So, the first six months of the tenancy have passed. Your tenant has paid the rent on time and kept the place in good nick and you, in turn, have been a good landlord whose property they’ve enjoyed living in. In short, you’re both happy with the way things are ticking over. Time to renew the tenancy agreement, then. Right?
A tenancy doesn’t end after the fixed term. Some less-than-scrupulous agents would have you believe that it does, as it allows them to charge you or your tenant for setting up a new agreement. However, when an assured shorthold tenancy – which most new tenancies in the UK are – ends, a ‘statutory periodic tenancy’ is created and continues until either the landlord or the tenant terminates the agreement.
A periodic tenancy can be beneficial for a number of reasons, including:
- You don’t have to evict with a section 8. A section 8 has the advantage of needing only 14 days’ notice, but they can often be thrown out of court. If you want to evict your tenant for any reason, a section 21 allows you to do so with two months’ notice at any point during a periodic tenancy.
- You can still change the agreement. You don’t need a new tenancy to change the terms of an agreement – you can do so with an addendum to the original contract.
- It keeps going as long as you want. A periodic tenancy doesn’t have a use-by date like its impatient older brother, so if you’re happy with the way things are going, you can just sit back and let it roll on.
So when is it a good idea to draft a new tenancy agreement?
Security is the main reason you and your tenant might want a new fixed term in place. Just as you can evict at any time, your tenant might also give notice, leaving you very little time to re-let the property and avoid a void.
If you want to increase the rent during a periodic tenancy, you need to give formal notice and your tenant can challenge the decision by appealing to a rent assessment committee. Issuing a new agreement is a good way to increase the rent, because once the tenant has signed the new contract they can’t challenge the increase.
If another landlord is taking over the same property with the same tenancy, or if a new tenant is joining a shared tenancy, you should create a new agreement.
An addendum is fine for small changes, but if your contract has notes stapled to every page or is full of dated clauses, it might be time for a new contract. You might also have issued a different agreement on another tenancy and want to keep the same model across the board.
The process for issuing a new agreement for an existing tenancy is much the same as drafting one for a new tenancy. You can draw one up yourself (not recommended for anyone who isn’t a legal expert); use a template – from an online source (like us!) or a stationers, for example; or, for a pricier option, pay a lawyer to draw one up for you. See our article on fair and unfair terms in tenancy agreements to be sure you avoid including any unfair clauses in the new contract.
There is one more important thing to consider when a tenancy ends…
What do I do with the old deposit?
With regards to deposit arrangements with a renewed tenancy, one of three things will be the case:
- You took a deposit for the old tenancy and protected it
If nothing in the tenancy has changed except the end date, and you are happy to keep the old deposit in place, you need to contact the protection scheme you’re using and renew the protection. However, provided that you complied with the scheme terms and are keeping the same deposit protected in respect of the same tenancy, you need not reissue the prescribed information. (This was clarified in section 32 of the Deregulation Act 2015.)
If parties or terms are changing or you want to take a larger deposit (perhaps to reflect refurbishments, higher rent or a higher number or tenant sharers) you’ll need to refund the old deposit and take a new one. The process in this case will be the same as for a fresh tenancy – you must protect the new deposit and issue the prescribed information within 30 days.
- You took a deposit in the old tenancy and didn’t protect it
If you haven’t protected your tenancy deposit, you might be ordered by a court to repay a sum of up to three times the deposit amount. You will also be unable to serve the tenant who paid the deposit with a valid section 21 eviction notice.
Even if your tenancy commenced prior to 6 April 2007, you should still have protected the deposit. This is in accordance with section 32 of the Deregulation Act 2015, mentioned above, which implemented an amnesty period for landlords to protect their old deposits. This deadline passed on 23 June 2015.
If any of your tenants’ deposits have slipped through the net, you should consider taking legal advice.
- You didn’t take a deposit for the old tenancy
This one’s simple enough – if you don’t want to take a deposit, you don’t need to do anything. If you do, you need to place it in a deposit protection scheme.
See our deposit protection page for more information on tenancy deposit protection law and the schemes available.
Forms and guidance
You can find forms and templates for things like assured shorthold tenancy agreements and formal rent increase letters, as well as a treasure-trove of other delights, in our free landlord downloads section – ideal if you need a hand with something like renewing a tenancy agreement. They’re all free to use, too!