Call of the month: Renewing a tenancy agreement

A landlord recently gave our landlord advice team a call with a query they had about renewing a tenancy agreement.

They were coming towards the end of an existing assured shorthold tenancy agreement (AST) with their tenant and wanted advice on whether to renew the agreement or not.

They want to keep the tenant as they are a good tenant, and want to offer them security, but also want to avoid unnecessary paperwork and contact with the tenant due to coronavirus.

Our advice

Our adviser explained that it is important for this landlord to understand that in either case of renewing the agreement or not doing so, the tenant will still have a tenancy.

Their tenancy does not come to an end and instead will become periodic at the end of the fixed term, either contractual or statutory periodic. The current NRLA AST agreement is a contractual periodic one.

More information on periodic tenancy types can be read online here.

If the landlord does renew the tenancy for a new fixed term, it is important to understand that there will indeed be more paperwork to do, not only the new agreement but also depending on your chosen deposit scheme the deposit may need re-protecting.

This is often the case for insured protection. A landlord may also want to re-serve relevant documentation such as gas safety certificate, energy performance certificate and the how to rent booklet – certainly if there has been a new update to it.

This is best practice to save the landlord hassle if they ever need to apply to court down the line.

Depending on how old the inventory and check in report from the first tenancy is, it may also be a good idea to do a new inventory. Some deposit schemes recommend a new inventory is done for every single new tenancy or change of tenants, but adjudicators will accept annotated or updated ones instead.

If the tenancy agreement isn’t renewed, this means the landlord will simply let it become periodic and continue as was, in most respects.

Some deposit schemes may require landlords to let them know this is the case and that the tenancy is continuing, but generally this is at no cost.

The tenancy continues as it was, but the tenant can now serve notice to leave, and although at the moment the ability for a landlord to gain possession is slowed down by extended notice periods, landlords are also able to have their Section 21 notices expire in the periodic part of an AST. If neither party wants to end the tenancy however, it will just continue.

Our advice was that it really is up to the member and to an extent the tenant.

If both parties would prefer a new fixed term, they can go ahead with this option. If everyone is happy with it continuing periodically, then that is fine also. The adviser suggested that it could also be an idea to leave it periodic and see how that works, as a new fixed term could be entered into later down the line.