AST and periodic tenancy

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    AST and periodic tenancy

    Hi all,

    This is my first post and my first BTL experience.

    I bought a new built flat from a developer in England last year. The Lease Agreement stipulated that I need the freeholder’s consent to let it. The request was granted without any mention of extra fees. I found a tenant via a high street letting agent and signed a twelve months fixed term AST.

    At the end of the term of tenancy, the tenant suggested that we should just carry on without renewing it. This would save us renewal fees charged by the agent (we are not pleased with the service) and give us the flexibility (we both prefer). To be sure, I did some research and was convinced that the terms in the original TA still apply if we let it lapse into a periodic tenancy. So we carry on without involving the agent.

    Recently, the developer sold his freehold to another company who informed me I owe him Tenancy Registration fee because I let out the flat. I then check with the lease agreement and found this clause : “Not to underlet the property unless the underlease is on an ASSURED SHORTHOLD TENANCY Agreement OR any other tenancy agreement whereby the tenant does not obtain SECURITY OF TENURE on expiry or earlier termination of the term”

    I have thus a few questions :

    (1) I already had the consent from the first freeholder. Can the new freeholder just impose a tenancy registration fee?

    (2) Would it ceased to be AST when the original fixed term tenancy agreement lapsed into a periodic tenancy. I am concerned that I might be in breach of my Lease Agreement (with the freeholder) if I let out the property as periodic tenancy?

    (3) Am I currently in the situation of a Statutory Periodic Tenancy by not having a written agreement? I just learnt that it is the landlord’s responsibility for council tax if the tenant leaves during their notice period. Am I exposed on unpaid council tax if any?

    (4) With regard to deposit held at DPS deposit scheme, the letting agent let me have a screen shot of the detail with the deposit ID masked out. Now that we are not using the letting agent to renew the tenancy contract, should I manage the DPS deposit myself or leave it with the letting agent?

    Thanks,
    sk

    #2
    1. I would say "no", but I am not an expert.
    2. it becomes a new AST. It appears to be no breach.
    3. The council can chase you for unpaid CT; you then need to chase T. Agreement should say you can do this.
    Note that the terms of the original agreement carry over to SPT (except for notice).
    4. You must take it on. Don't be hostage to agent.

    BUT make sure that you can just walk away from the agent.

    Comment


      #3
      Thanks MdeB for the quick reply.

      (1) I would raise it to the new freeholder with regard to tenancy registration fee. Just curious, is it a common practice for freeholder to squeeze more money out from BTL landlords?

      (2) So a periodic tenancy is still an AST... I forgot to ask about the clause on the lease agreement : "or other tenancy agreement whereby the tenant does not obtain SECURITY OF TENURE on expiry or earlier termination of the term" what exactly does it mean?

      (3) Am I only exposed to unpaid council tax during their notice period? To eliminate that exposure, do I need to go to the tenant and ask him to agree on a Contractual PT instead of Statutory PT?

      (4) When letting agent is not involved, is it the Landlord's responsibility to manage DPS? I read about the need to issue another Deposit Protection Certificate when my fixed term AST reverts to a SPT. How do I go about doing it?

      SK

      Comment


        #4
        2. The terms specifically allows for AST, which is the default type of tenancy on private letting in England. If you're letting out to a human tenant in England, it's almost certainly going to be on an AST (unless you explicitly grant more security under a non-shorthold assured tenancy). I understand the security of tenure to mean that a tenancy whereby a new tenancy don't automatically arise on expiry of an old one for example. That does happen in AST, but AST is specifically allowed so you're fine.

        3. Yes, but I'm not sure it's worth trying to get the tenant to agree to a CPT when they're already on a SPT.

        4. Ultimately, it's always the landlord's responsibility. You may well pay an agent to sort it out for you, but you're still the one responsible for compliance in the eye of the law. In the future, don't accept a screenshot with the Deposit ID redacted. You have every right to be sure they actually did what they were supposed to do. What on earth are they hiding with the redaction? Prescribed information is more than just the deposit protection certificate, or the deposit ID. If that's all that were given previously, then you probably weren't in compliance with the law and liable to a penalty. If you have previously given the correct required information, and if the deposit remained protected in accordance with the same scheme when the periodic tenancy started, you don't actually have to provide the information again. Obviously, if something changes, such as the deposit protection is transferred to your name, then you need to give the tenant the information again.
        I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

        Comment


          #5
          1 - No.

