AST tenancy agreements are the norm for short-term residential lets, hence there being a mass of information already available on how to deal with these.
From a property management perspective there is no point in simply repeating all this information here – what really helps is to cut-the-chase, and get down to what’s basically required when dealing with such tenancies day-to-day.
So, in addition to the literal agreement itself, there is often an array of other things like additional pieces of information and legislation to be aware of as well.
Renewing AST Agreements
Assuming you already have a form of AST agreement in place, then this resource helps look at the sort of things to look out for when simply looking to renew it, which can be looked at in three stages like the colours of a set of traffic lights:
1. Red and Stop, and the Current AST
The most important piece of information you are looking at with the current agreement is the end date, as this will dictate what timescales you’re now working to.
But there are still other important factors, such as who the official tenant names are, and if there is an inventory of the property’s condition to refer to.
As a backdrop to this, there are two other documents to ensure are already in place, if applicable that is.
Firstly, any HMO Licence for houses with many separate ‘households’ as issued via the Local Authority for the tenant to have a copy of.
And secondly, that the tenants have the Right to Reside in place which came in a few years ago in order to ensure that they have permission to be eligible occupiers in the UK – often a copy of their passport or other appropriate ID on file will suffice.
The key here is the emphasis on ‘occupier’, who must be over 18 years old and quite literally everyone actually living at the property, not just the tenants on the lease.
2. Orange and Wait, Any Holding-Over Period
The text-book answer is to pre-agree any new AST before the current ones comes to an end, that way the occupation continues seamlessly.
By simply stating the new start just the day after the current one ends then you’re covered, even if the actual dating of the agreement and signatures in different.
However, a slight complication comes when you go past the end of the current agreement with nothing new in place.
The good news is that the old one automatically continues as a “periodic” or “statutory” tenancy. In short, the basis of the current ones just holds-over.
Although you technically need to document this through a “Memorandum” or “Contractual Periodic Tenancy”, in reality it’s not required as it automatically happens by law.
Also, as an aside, it may be worthwhile deliberately keeping this temporary periodic-state to have flexibility for future plans, with landlords still being able to issue a Notice of Rent Increase in order to at least increase to a fairer rent in the meantime.
And if both the landlord and tenant agree to start a new one in the future, then no problem. Simply complete, and this Periodic Tenancy will automatically end the day before (or you can make explicit in writing).
However, the bad news is that if one party does not want to play ball then there’s a procedure to go through. Landlord’s must give at least two months notice in order to begin termination, and go through a complex and timely process.
Tenants can end the tenancy and vacate by serving a written “Surrender Notice” or “Notice to Quit”. This is just a normal letter to the landlord giving a notice period of how long it is between usual rent payments, usually 1 month.
3. Green and Go, the New AST Agreement
You now have a new AST agreement signed and dated, making sure you have two copies now – one for the landlord, and one for the tenant.
If there’s an inventory or schedule of condition around from previous agreements that’s still applicable, then it’s prudent to also ensure that this is still applicable and understood.
However, there is still documentation to have in place as well, over and above this AST and associated documentation, and the original Right to Rent and any HMO information mentioned above.
In particular, there’s 5 others:
1) Government Booklet
A booklet called “How to Rent: the checklist for renting in England” produced by the government must be given as a hard copy to each tenant at renewal.
This sounds a little pedantic, as surely they will still have the original one for if they did ever want to read through it and take note.
However, it is a legal requirement to re-issue this at every renewal, therefore, and best to present an actual hard-copy of this (freshly printed from the government’s website to include any amendments).
2) Gas Safety Certificate
If you have gas supply to the property, an annual check and certificate as issued by a registered gas engineer.
If you do not have gas supply for heating or cookers, then you can ignore this.
Where you do, a copy always needs giving to the tenants anyway as soon as it is completed which is probably at a different time than these current AST renewal.
In addition, since 2015 you need to also formally provide a copy to the tenant for both new and renewal ASTS – only holding-over Periodic ones are excluded.
Also, as an aside, although there is currently no similar obligation with electrical testing, there is talk of this becoming mandatory for landlords even if there is no obligation to issue with a renewal AST.
Therefore, it is best to be safe than sorry and make sure that you have a current (and valid) electrical certificate anyway, and the landlord is clear with the tenant who’s electrical appliances are who’s for the separate PAT testing on these as well.
3) EPC (Energy Performance Certificate)
These should be in place anyway for any legitimate letting to have first occurred, but now an official copy is also required for AST renewals as well as new lettings.
One word of warning here is to ensure these are also current ones, as although they do last ten years for residential properties before needs to be re-done there are now early ones coming up for renewal that were first completed.
This obligation has been around for a while, and yet there are various landlords that have still not correctly arranged and communicated.
This has caused the government to tighten up on this and now effect a landlord’s ability to take action against a tenant through say a Section 21 possession order if they have failed in this regards (and being fined up to three times the value of the deposit).
Bottom line – a tenant’s deposit must be registered with an external authorised body, which may mean the money being transferred to them or still being kept and ring-fenced by the landlord.
When they are correctly registered, there is prescribed information and a certificate that a landlord must formally send to the tenants within 30 days of receiving the deposit monies.
The good news is that these technically don’t need to be formally re-issued at every renewal (or Periodic ASTs), unless there has been a significant change though like a new tenant’s name, in which case the whole deposit will need to be re-registered in this new name.
But you may as well take this opportunity to re-issue a copy anyway and dot the i’s and cross t’s for the sake of clarity.
5) Smoke & Carbon Monoxide Alarm Checks
This is strictly not a requirement to have issued at renewal, but one certainly worth a mention at this time anyway.
In short, the landlord has a duty to have these first installed correctly, and then an obligation to keep maintained and checked.
The text-book answer is to have an obligation for the tenant to quickly test these every say month and record this, and then the landlord completing a full one at renewal; everyone then documents that these are all still correctly working.
Getting AST Renewals Right
Probably the most important point to realise about the renewal of shorter-term residential tenants, is that there is an automatic right of continuing afterwards. Therefore, this takes the pressure off, and in some cases it may be worth simply continuing on through a Periodic lease from both a tenant’s and landlord’s perspective in order to maintain flexibility.
But as you do go through the above traffic-light process from the initial current-lease stop stage to end up at the final green new-AST stage, make sure you get the detail right.
This involves various documentation and time scales that unfortunately seem to be increasing within the sector, but with clarity can soon be kept on top of.
Plus, as a final point, landlord can’t get carried away with fees for renewal of these AST agreements now under the Tenant Fees Act 2019. Since 2019 both new and renewal ASTs can not incur charges, and from May 2020 Periodic ones also, causing landlords and agents to absorb the administration costs themselves.
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