PDA

View Full Version : Lets under 6 months



LonLL
18-03-2010, 14:52 PM
Hi there,

Could someone please give me advice on what contract (preferably that I can purchase at WH Smith or order online) I should offer for a tenancy under 6 months? I am currently trying to sell my property, but the current tenants have given me notice so won't be staying for more than 2 months. I think I may need to rent it out for 3-4 more months after the current tenants leave if I don't receive an offer in the next few weeks, as I'm still paying mortgage on the property and can't let it sit empty.

Can I modify an AST to under 6 months, or should I offer a Holiday Let agreement? What are the pros and cons? Isn't there anything useful to Landlords for lets under 6 months? Pls note that I cannot live at the property myself and just allow a lodger.

Thanks

jeffrey
18-03-2010, 15:11 PM
Choose between:
a. an AST, but know that you cannot get s.21 possession earlier than the six-month point; or
b. an SAT, esp. if you were at any time the owner-occupier of the property (AND serve a ground 1 Notice on T, before the SAT begins).

LonLL
18-03-2010, 16:12 PM
Thank you, Jeffrey! Yes, I did use to live in the property before I let it out. How is SAT different from AST in terms of rights of landlord/tenant? Is Ground 1 notice similar to Section 21, and why must it be given prior to the start of tenancy?

jeffrey
18-03-2010, 16:26 PM
If g1 applies, L can seek possession at term expiry, even if < six months from term commencement: like s.21 for AST but less problematic.

Preston
18-03-2010, 21:33 PM
Accurate advice, but in my view a risky strategy for the sake of 3 or 4 months income, for two reasons.

Firstly, if the tenant refuses to move out when you want them to, obtaining a possession order on the "returning owner occupier" ground can take some time, depending at least partly on how busy your local county court is.

Secondly, the consequences of making a mistake with this strategy are substantial, namely, you could end up with a fully assured tenant on your hands for a very, very long time. To use this ground you must usually serve a notice on the tenant before the tenancy commences and, just as importantly, be able to prove at the right time that you have done so.

Good luck!

LonLL
18-03-2010, 21:37 PM
Wow, thanks for that warning. I can't believe that there isn't some kind of short-term rental contract for less than 6 months that can protect landlords!

Do you think then that I should just modify an AST to last 3-4 months, since I can always forcibly evict them at 6 months if necessary?

Preston
18-03-2010, 21:45 PM
Wow, thanks for that warning. I can't believe that there isn't some kind of short-term rental contract for less than 6 months that can protect landlords!

Do you think then that I should just modify an AST to last 3-4 months, since I can always forcibly evict them at 6 months if necessary?

It really depends how important timings are to you. If it would be a disaster for you if a tenant refused to move out when you want them to, I would leave the property empty I am afraid. If you could cope with a delay, however, I would do as you suggest and use an AST.

LonLL
18-03-2010, 21:50 PM
Well, if I had an offer that was due to exchange and the tenant wouldn't leave, yes, it could become a disaster. On the other hand, it's nearly £1000/month in mortgage and service charges to keep the property, which is a lot of money for me if it sits vacant.

How about holiday let agreements? Can those last 3-4 months, and is there good protection for landlords in them?

Preston
18-03-2010, 22:28 PM
The trouble with a holiday letting is that it has to be for a holiday!

Unfortunately, there is no statutory definition of a holiday. If the agreement says its a holiday letting, it is up to the occupant to prove otherwise if they feel it is a sham but equally, where there is evidence that the letting is clearly not for a holiday then an agreement stating otherwise will be disregarded by the courts.

Unfortunately I have no direct experience of managing this type of letting but I can say that you would need to consider a few additional issues such as the implications for council tax and insurance and the fact that this will almost certainly constitute a business user and so may be of interest to your lender and to the planning authorities.

LonLL
18-03-2010, 22:41 PM
Thanks, Preston. Sounds complicated indeed. I'm American and I don't understand why so many issues in this country have to be so messy and not clear cut.

I think I may go with modifying the AST as you suggest. Do you know if it's ok to remove the clause that normally says the tenant can't be evicted within the first 6 months, or must I leave it in, even if the letting period is set for under 6months?

Preston
18-03-2010, 23:35 PM
Even if you remove it, you cannot enforce the s21 (compulsory) route for possession until 6 months have passed, so the tenant leaving any earlier than this will be with their freely given consent.

The simplest approach - though far easier said that done - is to choose a tenant who really does only want the property for the 3 or 4 months you want to let it for.

In terms of the agreement, why not just go for an assured shorthold periodic tenancy right from the start with an option for the tenant to leave on, say, a month's notice?

LonLL
18-03-2010, 23:40 PM
Thanks, but I'm a little confused now. Is an assured shorthold periodic tenancy different from an AST? Isn't that the same agreement as the SAT which Jeffrey recommended earlier but which you suggested wasn't such a good idea because of the Grounds 1 notice?

