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Monday, December 10, 2012

Tenancy agreement - how long?

I was horrified the other day when a friend of mine told me that a letting agent they had used signed up a NEW tenant for an initial 12 month fixed term. Why?  On the face of it it seemed fine.  The landlord wanted a nice long-term let.  Obviously, the letting agent had done all the due diligence stuff such as having the tenant referenced and in fact there was even a tenant guarantor in place.  But all this doesn't change the fact that the new tenant could be a 'nightmare'.  You normally find this out in the first 6 months.

The power of the section 21 notice

With only a six month initial fixed term tenancy the landlord has the 'whip hand' in getting their property back through a non fault based possession procedure and one where in theory the courts have no discretion and must give the landlord back possession at the end of the term.  With a 12 month tenancy the landlord has to wait a full 12 months to be in the same position.  Why would you?  Personally, any letting agent that does this should be shot for incompetence!  If you have had a tenant who has performed well during the tenancy and pressures you for a 12 month tenancy then and only then it might be worth signing a longer term fixed term tenancy.  But never ever at the start of a new tenancy.

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Anonymous said...

Generally true - but not necessarily - and why do landlords (and possibly agents) get hung up on whether it is either 6 or 12 monthsm when it could be 7,8,10, 14 months or whatever.

Ultimately you have to take a view on the situation including the property, your financial circumstances and tenant.

In this instance, as you say there is a guarantor in place, the tenant might also have insurance to offer some protection should the worst happen.

Many landlords would worry that the tenant may move out after 6 months and then be faced with another remarketing fee, potential void and inevitable touching up of the property.

We try to avoid having a property coming empty over Christmas/winter which in the overall context helps to reduce the landlords costs and risks.

Anonymous said...

If there are no arrears after 6 months, most landlords will want the tenant to stay, so why not help them out initially? They may want 12 months to tie into a work or Uni contract.

If there are arrears, you can't claim them under the no fault action anyway.

Where agents (and landlords) do need shooting is where they insist that a new tenancy must be entered into at the end of every fixed term coming to an end - and insisting that must be for 6 months. Completely immoral and one of the things that gives the sector a bad name

Anonymous said...

Had you considered the possibility of a Landlord break clause enabling the tenancy to be broken on a pre-defined date?