Long lease expiring, tenant owes £2,000, what to do with subtenants

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  • Long lease expiring, tenant owes £2,000, what to do with subtenants

    Hi

    I rented out an HMO on 14 September 2015 on a 3 yr lease to company which specialises in corporate rents. The lease ends on Thursday- 13 September 2018.

    In September 2017 the company fell into rent arrears and now owes £2000. Promises to pay haven't been honoured and on Friday I submitted a money claim online. The company director told me he would contact my letting agent to 'handover' his tenants and their ASTs but he hasn't done this and won't reply to my emails+phonecalls.

    Can I approach the subtenants myself to sign them up with new ASTs? Can I inform them that they have been paying rent to my tenant whose lease ends on 13th September? If they refuse to sign ASTs, do i treat them as squatters or issue Section 8 or 21?

    I don't want him to accuse me of harassing his tenants so any advice would be most welcome.

    Thanks
    James

  • jpkeates
    replied
    Shame that it doesn't mention the occupiers or "vacant possession".

    Leave a comment:


  • jimexton
    replied
    Originally posted by theartfullodger View Post

    What does the agreement say about what happens at end of 3 years? Unlikely to say it just ends. Please let us know.

    Who supplied agreement - company?
    The lease was supplied by the company but checked by my lawyer. It says: 21. RETURNING THE PROPERTY TO THE PROPERTY OWNER

    21.1 At the end of the Term to return the Property to the Property Owner in good and substantial repair, condition and decoration and in accordance with the Renter covenants of this lease.
    21.2 At the end of the Term the Renter shall remove items it has fixed to the Property, remove any alterations it has made to the Property and make good any damage caused to the Property by that removal.
    21.3 At the end of the term, the Renter shall remove from the Property all chattels belonging to or used by it.
    21.4 The Renter irrevocably appoints the Property Owner to be the Renter´s agent to store or dispose of any chattels or items it has fixed to the Property and which have been left by the Renter on the Property for more than ten working days after the end of the term. The Property Owner shall not be liable to the Renter by reason of that storage or disposal. The Renter shall indemnify the Property Owner in respect of any claim made by a third party in relation to that storage or disposal.
    21.5 If the Renter does not comply with its obligations in this clause, then, without prejudice to any other right or remedy of the Property Owner, the Renter shall pay the Property Owner an amount equal to the Annual Rent at the rate reserved immediately before the end of the term for the period that it would reasonably take to put the Property into the condition it would have been in had the Renter performed its obligations under this clause. The amount shall be a debt due on demand from the Renter to the Property Owner.

    Leave a comment:


  • jpkeates
    replied
    Originally posted by jimexton View Post
    The lease was for a set period of time (3 years)- ending 13 september2018. Surely this means the tenancy ends on that date?
    It depends what the tenancy agreement says - it's a commercial agreement, not an AST, and there aren't many implied terms.
    I inspected the property last month and the people in there were keeping it clean and tidy. That's why I'd like them to sign AST with me
    You'd be acquiring the HMO management (from the sound of it) and they may not want to sign an AST with you.

    Leave a comment:


  • jpkeates
    replied
    It's possible to make money renting to tenants - here we are, it must be possible.

    So why don't companies who want to rent to tenants buy properties to do that - it's the most profitable way to do it.
    Answer, because they're either not allowed to buy (councils or charities) or can't afford it (dodgy/new companies/people with a great idea but no credit or capital).
    Or they're crooks who are going to rent a family residence and convert it into an HMO / hostel.

    So, unless they're a council or charity, they're not worth consideration at all.
    And then it's simply about how much the guaranteed rent is worth (usually with zero maintenance and low risk of default) vs the (probable) need to completely refurb at the end.
    And the moans from the neighbours.

    Leave a comment:


  • theartfullodger
    replied
    Originally posted by jimexton View Post

    The lease was for a set period of time (3 years)- ending 13 september2018. Surely this means the tenancy ends on that date?

    I inspected the property last month and the people in there were keeping it clean and tidy. That's why I'd like them to sign AST with me.
    What does the agreement say about what happens at end of 3 years? Unlikely to say it just ends. Please let us know.

    Who supplied agreement - company?

    Leave a comment:


  • jimexton
    replied
    Originally posted by jpkeates View Post
    That section only comes into play when the current tenancy ends.
    And it hasn't, yet and no one seems to be ending it.

    The landlord can end the tenancy by serving notice (probably, depends on the tenancy agreement), but that's not a great option in this case.
    Better to go to court for repossession based on a breach of the lease terms (rent).

