5 Yr Residential tenancy agreement

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  • Lawcruncher
    replied
    Originally posted by KTC View Post
    Three years and you need a deed..
    Make that: "Over three years and you need a deed."

    I am wondering here if it is actually a group of health workers wanting a tenancy for five years. It would be a bit unusual. Is it in fact the health authority who are going to be the tenant? If so, the tenancy will not be an AST. It may be worth considering if you want rent security for five years, but not if you want the flexibility to sell before the five years are up.

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  • Hooper
    replied
    Originally posted by KTC View Post
    As above, rolling break clauses literally make no sense. ... Rolling ones you may as well have periodic tenancy.
    Works for me. Originally proposed as a solution to a T wanting to avoid unexpected rent surprises, so annual increases within the three year term are all automatic and pre-agreed and pegged to an index. This has been very valuable to me over the years and keeps my rents healthy with minimum fuss and upset - much better than I did before.

    T also cannot move out without notice at the end of the 6/12 month period, something which had cost me £££ a handful of times.

    T also needs to give two months notice rather than one, which has helped me to minimise voids.

    At the time when I introduced it, it also avoided having to re-serve deposit related info once it turned periodic, although that's not an issue anymore.

    It helps to communicate a long term view - which is genuine and which is appreciated by some during viewings - and allows me to be just a little more hands off during the tenancy.

    I did consider using an annual break clause instead - so that it was more like entering into a new 12 month tenancy each year - but felt it might put pressure on tenants to exercise the break rather than commit to a further year.

    I have not experienced a downside yet. But I tend to have cooperative professional tenants. I have only relied on the break clause once myself, when tenants were causing a nuisance to others in the building. I still occasionally use a standard 12 month - for instance when rents seem to be particularly depressed and I don't want this to carry through into future years.

    I can perfectly understand why others aren't interested in using it. But so far the objections are not particularly convincing.

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  • KTC
    replied
    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.

    Leave a comment:


  • KTC
    replied
    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.

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  • landlord-man
    replied
    12 month AST

    Establish rapport with Tenants, do some. LL training and then sack the agent and keep more ££ yourself

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  • Hooper
    replied
    My understanding is that L simply needs to serve s21 at same time as the notice to break. No?

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  • DPT57
    replied
    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.

    Leave a comment:


  • jpkeates
    replied
    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.

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  • Hooper
    replied
    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.

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  • Gurvinder
    replied

    Thank you Hooper.

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

    Leave a comment:


  • jpkeates
    replied
    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.

    Leave a comment:


  • Hooper
    replied
    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.

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  • Hudson01
    replied
    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.

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  • ash72
    replied
    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.

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  • Gurvinder
    replied
    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 ?

    Leave a comment:

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