Lets under 6 months

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  • Lets under 6 months

    Hi there,

    Could someone please give me advice on what contract (preferably that I can purchase at WH Smith or order online) I should offer for a tenancy under 6 months? I am currently trying to sell my property, but the current tenants have given me notice so won't be staying for more than 2 months. I think I may need to rent it out for 3-4 more months after the current tenants leave if I don't receive an offer in the next few weeks, as I'm still paying mortgage on the property and can't let it sit empty.

    Can I modify an AST to under 6 months, or should I offer a Holiday Let agreement? What are the pros and cons? Isn't there anything useful to Landlords for lets under 6 months? Pls note that I cannot live at the property myself and just allow a lodger.

    Thanks

  • #2
    Choose between:
    a. an AST, but know that you cannot get s.21 possession earlier than the six-month point; or
    b. an SAT, esp. if you were at any time the owner-occupier of the property (AND serve a ground 1 Notice on T, before the SAT begins).
    JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
    1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
    2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
    3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
    4. *- Contact info: click on my name (blue-highlight link).

    Comment


    • #3
      Thank you, Jeffrey! Yes, I did use to live in the property before I let it out. How is SAT different from AST in terms of rights of landlord/tenant? Is Ground 1 notice similar to Section 21, and why must it be given prior to the start of tenancy?

      Comment


      • #4
        If g1 applies, L can seek possession at term expiry, even if < six months from term commencement: like s.21 for AST but less problematic.
        JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
        1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
        2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
        3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
        4. *- Contact info: click on my name (blue-highlight link).

        Comment


        • #5
          Accurate advice, but in my view a risky strategy for the sake of 3 or 4 months income, for two reasons.

          Firstly, if the tenant refuses to move out when you want them to, obtaining a possession order on the "returning owner occupier" ground can take some time, depending at least partly on how busy your local county court is.

          Secondly, the consequences of making a mistake with this strategy are substantial, namely, you could end up with a fully assured tenant on your hands for a very, very long time. To use this ground you must usually serve a notice on the tenant before the tenancy commences and, just as importantly, be able to prove at the right time that you have done so.

          Good luck!

          Comment


          • #6
            Wow, thanks for that warning. I can't believe that there isn't some kind of short-term rental contract for less than 6 months that can protect landlords!

            Do you think then that I should just modify an AST to last 3-4 months, since I can always forcibly evict them at 6 months if necessary?

            Comment


            • #7
              Originally posted by LonLL View Post
              Wow, thanks for that warning. I can't believe that there isn't some kind of short-term rental contract for less than 6 months that can protect landlords!

              Do you think then that I should just modify an AST to last 3-4 months, since I can always forcibly evict them at 6 months if necessary?
              It really depends how important timings are to you. If it would be a disaster for you if a tenant refused to move out when you want them to, I would leave the property empty I am afraid. If you could cope with a delay, however, I would do as you suggest and use an AST.

              Comment


              • #8
                Well, if I had an offer that was due to exchange and the tenant wouldn't leave, yes, it could become a disaster. On the other hand, it's nearly £1000/month in mortgage and service charges to keep the property, which is a lot of money for me if it sits vacant.

                How about holiday let agreements? Can those last 3-4 months, and is there good protection for landlords in them?

                Comment


                • #9
                  The trouble with a holiday letting is that it has to be for a holiday!

                  Unfortunately, there is no statutory definition of a holiday. If the agreement says its a holiday letting, it is up to the occupant to prove otherwise if they feel it is a sham but equally, where there is evidence that the letting is clearly not for a holiday then an agreement stating otherwise will be disregarded by the courts.

                  Unfortunately I have no direct experience of managing this type of letting but I can say that you would need to consider a few additional issues such as the implications for council tax and insurance and the fact that this will almost certainly constitute a business user and so may be of interest to your lender and to the planning authorities.

                  Comment


                  • #10
                    Thanks, Preston. Sounds complicated indeed. I'm American and I don't understand why so many issues in this country have to be so messy and not clear cut.

                    I think I may go with modifying the AST as you suggest. Do you know if it's ok to remove the clause that normally says the tenant can't be evicted within the first 6 months, or must I leave it in, even if the letting period is set for under 6months?

                    Comment


                    • #11
                      Even if you remove it, you cannot enforce the s21 (compulsory) route for possession until 6 months have passed, so the tenant leaving any earlier than this will be with their freely given consent.

                      The simplest approach - though far easier said that done - is to choose a tenant who really does only want the property for the 3 or 4 months you want to let it for.

                      In terms of the agreement, why not just go for an assured shorthold periodic tenancy right from the start with an option for the tenant to leave on, say, a month's notice?

                      Comment


                      • #12
                        Thanks, but I'm a little confused now. Is an assured shorthold periodic tenancy different from an AST? Isn't that the same agreement as the SAT which Jeffrey recommended earlier but which you suggested wasn't such a good idea because of the Grounds 1 notice?

                        Comment


                        • #13
                          No, there are two main ways of setting up an assured shorthold tenancy. Firstly, you can grant a fixed period, (usually six months, but it can be as long or short as you like). Unless there is a break clause, the fixed period is binding on both landlord and tenant. At the end of the fixed period, assuming that the tenant remains in occupation the tenancy converts to a rolling statutory assured shorthold periodic tenancy i.e. it renews itself, usually each month (assuming the rent is paid monthly).

                          Alternatively, you can make the tenancy periodic - e.g. a monthly rolling tenancy - right from the start. This is of limited practical effect from the landlord's point of view during the initial six month period for the reason given earlier in relation to the use of the section 21 route for possession.

                          It makes it clearer to the tenant, though, that you are genuine about wanting a short letting and that you will not try to hold them to 6 months or longer. I currently deal with a large number of lettings where the tenant, for various reasons, often wishes to leave before six months are up, so the agreements make it clear that they can give one month's notice at any time from the start of the agreement.

                          Sorry if this is getting confusing. Its a fairly minor distinction I am drawing. The key to success from your point of view is, I guess, finding someone whose accommodation needs match your own short term ambitions.

                          Comment


                          • #14
                            Thanks, Preston. I'm interested...however, should I use a different contract from the AST or how do I make it periodic? Could you possibly send me a periodic AST contract so I can use it as a template? If the tenancy becomes 6 months (say for example cause I'm having problems selling), does it automatically just become a fixed term AST?

                            Yes, I'll definitely be looking for a short-letter...however, I just want to be prepared in case I have trouble with the short part!!!

                            Comment


                            • #15
                              A contractual AST (i.e granted periodic from day1) cannot suddenly become a fixed-term AST. The format of an Agreement is identical.
                              JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                              1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                              2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                              3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                              4. *- Contact info: click on my name (blue-highlight link).

                              Comment

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