          2 - The periodic tenancy is an AST, so your tenancy satisfies the requirement (before the section after the or arises, so that part is not relevant).

          3 - You may end up paying a small amount of council tax (although you should argue with the council otherwise). It's part of being a landlord, don't stress about it.

          4 - If you are no longer involved with the agent you should make sure the deposit is transferred to you. It is unlikely that your agreement with the agent allows you to end the service just by doing nothing. Agents often charge a fee when a tenancy goes periodic, which you and the tenant have probably already agreed to.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            Any company that bought out the freehold would expect to squeeze as much money has it could out of the leaseholders in terms of administration charges. Some appear to try it on, presumably in the hope that most leaseholders have never read their lease and will just pay up.

            Comment


              #7
              Ask the freeholder by what authority they are demanding the money. Also, as JPK says, don't stress about the council tax. Its very unusual for this to happen and you would be losing more rent than council tax in that circumstance so just stick with the SPT. An as suggested, re-read the contract terms with the Agent to make sure you can walk away as easily as you think

              Comment


                #8
                Thanks for all the helpful feedbacks.

                1. I will provide detail of the tenancy but not rush to pay up the admin charge to the new freeholder until I am satisfied with their explanation.

                2. Thanks to everyone, I am relieved that my decision to go periodic (still a AST) was not in breach with the Lease Agreement.

                3. My tenant is good and very reasonable. So I will not approach him to sign any contract. As DPT57 suggested, I will stick with SPT. Just texted the tenant this morning and he confirmed he has paid Council Tax billed under his name. I can only take his word for it.

                4. I can never imagine the business with a letting agent can be so sticky. Its my first time to deal with a one. It seems that the only way to cut them off is to end the tenancy with the current tenant and offer it out with an online agent? Is online agent better in that respect? Or perhaps if both my tenant and I can give evidence that they lie to us, they will leave us alone.

                When I showed the agent the flat (ground floor with a garden) when I got the key from the developer last year, they commented that I might consider putting in a shed. I said yes, thats possible if the right tenant comes along it can be negotiated. But they promised the tenant I will put in a shed. When they showed the flat to my tenant, he told them he will not do the lawn. The agent reported back to me and I said that can be negotiated too. However in the TA, it states that it is the tenants responsibility. So I thought the tenant has agreed to take it on himself! In the end, he is without the shed and I offer to do the lawn for free. Thats why we are very unhappy with the agent. There is also this DPS business which for some reason, the agent is not disclosing it fully to us.

                sk

                Comment


                  #9
                  Perhaps the agent has failed to properly comply with the terms of the deposit protection. I would push them on this if I were you. If you intend to let the property yourself in future, and I would agree that this is a sensible choice, then I suggest you join one of the landlord associations and do some foundation training with them,

                  Comment


                    #10
                    Re New Freeholder's admin charges

                    I just spent some time re reading the section under Assignment and Undertetting in the Lease, there is this clause which I suspect gives the new freeholder the right to impose admin charge?

                    "Within one month of any assignment, underletting for more than one year, charge, parting with possession of or any other devolution of title to this lease or the Property to serve notice on the Landlord or (if required by the Landlord) the Landlord's solicitors giving details and to :
                    (a) provide a certified copy of the transfer or other instrument of devolution of title, and
                    (b) pay the reasonable registration fees of the landlord or its solicitors, which shall be no less than Ninety Pounds (£90) plus VAT in respect of each document produced."

                    By letting out my flat, does it involve "underletting for more than one year, charge, parting with possession of or any other devolution of title to this lease or the Property to serve notice on the Landlord"

                    sk

                    Comment


                      #11
                      I would recommend a 6 month tenancy term with any new tenant. You can then let it go periodic, which gives you more flexibility. Whether you are obliged to pay a fee to the landlord may depend on how they interpret that clause. They might say that the payment is due once the tenant has been in possession for 12 months.

                      Comment


                        #12
                        Originally posted by DPT57 View Post
                        They might say that the payment is due once the tenant has been in possession for 12 months.
                        They might, but in the case of council tax liability I believe it has been determined that it is the length contracted not the length that ultimately occurs that is relevant, so the same could be argued here.

                        Comment


                          #13
                          Yes indeed, that would be a good argument for the OP to make, although I doubt a determined freeholder would feel bound by the Council Tax legislation.

                          Comment

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