PDA

View Full Version : Tenants in AST leaving early



faisaluk
02-11-2005, 07:54 AM
My tenants signed a 6 month AST via a letting agent when they first moved in in September 2004. At that time they paid me 6 months up front and a deposit.

In March 2005 the AST ran out, and I had them sign an identical AST but this time for a period of 12 months. They then begain paying me 1 month in advance. A few months into this AST, both tenants stopped working and started claiming HB.

They have now informed me that the HB amount they are being paid is being reduced and that they cannot afford to stay in my property.

I'd like to clarify a few things, and ask what my options are:

1. Was it ok to have them sign a 12 month AST after the initial 6 months expired ?

2. Are the tenants liable for rent up until March 2006, and in reality what does this mean -- would I have to sue them if they simply refuse to pay up ?

3. Am I allowed to use the holding deposit to cover any of this unpaid rent, and is it advisable to do so ?

4. Do I need to serve them with any notice, or have them provide me in writing that they are leaving ?

My tenants have been very good and they are nice people, so I do not want to be unreasonable with them. I just need some advice on how to handle this situation.

I want to start looking for new tenants, but not knowing when my current tenants will be moving out (they are in the process of looking for a smaller place), makes it difficult as potential tenants would want to know when to move in. Should I be getting a firm date from the tenants to move out in writing from them ?

Thanks for any and all advice.

islandgirl
02-11-2005, 08:47 AM
just a word of warning from my bitter experience. Tenants on 12 month AST. stopped paying. Said they could not afford it and wanted to move out. Got written notice from them saying they would move out on a specific date in 4 weeks time and that they were surrendering the tenancy. 4 weeks later they said they were not going and we would have to "throw them out". Took legal advice. Apparently the surrender is worthless in law. Top flight property solicitor who initially thought we would have no problems getting them out on the surrender grounds went back to her books and found out that was not the case. Almost 2 months later they are still there, not paying anything, hearing under section 8 not due till end Nov. So, if they give you a date and then dont go you can do nothing quickly. Beware letting to someone else then having to let them down with all the consequences that may bring for you.

dazalock
02-11-2005, 09:13 AM
My tenants signed a 6 month AST via a letting agent when they first moved in in September 2004. At that time they paid me 6 months up front and a deposit.

In March 2005 the AST ran out, and I had them sign an identical AST but this time for a period of 12 months. They then begain paying me 1 month in advance. A few months into this AST, both tenants stopped working and started claiming HB.

They have now informed me that the HB amount they are being paid is being reduced and that they cannot afford to stay in my property.

I'd like to clarify a few things, and ask what my options are:

1. Was it ok to have them sign a 12 month AST after the initial 6 months expired ?

Perfectly ok, but I would advise against giving anyone a 12 month tenancy in the future

2. Are the tenants liable for rent up until March 2006, and in reality what does this mean -- would I have to sue them if they simply refuse to pay up ?

They are liable for rent up until the point you find a replacement tenant, which you must make positive steps to do.

3. Am I allowed to use the holding deposit to cover any of this unpaid rent, and is it advisable to do so ?

If it does not say otherwise in your tenancy agreement. I would adivise not using the deposit for unpaid rent but for delapidations only, this is becasue it restricts you from sue for unpaid rent. in reality, of course, you hold the deposit take out the delapidations and tell the tenants you will return the deposit once they pay outstanding rent, which they wont of course.

4. Do I need to serve them with any notice, or have them provide me in writing that they are leaving ?

You a bit stuck here, and this is why I dont renew tenancies, I just allow them to go into periodic. you could serve a S21 as backup to end the tenancy on the AST end date. Otherwise you need to hope they move as promised. If they fall 2 months behind on rent, get that S8 in, dont listen to excuses!

My tenants have been very good and they are nice people, so I do not want to be unreasonable with them. I just need some advice on how to handle this situation.

I want to start looking for new tenants, but not knowing when my current tenants will be moving out (they are in the process of looking for a smaller place), makes it difficult as potential tenants would want to know when to move in. Should I be getting a firm date from the tenants to move out in writing from them ?

Thanks for any and all advice.

Good advise from Islandgirl, you just need to keep on top of it and keep the communication going!

Tax Accountant
02-11-2005, 09:18 AM
I am not experienced on legalities. Bearing this in mind, my initial thoughts are as follows:

(1) To make your new 12 month AST have authority, you needed to have served them notice to quit at the end of the original 6 months AST. If you didn't do this, you would have difficulties substantiating the new AST. But not to despair. All this means is that the tenancy would be regarded as a statutory periodic tenancy in a worst case scenario. Under this, you could determine the tenancy by giving at least 2 months notice.

(2) As they are on Housing Benefit, there is no point in suing them for the remaining AST contract. As you say, they have been very good and they are nice people, so you do not want to be unreasonable with them.