Preston
19-03-2010, 00:03 AM
No, there are two main ways of setting up an assured shorthold tenancy. Firstly, you can grant a fixed period, (usually six months, but it can be as long or short as you like). Unless there is a break clause, the fixed period is binding on both landlord and tenant. At the end of the fixed period, assuming that the tenant remains in occupation the tenancy converts to a rolling statutory assured shorthold periodic tenancy i.e. it renews itself, usually each month (assuming the rent is paid monthly).

Alternatively, you can make the tenancy periodic - e.g. a monthly rolling tenancy - right from the start. This is of limited practical effect from the landlord's point of view during the initial six month period for the reason given earlier in relation to the use of the section 21 route for possession.

It makes it clearer to the tenant, though, that you are genuine about wanting a short letting and that you will not try to hold them to 6 months or longer. I currently deal with a large number of lettings where the tenant, for various reasons, often wishes to leave before six months are up, so the agreements make it clear that they can give one month's notice at any time from the start of the agreement.

Sorry if this is getting confusing. Its a fairly minor distinction I am drawing. The key to success from your point of view is, I guess, finding someone whose accommodation needs match your own short term ambitions.

LonLL
19-03-2010, 00:42 AM
Thanks, Preston. I'm interested...however, should I use a different contract from the AST or how do I make it periodic? Could you possibly send me a periodic AST contract so I can use it as a template? If the tenancy becomes 6 months (say for example cause I'm having problems selling), does it automatically just become a fixed term AST?

Yes, I'll definitely be looking for a short-letter...however, I just want to be prepared in case I have trouble with the short part!!!

jeffrey
19-03-2010, 10:30 AM
A contractual AST (i.e granted periodic from day1) cannot suddenly become a fixed-term AST. The format of an Agreement is identical.

LonLL
19-03-2010, 11:59 AM
Thanks, Jeffrey. What do you mean the format of the agreement is identical? I don't quite understand how to change the dates to rolling on the AST to make it periodic? Also, do I change the section about 2 months notice to 1 month's notice, or what should I do? Can one of you pls send me a template?

jeffrey
19-03-2010, 12:56 PM
No, I can't; sorry. It's up to you- if you're not legally advised- to draw your documentation accurately. I can do no more than help with pointers.

LonLL
19-03-2010, 14:23 PM
Sigh, thanks anyway, Jeffrey. I'm just looking for an example of the relevant wording which replaces the section about a fixed period in the contract to make it rolling. For example, when it says in the AST that tenancy runs from x date to y date, would I just make it a one month period and also change the notice period to 1 month which I should give at the start of the contract via a Section 21? Preston, perhaps you can help me?

Preston
19-03-2010, 23:08 PM
Sigh, thanks anyway, Jeffrey. I'm just looking for an example of the relevant wording which replaces the section about a fixed period in the contract to make it rolling. For example, when it says in the AST that tenancy runs from x date to y date, would I just make it a one month period and also change the notice period to 1 month which I should give at the start of the contract via a Section 21? Preston, perhaps you can help me?

Unfortunately I have no precedents I can share, but if you google for assured shorthold tenancies you will find both fixed term and periodic examples.

mind the gap
19-03-2010, 23:13 PM
I'm American and I don't understand why so many issues in this country have to be so messy and not clear cut.


Is it really so much simpler in the USA? How?

LonLL
21-03-2010, 15:00 PM
Hi mind the gap,

I was just speaking generally. I don't actually know much about the American property market as I've been in the UK for many years now and have done all my property dealings here. However, I just find in the UK that in general, on issues ranging from taxes to driving to property ownership, Brits can be very vague with things not spelled out clearly, as rules seem always subject to the interpretation of the authorities, with lots of grey areas, and therefore weighed towards the advantage of the authorities.

I think there's also generally more protection of the citizen/taxpayer/property owner in the US, with limits on what the government can or can't do. For example, I don't think there's any law in the US that says the government can seize a property if an owner lets it stand empty for x months, so long as taxes are paid on it and one has proof of ownership. How did that get through in this country so easily with such little fuss?

I hope you or anyone else reading doesn't get offended by this, but I just find Brits are often much too passive about wrongs and injustices, which allows the government to step all over and curb their rights.

Lawcruncher
21-03-2010, 16:15 PM
For example, I don't think there's any law in the US that says the government can seize a property if an owner lets it stand empty for x months, so long as taxes are paid on it and one has proof of ownership.

I may have missed it, but I do not think there is a law to that effect in the UK. I think you have been misinformed.



I hope you or anyone else reading doesn't get offended by this, but I just find Brits are often much too passive about wrongs and injustices, which allows the government to step all over and curb their rights.

