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cahaya
05-11-2009, 12:12 PM
I have some tenants living in a property I rent out. They've been there for 3 1/2 years now. The first year they rented through two six month contracts, paying the rent in advance as they have a CCJ and couldn't pass credit checks.

When the second contract ended they could not pay the next six months upfront, and asked if they could use a guarantor to stay on and pay monthly. To cut a long story short, the agent handling the contract advised me against keeping them as tenants and refused to issue a new contract. However, her colleague recommended I simply let them stay on on a rolling contract.

And that is exactly what I have done. They're good tenants, always pay the rent (which has remained the same), maintain the property, rarely need any work done, and we enjoy a friendly relationship. They have no plans to leave the house and I have no plans to sell.

However, a friend mentioned yesterday that after a certain period of time on a rolling contract, tenants can acquire rights - such as the right to remain in the property for life at a set rent. Is this true? And if true or not, are there any precautions I should take? Is it not a good idea to continue with a rolling contract long term?

Thanks in advance for any advice.

Telometer
05-11-2009, 12:28 PM
"Friends" are seldom wise!

tom999
05-11-2009, 12:28 PM
Is tenancy an AST for a residential property in England or Wales?

jeffrey
05-11-2009, 13:11 PM
I simply let them stay on on a rolling contract.
Does this mean a statutory periodic tenancy under s.5(3) of the Hosuing Act 1988?

NoMoreFaith
05-11-2009, 13:44 PM
Assuming this is an E&W tenancy that has moved onto a periodic tenancy, I would only be wary in regards to notice period, but otherwise with good tenants, its a reasonable state of affairs.

As they paid 6 months in advance on their previous fixed term tenancy, this is counted as "the term". Term is based from the period for which the tenancy is paid for on the last fixed term agreement (in this case 6 months). A section 21 notice for periodic tenancies therefore would be 6 months from the expiry of the CURRENT 6 Month Term

If it has been 3 and a half years, that would indicate a term has just finished so if you wanted to ask them to leave, it could be up to 11 months before you can legally do so (short of them causing a major issue worthy of a section 8 notice).

The periodic tenancy in this case is possibly a little risky, as if they take advice legally for whatever reason they may become aware of this.

However, your friend is wrong about the tenant acquiring additional rights beyond the terms of the last fixed term agreement, but regardless of the friendly relationship with them.
I would perhaps suggest getting them onto a new fixed term agreement with the rent being paid monthly so that when they go back to a periodic tenancy you have more flexibility should you wish to issue notice, which would be 2 months.

But good tenants are worth keeping, and there are a multitude of innocent reasons for people to have a CCJ and their record is good.

Poppy
05-11-2009, 13:57 PM
NoMoreFaith, That depends on whether the rent reserved is stated as monthly or six-monthly (bi-annual, semi-annual) in the tenancy agreement. The question has not yet been asked.

Cahaya, If the main thing you are worrying about is whether your tenants will gain additional rights by their length of stay, the answer is no if the tenancy is an assured shorthold tenancy or has become a statutory periodic tenancy. What was your friend thinking of, scaring you like that? I hope that friend is not affiliated with the property industry.

cahaya
05-11-2009, 14:54 PM
Thanks so much for all your replies. The contract was the 'usual' 6 month contract issued by letting agents (sorry, am unable to be any more technical than that!). The 6 months rent in advance did not change notice terms, it was simply in lieu of monthly rent. My tenant explained the CCJ, and I am quite happy with the circumstances.

I have no wish to evict the tenant - quite the contrary! But I was just scaremongered by my friend (who clearly knew nothing...) and wanted to know if I needed to do anything to protect myself. Thanks to all your advice here, I am happy now that we can continue on as we have been. Phew!

cahaya
05-11-2009, 14:56 PM
Oh and Poppy - no, the friend is not affiliated with the property industry exactly... it was a building contractor friend. I'll be sure to put them right so they don't scare anyone else!

Poppy
05-11-2009, 15:02 PM
Naughty friend. Tell 'em to stick to bricks! :p