(3) In the end, you could use some or all of the holding deposit to cover any unpaid rent in respect of the period during which they have actually occupied the house.

(4) I think it is best to work hand in hand with them. It is best to get them to give you a written notice. At the same time explain to them that you have to give them a formal notice and do this as a back up in case you have to fall back on statutory eviction.

Remember that most local authorities will require the tenants to have been served with legal notice before they will re-house them.

I think that you should count yourself lucky if they will leave amicably and on good terms, even if this means that you have lost some rent before finding replacement tenants.

Ramnik

dazalock
02-11-2005, 10:35 AM
(1) To make your new 12 month AST have authority, you needed to have served them notice to quit at the end of the original 6 months AST. If you didn't do this, you would have difficulties substantiating the new AST. But not to despair. All this means is that the tenancy would be regarded as a statutory periodic tenancy in a worst case scenario. Under this, you could determine the tenancy by giving at least 2 months notice.



Raminik

Not sure thats true, remembering that the S21 is a notice that the LL wants the property back and is served without conditions. Many LL's renew tenancies with new AST's without S21's being served. Once a new AST is served, it simply creates a new Tenancy.

What I would say, is that if a S21 has been served and a subsequent AST is signed, the S21 is deemed invalid.

Tax Accountant
02-11-2005, 10:47 AM
Ramnik

Not sure thats true, remembering that the S21 is a notice that the LL wants the property back and is served without conditions. Many LL's renew tenancies with new AST's without S21's being served. Once a new AST is served, it simply creates a new Tenancy.

What I would say, is that if a S21 has been served and a subsequent AST is signed, the S21 is deemed invalid.

Hi Dazalock,

Hence my opening paragraph stating that I am not experienced in legalities.

So what exactly are you saying? Is it better to sign an AST without serving a notice or after serving a notice? What are the pros and cons of each method?

Ramnik

dazalock
02-11-2005, 10:52 AM
You would sign each new AST together with a new S21 notice.

Personally, I would sign a 6 month AST and serve a new S21 notice, and then allow it go periodic.

PaulF
02-11-2005, 16:04 PM
C'mon guys! Thinking Caps on now!

If a landlord & tenant want to replace an expired fixed term AST with another one they can, and there is no requirement to serve any Notices. Remember individuals are allowed to negotiate provided what transpires is lawful. If a new AST is drawn up the other one automatically is voided by this action, even if it is during the fixed term of a current tenancy; if landlord & tenant agree on something they are at liberty to freely negotiate. You can't have two tenancies running concurrently for the same premises now can you?

It's only when one party wishes to use statutory instruments available to them does "due process" kick in.

Procrastinating thought only confuses when you should be using reasoned thought!

faisaluk
02-11-2005, 16:10 PM
Thanks for all advice guys.

I'll be taking your advice and hoping to end the tenancy amicably.

faisaluk
13-11-2005, 13:25 PM
Another question which has arisen.

As the tenants are on a fixed term tenancy, I cannot issue a S21. Therefore a S8 seems to be my only option if I need to evict them.

The problem is: what constitutes being in arrears ?

If they give me 50% of the rent on due date X, and then give me the remaining 50% before the next due date - does that mean they cannot be served with a S8 ... even though they will consistently always be in arrears month on month, but not by the required 2 months amount ?

Sorry if I didnt explain that very well.

MrShed
13-11-2005, 13:30 PM
They cannot be served a Section 8 on the mandatory 2 months arrears ground, but they can on the discretionary grounds of being consistently in arrears. I do not remember the ground numbers I'm afraid.

RichieP
13-11-2005, 19:14 PM
It is a Section 8, but you can't use Ground 8.

Use 10 and 11. All the grounds here (http://www.landlordzone.co.uk/grounds_for_possession.htm)

faisaluk
14-11-2005, 08:40 AM
That's useful, thanks.

Ive been searching posts and have some confusion as to what 2 months arrears actually means. There seems to be conflicting opinion.

If tenants pay on the 1st of the month, and pay 1 month in advance, then are they in arrears the day after the second month.

I.e. they miss payment 1st Oct. And miss payment on 1st Nov. Are they 2 months in arrears on the 2nd Nov, or do I have to wait till 2nd Dec ?

Thanks.

MrShed
14-11-2005, 08:58 AM
I agree faisaluk there is some confusion. Now I saw two months arrears(and still do despite some conflicting opinion) as being when a property has been occupied, without the rent being paid for that period, for at least 2 months.

So, the way I see it is, if they pay a month in advance, and made a payment 1st September, this covers them for September. Then they miss 1st October, so by the END of October they are a month in arrears. Then they miss 1st November, so by the END of November they are 2 months in arrears. This is the way I see it, but I know some people have different views on this!

faisaluk
14-11-2005, 09:27 AM
So if your contract states 1 month in advance, effectively you have to wait for 3 months arrears before being able to serve a Section 8 ?

