If not make sure they know that you are happy to agree a longer tenancy or that you would like to see the tenancy run on to be a statutory periodic tenancy.
My favoured option the hybrid approach
My preferred option would be to go for a hybrid approach. Grant your tenant a 6 month tenancy. I would advise issuing a section 21 notice alongside the tenancy agreement and the prescribed information required by the Tenancy Deposit Scheme. Then, if after the initial 6 months has elapsed and the tenancy is going well, consider granting the tenant a longer tenancy if they want. I can’t emphasise enough that from my experience long term tenants generally make happy and contented landlords.
What do you do? Let us know by posting your comments
I run an estate agency in coventry, we have never charged a renewal fee to either landlords or tenants in my view this is why we charge a management fee (which is only 7%). we belive we will grow bigger slowly but with ethics.
Yes there are a lot of agents that abuse the trust of their landlords and tenants, but not all.
David Muir Godiva Estates Ltd
Further info on how long to grant a tenancy for?