    The tenant can possibly end the tenancy by serving notice but again the tenancy agreement may have additional terms, like vacant possession. The tenant can't just handover the tenants and tenancy agreements, they would have to end the tenancy (triggering s18) or novate the agreements (somehow).





    The lease was for a set period of time (3 years)- ending 13 september2018. Surely this means the tenancy ends on that date?

    I inspected the property last month and the people in there were keeping it clean and tidy. That's why I'd like them to sign AST with me.

    Leave a comment:


  • leaseholder64
    replied
    Every time I read the subject, I'm momentarily confused. "Long Lease" in UK property law, generally applies to leases that were, originally, for at least 21 years. Three years is actually carefully chosen to be just below a threshold where a requirement for written agreements kicks in.

    A better description would be "Rent to Rent arrangement".

    The general view here is that private sector rent to rent arrangement generally hide some dodgy reason and social sector ones mean that an undesirable tenant will be installed.

    Leave a comment:


  • jimexton
    replied
    thanks everyone

    Leave a comment:


  • jpkeates
    replied
    Originally posted by theartfullodger View Post
    Umm... I beg to differ & think s18 of HA 1988 does also. The whole point of that section is to cover these circumstances. Once the agreement between owner & company has ended the AST tenants of the company become the AST tenants of the owner, regardless of tenants or owner's wishes... AFAIK...

    Any other views?
    That section only comes into play when the current tenancy ends.
    And it hasn't, yet and no one seems to be ending it.

    The landlord can end the tenancy by serving notice (probably, depends on the tenancy agreement), but that's not a great option in this case.
    Better to go to court for repossession based on a breach of the lease terms (rent).

    The tenant can possibly end the tenancy by serving notice but again the tenancy agreement may have additional terms, like vacant possession. The tenant can't just handover the tenants and tenancy agreements, they would have to end the tenancy (triggering s18) or novate the agreements (somehow).






    Leave a comment:


  • theartfullodger
    replied
    Originally posted by jpkeates View Post
    The tenancy agreement with the company needs to be brought to an end.
    The agreement will detail what needs to be done.
    Until that agreement ends, the tenants aren't anything to do with you and should be left alone.....
    Agreed!
    .....

    You can't offer them new tenancy agreements for a property that isn't yours to let.

    The company can't "handover" the tenants either.
    The agreements would have to be assigned, and that isn't a simple process (although it would highlight any deposit issues) and it might be in the tenant's interests not to co-operate.

    I'd cancel the Money Claim, as you have no idea how much the tenant company will end up owing and get some legal advice.

    The tenants can't be squatters and your best route might be to go to court to repossess and allow the bailiffs to remove everyone and start again.
    Umm... I beg to differ & think s18 of HA 1988 does also. The whole point of that section is to cover these circumstances. Once the agreement between owner & company has ended the AST tenants of the company become the AST tenants of the owner, regardless of tenants or owner's wishes... AFAIK...

    Any other views?

    Leave a comment:


  • jpkeates
    replied
    The tenancy agreement with the company needs to be brought to an end.
    The agreement will detail what needs to be done.
    Until that agreement ends, the tenants aren't anything to do with you and should be left alone.

    You can't offer them new tenancy agreements for a property that isn't yours to let.

    The company can't "handover" the tenants either.
    The agreements would have to be assigned, and that isn't a simple process (although it would highlight any deposit issues) and it might be in the tenant's interests not to co-operate.

    I'd cancel the Money Claim, as you have no idea how much the tenant company will end up owing and get some legal advice.

    The tenants can't be squatters and your best route might be to go to court to repossess and allow the bailiffs to remove everyone and start again.

    Leave a comment:


  • theartfullodger
    replied
    Tricky. See what others say. Might be safest for you, on taking over, to return the deposit that you don't have to avoid problems.

    Leave a comment:


  • jimexton
    replied
    Thanks- that's a weight off my mind!. What about their deposits they paid to my tenant? I assume they'll have to contact the TDS and explain the situation?

    Leave a comment:


  • theartfullodger
    replied
    Under s18 of housing act 1988 the occupants become your AST tenants. They do not have to agree to any changes or any new AST.

    Counterintuitive, offer a new AST for less rent , 6 months, they'll probably sign & make sure you get all fresh paperwork. I doubt you'll get paperwork from the bunch of clowns you sadly contracted with.

    Leave a comment:

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