Ignorance rarely offends. In the UK we do not think that mega corporations should ride roughshod over people's rights so that they can shovel more gold down the gaping maw of their insatiable greed.

Snorkerz
21-03-2010, 16:23 PM
With regard to creating a rolling contract - if you use a standard AST contract (WH Smith - less than a fiver) but make the fixed term one month, the tenant could leave at the end of that month, or roll onto a statutory periodic tenancy, whereby they have to give one months notice and you have to give 2 for a section 21 notice. You 'could' issue the section 21 notice at the commencement of the tenancy (after tenancy is signed and any deposit is protected) thus minimising the notice you have to give before commencing a possession claim (if required).

LonLL
21-03-2010, 18:23 PM
Lawcruncher

Who's talking about corporations? I'm talking about hardworking taxpayers, homeowners, and property owners like those found on this forum. Here are relevant links on the EDMO for your enlightenment:

http://news.bbc.co.uk/1/hi/programmes/moneybox/5112926.stm
http://www.gravesham.gov.uk/index.jsp?articleid=2087
http://www.gravesham.gov.uk/media/pdf/m/s/Fact_sheet_13_Empty_Dwelling_Management_Orders.pdf
http://www.communities.gov.uk/publications/housing/emptydwellingmanagement
http://www.thisislondon.co.uk/standard/article-23804734-tories-to-block-seizure-of-homes-while-offices-in-whitehall-are-empty.do

Hopefully the Tories will be serious about abolishing EDMOs if they get into power.

LonLL
21-03-2010, 18:28 PM
Snorkerz,

Thanks very much for your advice. Do you think then that I can just revoke the s21 after 1 month and just issue a new one again every month until either the property sells, or I hit six months and decide to issue a fixed term AST? That that make it rolling?

Snorkerz
21-03-2010, 20:05 PM
Snorkerz,

Thanks very much for your advice. Do you think then that I can just revoke the s21 after 1 month and just issue a new one again every month until either the property sells, or I hit six months and decide to issue a fixed term AST? That that make it rolling?

No need to. You issue the s21 notice yourself and then have to wait 2 months before you CAN start court proceedings - you don't HAVE to start court proceedings at that point, you can wait until it is convenient to you. The roll-on monthly contracts will be covered by the same s21 notice as they are created by law as a kind of 'extension' of the original AST. Wha this means in reality is that if your tenants don't move out when you want them to, you can start the s21 court process immediately without having to wait the 2 months.

Once the original '1 month' fixed term AST is up, there is no need for you to renew it or do anything with it - ever - until you want to end the tenancy.

jeffrey
21-03-2010, 20:14 PM
Is it really so much simpler in the USA? How?
There is no single USA-wide legal system. Just as the UK has three (E&W; S; NI), the USA has fifty.

LonLL
21-03-2010, 20:16 PM
Wow, Snorkerz, thanks so much for that advice. That makes sense. I'll think about this some more and try to get some legal feedback as well. If I'm not mistaken though, an AST under 6 months doesn't require landlords to do the normal deposit insurance?

jeffrey
21-03-2010, 20:16 PM
For example, I don't think there's any law in the US that says the government can seize a property if an owner lets it stand empty for x months, so long as taxes are paid on it and one has proof of ownership. How did that get through in this country so easily with such little fuss?


I may have missed it, but I do not think there is a law to that effect in the UK. I think you have been misinformed.

Oh but there is (in E&W at least, if not elsewhere in the UK). Read the Housing Act 2004 about the Empty Homes Order procedure!

Snorkerz
21-03-2010, 20:35 PM
Wow, Snorkerz, thanks so much for that advice. That makes sense. I'll think about this some more and try to get some legal feedback as well. If I'm not mistaken though, an AST under 6 months doesn't require landlords to do the normal deposit insurance?Any deposit will need protectiing, no matter how long the AST is for.

LonLL
21-03-2010, 23:25 PM
Thank you, Snorkerz.

I've just been reading through some of the other posts on short lets (sorry, didn't realise there was another thread), and someone proposed writing into the terms of the AST to double the rent say in the x+1 month if the initial agreement was for x months, as a deterrent against the tenant staying longer than the x months agreed. Is that legal so I can just amend the AST in this way?

Also, what would be the landlord's responsibilities on utilities and council taxes? Does Landlord have to cover these for lets under 6 months, or can the landlord expect the tenant to cover these bills?

Jeffrey, I notice you seem to be a big fan of the SAT...would you still recommend one, given Preston's objections of its riskiness and the timing of the g1 notice? The SAT agreements don't seem to be very common, or am I mistaken?

jeffrey
22-03-2010, 10:42 AM
SATs have advantages and disadvantages. Use one only if legally advised or you really know what you're doing.