Rent Review and Late Rent Interest Rate Clauses in AST Agreement.

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    Rent Review and Late Rent Interest Rate Clauses in AST Agreement.

    Drafting an AST for new tenants. 1yr fixed then (monthly rolling) statutory afterwards.

    I'm wondering whether to include a yearly upward rent increase clause. CPI, RPI, fixed or whichever is higher of 2 options?
    The rent is competitive, if the tenants are good tenants I'll keep it low. If they're troublesome or the economy improves I'll consider using the rent review to increase. Is this legal? Do you do this?

    Secondly, do you make provision in your AST agmts for interest on rent late for more than 14days? B of E base rate ok to use? Can private/individual LLs include the provision for interest on late rent or is that for companies/EAs only?

    #2
    Have you done any LL training?

    Comment


      #3
      First of all, 12 months is too long for new tenants.

      You can add a mechanism for an increase into the tenancy agreement, but if you plan for the tenancy to continue on a periodic basis, there's not a lot of benefit - it only limits you. If you plan to offer new tenancy agreements rather than operate periodically, you can use those to agree a new rental.

      I don't know anyone who charges interest on overdue rent. A term agreeing interest on overdue rent seems, to me at least, to permit rent to be paid laid with a small additional payment.
      If the tenant owes rent and you sue for it, you can always add interest then.
      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


        #4
        Put nothing in tenancy about rent increases. Then you can decide what you want to do for increase - nothing, negative, whatever.

        If a tenant is troublesome then s21 is usually wiser than small rent increase (big increase will be referred to tribunal) and arguements, damages, arrears.
        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

        Comment


          #5
          Thanks everyone.
          I've thought it through. I won't put a rent review clause.
          I see your point re 12 months initial term but I'm ok with it. I considered a break clause at 6 months but leaning towards 12months.

          My next point now is giving access to the garage for their fishing rods. Thanks.

          Comment


            #6
            I give a three year tenancy with annual review clauses - higher of fixed percentage or CPI. I never liked the process of advising of a rent increase out of the blue and this has worked well so far - there are no nasty surprises and keeps my rents healthy. There is also a break clause allowing either party to give 2 months notice after 12 months.
            Assume I know nothing.

            Comment


              #7
              Break clauses are notorious for being difficult to get right.

              So so so much easier, safer and more flexible and easier eviction to simply have 6 AST then periodic.

              Late rent clause? Forget it, apart from avoiding argument about unfair fees simply serve S8 for arrears every time rent is late or underpaid. Yes, s8g10 may be validly served if only 1p us underpaid for only 1 day.

              But hey, free country, your choice!
              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

              Comment


                #8
                Originally posted by Delectable1 View Post
                Drafting an AST for new tenants.
                Do you mean writing all the clauses yourself? This is a task only for the most experienced housing lawyers imo. Is that you?

                Comment


                  #9
                  Originally posted by Hooper View Post
                  I give a three year tenancy ...There is also a break clause allowing either party to give 2 months notice after 12 months.
                  What do you see as the advantage of having a break clause, compared to simply becoming periodic?
                  (I can see none).

                  Comment


                    #10
                    Originally posted by MdeB View Post

                    What do you see as the advantage of having a break clause, compared to simply becoming periodic?
                    (I can see none).
                    Good question.

                    For me, two months notice and pre-agreed automatic rent reviews without the need for negotiation or formal notice. Also, I had a couple of tenancies when tenants moved out at the end of the term without notice. They are of course entitled to do so but the lack of notice led to much longer than usual voids (I normally manage a couple of days if the property is not in need of any significant maintenance). If they do leave without notice after three years I'm far less bothered.

                    Feedback from tenants is that they like the fact that I will not be pressuring for a renewal after 6-12 months (I self-manage and never charged for renewals anyway; it is probably less important now that there are no fees associated with this), that they are not going to be landed with larger or more frequent than expected increases and having a three year term is an indication, if nothing more, that I am long-termist.
                    Assume I know nothing.

                    Comment


                      #11
                      Originally posted by Hooper View Post

                      Good question.

                      having a three year term is an indication, if nothing more, that I am long-termist.
                      So no advantages, but the possibility of getting into an unintended situation by a badly-drafter break clause.

                      A three-year term with break option after 12 months is no more secure for a T than a one-year term and periodic.

                      Comment


                        #12
                        I listed a number of concrete advantages but I'm sure none was that the tenancy length is any more (or less) secure for the tenant.

                        I am certain there are lots of dreadful examples of break clauses out there. Careful and professional drafting is always important but the idea that break clauses should be avoided because they are particularly tricky to get right strikes me as a bit of an amateur myth.

                        It has worked very nicely for me for some ten years but I'm not proposing that it would work for you or indeed anyone else - I've nothing to sell.

                        Assume I know nothing.

                        Comment

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