MrShed
14-11-2005, 09:36 AM
Now as I say people, and certainly some people more knowledgeable than myself, will have a different view. However, they would not really be THREE months in arrears by my view, only two.

MrShed
14-11-2005, 09:56 AM
And no you are not waiting 3 months arrears anyway. Yes, it will be 3 months since the last rent payment, but only TWO months since the last expected rent payment....you are not suggesting that they are in arrears for the first month for the rent they had paid are you ??

dazalock
14-11-2005, 10:03 AM
I cannot agree here shedster, this has been bought up before and yes it does seem to cause some confusion, and Im not 100% clear on this myself. However, I believe that if rent is due on such and such a date, and you dont pay it, you are in arrears, regardless if you pay in advance or not. The important thing is that this is the date you have agreed to pay the money. DJB highlighted this on another thread and I quote from him:

"If I pay my rent monthly in advance on the first day of each month - lets for arguments sake say 1st January. I dont pay it, I am now one month in arrears with my rent. I also fail to make payment to you on 1st February - I am now two months in arrears with my rent and you can serve a S8 notice on me, and provided I keep this up (i.e. owing two months rent) by the time of the court hearing, the judge will make a mandatory possession order."

Like I say, Im open to correction on this.

MrShed
14-11-2005, 10:24 AM
As I say dazalock I am confuzzled on this.....and I too am open to correction! I must admit that I personally am basing this on what I believe the definition of arrears to be: "the receipt of goods or services prior to payment of said goods/services". As such, although the tenant may be late with his rent payment, I personally would not define it as "arrears" until the tenant has lived in the property for a time he has not paid for. I may be focussing too much on small technical points, but as has been said frequently, small technical points are what the law is all about :p

That said, DJB I would consider to be a somewhat more accurate source on these matters, and so I am inclined to agree with you and him...as long of course as it is written in the AST that the rent is to be payable a month in advance.

Energise
14-11-2005, 10:32 AM
Tessa Shepperson:

"This should be used where there are rent arrears of a total value of more than two months worth (i.e. for a rent of £300 per month the arrears are £600 or more)."

So 2 rent payments in arrears rather than 2 rent periods.

(Still seems strange to me that you would have to wait longer on a weekly tenancy than on a monthly tenancy.)

faisaluk
14-11-2005, 11:05 AM
The other issue I have is that it's not like my tenants are not paying me full stop. Only that the HB they receive does not cover the full rent amount. And so it is very likely they will never actually be 2 months in arrears.

Is there no grounds for eviction based on the fact that the tenant can never actually afford to pay the full rent ?

It's an awkward situation to be in - I was hoping they would simply concede they cannot afford this house, and find another which they can. But they're pursuing it further with the council, and in the process leaving me with my mortgage to be topped up out of my own pocket every month.

Jennifer_M
14-11-2005, 11:11 AM
If they can't pay the full amount, they will be 2 months in arrears at some point. It will just take longer than 2 months.

faisaluk
14-11-2005, 11:14 AM
That's my point. It's inevitable they will be, it's just frustrating from my point of view to have to wait until that point. And not really fair on me either.

dazalock
14-11-2005, 11:21 AM
Ground 11 - This ground covers persistent delays in rent payment. However, being a discretionary ground the court will take into account factors outside the tenant's control, for example, delays in housing benefit payments.

You could goto court on this ground and try and get a judgement.

RichieP
14-11-2005, 15:17 PM
I'd agree with dazalock. Go for Grounds 10 and 11 and apply to the court. Show the court you have written to the tenants lots of times and given them every chance to reduce the arrears. If the arrears are continuing to increase by the time of the hearing the judge may make a suspended possession order. This means that they must attempt to reduce the arrears. If they miss one payment you can reapply to the court for possession.

faisaluk
14-11-2005, 15:48 PM
This is the route I will go down I think. Thanks again for advice.

Im hoping the council will see sense and up their HB payments.

davidjohnbutton
14-11-2005, 15:56 PM
Do not sit in hope that the council "will see sense and up the housing benefit" - this is not going to happen. The rent will have been pegged by a referral to the Rent Officer who advises the council what is a fair market rent for the property - that is the starting point - the HB/LHA can then be reduced if the tenancy is under-occupied - for example, a single person living in a two bedroom house will have the market rent reduced due to the fact that this person only needs one bedroom.

So until the rent officer reassesses the premises, the HB/LHA is not going to move upwards, so you will for the time being have that differential between the contractual rent and what HB/LHA is being paid and of course, there well may still be a difference even when reassessed.