5 Yr Residential tenancy agreement

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    5 Yr Residential tenancy agreement

    Hi All

    We have a property which is managed by a letting agent
    He has found new Tennent's that want to lease it for 5 yrs. There is a large hospital near the property and the tenants are NHS workers.

    My questions are as below.

    1) I read somewhere a long time ago that you have to have a deed if its a rental over the period of 3 years. Is this correct ? If so, what should I be aware of ? what does it involve ?

    2) Do I need to care about of the challenges of a deed if its being managed by an agent ? Paperwork will be though the agent and the Tennent.


    regards
    Gurvinder

    #2
    Yes, it's no longer an AST, I would suggest you give them a 12 month contract and explain you will renew each year (subject to rent being paid and property looked after).

    Comment


      #3
      Originally posted by ash72 View Post
      Yes, it's no longer an AST, I would suggest you give them a 12 month contract and explain you will renew each year (subject to rent being paid and property looked after).
      Thank you!

      what would be needed if my it was rented for 5 years ? I cant seem to find clear detail on this online. Would this be between the tenant and agent ?

      Comment


        #4
        Do you have a BTL mortgage, as there's no point providing a 5 year deed as most lenders terms wont allow it. Why do you want to offer them it for so long? Anything can happen in 5 years (as the current virus has shown, as well as making evictions harder), and the deed needs to signed and witnessed, so there is additional complexities as well as the deed drafted by a property lawyer.

        Comment


          #5
          Do not agree to anything more than 12 months, as said all manner of things can happen, all my tenancies are 12 months with a 6 month break clause and then they go into periodic, if the tenant wants something else then we simply part waves. My property.... my rules.

          Comment


            #6
            Originally posted by ash72 View Post
            Yes, it's no longer an AST, I would suggest you give them a 12 month contract and explain you will renew each year (subject to rent being paid and property looked after).
            Not sure this is correct? Initial terms of AST can be up to seven years, but if longer than three years it needs to be executed as a deed.

            Things to look out for are making sure that you have a reasonable rent review clause.

            I use a watered down three year term - i.e. three years with a break clause which can be relied upon by either party at any time after 6/12 months. Rent reviews are fixed at x% or CPI, whichever is the greater.
            Assume I know nothing.

            Comment


              #7
              Originally posted by Gurvinder View Post
              what would be needed if my it was rented for 5 years ? I cant seem to find clear detail on this online. Would this be between the tenant and agent ?
              The agreement would need to be a deed, because it's more than three years.

              As a landlord, however, you would be insane to contemplate a five year agreement and I would refuse to work with any agency that proposed such a deal.
              The agent is meant to be working on your behalf and they are manifestly not.
              That you are even contemplating it is concerning.

              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


                #8

                Thank you Hooper.

                Can you show me a written example of the break clause ?

                Comment


                  #9
                  Either the landlord or the tenant shall be entitled to terminate the tenancy by giving at least two
                  months notice in writing to that effect. Notice must not expire within the first 6/12 months of the Term and must expire on the last day of a rental period.
                  Assume I know nothing.

                  Comment


                    #10
                    Notice from a landlord doesn't end the tenancy, so a long tenancy agreement with a break clause is loaded in favour of the tenant.

                    The clause that Hooper has quoted would allow a tenant to end the agreement at any point after the first six months by giving two months notice ending at the end of a tenancy period.

                    If a landlord served the same notice, it would have no effect, other than, if the tenant didn't move out (which they would be entitled to do) a new periodic tenancy would start. They could use the section 21 notice process from that point.

                    So the security of the five year agreement is illusory, but biased in favour of the tenant.

                    There's a reason that a) no one does this and b) every landlord responding is saying don't do it.

                    In 2016, anyone entering this kind of agreement would have been lucky to predict the events, and their consequences, of the following five years.
                    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


                      #11
                      To all intents and purposes, there is no difference between a 3 year tenancy with a 6 month break clause and a 6 month tenancy! Many landlords on here have had tenants on periodic tenancies for years, myself included, (8 years for one tenant). If you're in this for the long term then tell them that and that regardless of the tenancy type, you plan to let the property for at least that long.

                      Comment


                        #12
                        My understanding is that L simply needs to serve s21 at same time as the notice to break. No?
                        Assume I know nothing.

                        Comment


                          #13
                          12 month AST

                          Establish rapport with Tenants, do some. LL training and then sack the agent and keep more ££ yourself
                          My views are my own - you may not agree with them. I tend say things as I see them and I don't do "political correctness". Just because we may not agree you can still buy me a pint lol

                          Comment


                            #14
                            Originally posted by Hooper View Post
                            Initial terms of AST can be up to seven years
                            Just as a point of order, there's no upper limit to how long an AST can be. A 999 years leasehold flat can be an AST if the ground rent is high enough. (And that is an actual problems some leasehold owner have faced due to the difference in rights and relief between AST possession and conventional forfeiture.)

                            Three years and you need a deed. Lease can be noted at the Land Registry.

                            Seven years and it's a "long lease". Lease must be registered at the Land Registry. Many things which applies to short residential leases but not long ones, and vice versa.
                            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.

                            I do not answer questions through private messages which should be posted publicly on the forum.

                            Comment


                              #15
                              As above, rolling break clauses literally make no sense. A break clause say exercisable to terminate at 2.5 years but if not exercised then sides are committed to another 2.5 years, possibly depending on circumstances. Rolling ones you may as well have periodic tenancy.

                              A large established hospital I can see potentially make reliable paying tenant. As long as it's really the hospital that's the tenant and not say an agency operating to house workers.

                              There's many potential drawback which you need to fully consider. If you're really thinking of going ahead, take some proper legal advice on pros and cons first.
                              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.

                              I do not answer questions through private messages which should be posted publicly on the forum.

                              Comment

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