When tenants break up
I’ve just had notification that two tenants renting one of my properties have split up.
"Aaaaahh how sad, poor thing!" I hear you say.
Thankyou for your sympathetic thoughts, yes, this really is not what a landlord wants to hear going into the winter months. I mean could they not of tried a bit harder at sorting things out, found some kind of compromise, just stuck with it? I mean no relationships perfect, but you just have to carry on and make the best of it. Anyway its happened.
Subsequently chatting to a letting agent it turns out that September scores highly for break ups.
Maybe as the weather worsens one half of the couple asks "Can I really bare to spend the whole of the winter cooped up with this creep?"
So back to my tenants, the first notification was from ‘Ted’ who texted me to say he was moving out. This caused my heart to sink as I contemplated the prospect of having to let another property.
Despite reassurances from my letting agent that September is a good month for letting property I was heart broken. I really didn’t want any further rental voids on my property portfolio, I had a hollow feeling inside.
However, after contacting the other half of the couple, ‘Elly’ I was joyed up by her reassurances that she was wanting to stay on as a solo tenant in the flat. She had decided that she was going to stay put and go it alone. A financially courageous attitude in these stark economic times that I admire, but at the same time slightly concern me as to how she is going to pay twice the amount of rent and bills. When asked she has no current plans to get in a sharer.
Tenant split – the technicalities
There are certain administrative procedures for formalising the situation.
Firstly, ‘Elly’ didn’t want to sign a new 6 month tenancy just in her name so this was my starting point.
What landlords should be aware of is that the tenancy was and remains a joint tenancy.
That means that despite the fact that a tenant has moved out; technically they remain responsible for the tenancy and the payment of rent. Also, the landlord alone cannot alter the tenancy agreement without both of the tenants agreeing to any changes. I could choose to end the tenancy by serving a section 21 notice and then grant a new tenancy to ‘Elly’ as a single tenant.
However, doing things this way would result in the creation of a new tenancy, something that my tenant was keen to avoid.
The alternative to the creation of a new tenancy is somewhat more convoluted.
1. The only way to legally remove ‘Ted’ from the tenancy is to get him to formerly assign the old tenancy to ‘Elly’ as the remaining tenant. This can only legally be done by way of a Deed and therefore this potentially involves employing a solicitor to draw up a legally binding agreement. A potentially expensive procedure. I have come across this free form which may serve the purposes, although I cannot verify it’s legal enforceability.
2. The default option of doing nothing would result in the continuation of the ‘status quo’ with both tenants still being responsible for both rental payments and the state of the property.
What action to take?
My dilemma is that in order to satisfy the preferences of the remaining tenant this would involve a complicated and potentially expensive procedure (1) involving the drawing up of a Deed and then to get both tenants to sign and return it. The easiest course of action by far would be to continue the tenancy as is. This has several advantages to me in that if the remaining tenant fails to pay rent I have two potential people to go after for rent arrears. The downside is that it potentially ‘muddys the water’. I can forsee the situation where the remaining tenant could continue to pay half of the rent claiming that she is still paying her half. This would make it difficult and many months before I could obtain possession under the fault based possession proceedings using the mandatory ground 8 of being 2 months or more in arrears.
Honesty the best course of action
Firstly, ‘Elly’ and ‘Ted’ have been pretty straight up with me. I have no reason to think that either is up to anything dodgy or misleading. They have been my tenants for over 2 years and have always being honest with me and payed their rent on time. So therefore my approach will be to be honest and up front with ‘Elly’. I will explain to her that I don’t think I want to go down the assignment route unless she is happy to pay for the drawing up and execution of the Deed. This would involve her getting Ted to sign it- something she may not be keen to do if they have just split up.
My preferred route is to issue a setion 21 notice and then grant her a new tenancy which would be for less than the standard 6 months. In this way she is not committed to the tenancy for greater than she wants.
The advantage for me is that I have the comfort of having a section 21 notice in place if things go wrong; but also be appearing to give the tenant what they want. I also have the option of just allowing the tenancy to proceed as a joint tenancy or granting a new tenancy once the section 21 notice becomes effective, if I’m happy that Elly can pay the rent on her own.
Either way I aim to hold the trump cards close to my chest. Always my preferred option when dealing with these tricky rental issues.
Had a similar situation? What would you do?
Hi there, these things do happen. I personally would choose to leave the lease as is. People are mistakenly under the impression that if they leave the property, the lease falls away – to which my response is you can choose to stay wherever you wish but the contract you entered into stays in force. In all my leases I have a” jointly and severally responsible” clause, so Elly would not be able to pay half of the rent in terms of this clause. My feeling is that the more people one can go after, in need, the better with the underlying principle that tenants cannot expects events in their life to effect, particularly, Landlords – this is a business arrangement – try returning the car they have purchased together from a dealer and see have far they get……similar scenario. Regards Graham
REMEMBER any change to an AST will require a fee to be paid to protect the deposit again.
Don’t do this and a clued up tenant will obtain by default up to 3 times the deposit plus the deposit aswell.
This will change shortly; based on a sliding scale; but you MUST STILL protect the deposit again– Paul Barrett