6 month *replacement* AST: can S21 be served and actioned after a couple of months?

[EthicalMan]

Hi

I have bought a tenanted house in England. The tenants (2 parents and 2 grown up children) moved in 3rd September 2010 and have had an annual AST since then. The deposit was protected with ‘mydeposits’ and has been transferred into my name. I wish to raise the rent, which is paid monthly, and sign a contract with them when the current contract expires on 2nd September. (The current rent is has hardly been raised for five years, and my proposed new rent is slightly below market rent, though the tenants doubt it). They say that they will sign.

The fly in the ointment is a smallish chance I may need to sell the property in less than six months – I may have a good opportunity coming up for which I need cash. My understanding is that with an AST I cannot sell in less than 6 months, is that correct? Therefore I would prefer to give them a periodic contract. Will I be legally covered if I do – given that they have not previously had an AST *with me*?

Thanks very much for your help

[Ericthelobster]

My understanding is that with an AST I cannot sell in less than 6 months, is that correct?

No, provided you sell with the tenants in situ, you can sell whenever you want. If you want to sell with vacant possession it's more awkward as you aren't able to commence possession proceedings until 6 months after the start of an AST (and unless the tenants chose to leave voluntarily at that point, it would be considerably longer than 6 months until they were finally evicted.)

Therefore I would prefer to give them a periodic contract. Will I be legally covered if I do – given that they have not previously had an AST *with me*?

You wouldn't need to 'give' them anything; you just do nothing come 2 September and the existing agreement just becomes periodic. You can raise the rent using a Section 13 notice (see http://www.landlordzone.co.uk/documents)

[EthicalMan]

Thanks for your message.

I would prefer to sign a new contract with them as then there is an explicit, indisputable contract between me and them. I might also wish to vary one or two of the provisions that were in the contract they signed with the previous owner. And if I did want to sell then in this area I might get more selling to an owner occupier.

Would I be legally covered if I sign a periodic contract with them, given that it was the previous owner, not I, who signed the annual fixed term AST with them?

[theartfullodger]

They do not have to agree to anything changing the paperwork or agreement.

[EthicalMan]

I think they are happy to sign - they want to stay in the property and they would have to pay a higher rent if they moved elsewhere nearby that is similarly good. I just wonder whether anyone knows whether it is okay for me to sign a periodic contract with them if previously they signed fixed term AST with the previous owner/landlord

[theartfullodger]

Yes.

An AST can be periodic from the start or fixed term of anything from 1day to 3 years without fuss.

[thesaint]

No, provided you sell with the tenants in situ, you can sell whenever you want. If you want to sell with vacant possession it's more awkward as you aren't able to commence possession proceedings until 6 months after the start of an AST (and unless the tenants chose to leave voluntarily at that point, it would be considerably longer than 6 months until they were finally evicted.)

The landlord could issue a periodic tenancy(say 1 month)and have the Sec 21 expire after the first period.

[EthicalMan]

theartfullodger,

Interesting thanks. So do I understand this correctly?: Even if I had new tenants I could issue a periodic contract from the start? Presumably though in that case I still could not evict them within 6 months. Whereas my understanding is that once they have had been in residence for 6 months or more on a fixed term then when the subsequent periodic contract is signed then an S21 could be issued giving two months notice?

[EthicalMan]

thesaint,

Thank you. So if they pay monthly then I could issue an S21 with only one month's notice? I thought 2 months notice was always a minimum for S21s, am I wrong about that? Is it the case that their notice period is the same as mine - or would they have to give only one month's notice even if I have to give two months?

Would I be able to issue a periodic contract, and then subsequently (say one or three months later) give a month or two notice, if *I* have never had a contract of 6 months or more with them - given it was the previous owner of the property who did.

[theartfullodger]

- as the landlord will be different from the landlord of the preceding tenancy then (HA 1988 s21(7)(b) ) the new tenancy will not be a "replacement" tenancy so the 6 month clock starts again I think...

[EthicalMan]

theartfullodger,

Great reference, thanks! It says

For the purposes of this section, a replacement tenancy is a tenancy—
(a)which comes into being on the coming to an end of an assured shorthold tenancy, and
(b)under which, on its coming into being—

(i)the landlord and tenant are the same as under the earlier tenancy at its coming to an end, and
(ii)the premises let are the same or substantially the same as those let under the earlier tenancy as at that time.


The question therefore is, am I now the landlord? The current (1 year AST) contract which ends on 2nd Sept is not in my name but I am the property owner and have 'stepped into the shoes' of the previous landlord. If I *am* currently the landlord then I will be the landlord when this tenancy comes to an end so by (i) the new tenancy will be a replacement tenancy....

[mariner]

Don't expect legislation wording to be inontravertible, otherwise there would be no defense lawyers.
On completion of sale you 'inherit ' extant' AST/SPT provisions. Until you you serve s48 you cannot vary these provisions, nor expect rent.
You cannot 'require' T to sign any subs TA which alters the extant provisions,

[jpkeates]

Don't sign a new agreement, let the current one roll into a periodic agreement.
Serve the required (s48) notice(s) and then issue a s13 notice to increase the rent.

Any new AST makes your six month sale slightly more complex (whatever the status as a replacement or not).
If the sale issue goes away, feel free to agree a new contract to give everyone more certainty if you wish.

[thesaint]

EthicalMan,

Sorry, yes you would have to give at least two months notice, but it doesn't have to be 6 months afterwards. 6 months is only the time from the 1st tenancy given.
You are making things incredibly difficult for yourself by going down this road.

[EthicalMan]

Thanks for all the comments.

jpkeates,

I thought that if I did need to issue an S21 within the six months then if I only rolled over the contract then it would not be so black and white that they had a contract with me, that I was the landlord, and therefore entitled to issue the S21. If I am the landlord in the eyes of the law even without issueing a new contract, if the current contract just rolls over, then presumably I am, as their current landlord, entitled to issue a new periodic contract. So I cannot see how it could do me any harm issuing a new periodic contract.

I take the points that the tenants don't have to sign anything. but they will as I am offering them a below market price rent and they can tell I will treat them decently.

Cheers

Dan