Tenant wants to renew for up to 18m - should I?

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    #16
    Trying to avoid discounts - it all adds up and the recent assault on the private sector landlord service by the Gov isn't helping.

    Not sure its such a Landlord market out there - I sense wages and incomes have not risen and thus the rentals would stagnant.

    Hard to find good tenants and not good to let go of them - once they have proven to be low maintenance. Just have to find a method to establish the tenants bottom line through negotiation. Was curious if the LL's on this forum had worked out that art.

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      #17
      If there is a squeeze on, don't just roll over and let yourself be squeezed (however nice that may be)... squeeze others, you're not a social worker.

      Rent payment up-front does != a discount. Basic premise that your Tenant may need to get their head around. However, if you've already done this before...

      Good Tenants are in the overwhelming majority, right?

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        #18
        Receiving rent up front offers almost zero to the landlord (there's not much cash flow advantage at the moment with interest rates being so low).
        It messes up tax if you pay on a cash basis.
        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).

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          #19
          As others have said, for your own uncertain situation, letting the tenancy go periodic is almost certainly the best bet.

          If you really want to go for another fixed term (or even if not), are you really considering increasing the rent after the tenants have only been in place 6 months? Strikes me as a really good way to get up their noses, and to portray yourself to them as another money-grabbing self-serving landlord. Not a good idea if you want to hang on to these particular tenants and develop a decent working relationship with them.

          For what it's worth, I've just had some tenants ask me for a new 12-month contract, after their initial 6-month fixed term. I normally give tenants the option of a renewal or going periodic, all this being equal. These are great tenants so far, who I want to retain, and I have no plans to sell or move in to the property etc. My response was to offer them a new 6-month contract, explaining that I review the rents every 12 months, and that I'd be happy to consider a 12-month renewal at that point. They were happy with that.

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            #20
            £20k+ sent to the Letting Agency

            Thanks for your past message.

            Got a strange situation now.

            Tenant has coughed up 18m rent for the renewal (£20k+) - but has sent it all to the Letting Agency's client account.There is no AST renewal contract at the moment - but the letting agency should send him and me one and we can sign and scan back over the next days.

            I am a bit worried about this Letting Agency - some of their staff have left and I am concerned they will take their sweet time handing the money over to me the Landlord. I did indicate this to the tenant, he was in a rush due to a holiday and transferred the funds to the letting agency in anycase.

            Hopefully this works out.. but curious where do we stand legally if the agencies does not hand over money, folds (its a ltd company) or something else happens so I do not receive funds?

            Is the tenant in the clear as he has handed money to this agency?

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              #21
              The client account should be completely separate from the business's trading account.
              "Should be" is the operative word here.

              I'd get in touch and ask them to transfer it as a special case (you might find they have a daily limit per account).

              So, despite pretty much unanimous advice not to do an 18 extension, you did.
              Care to tell us why, just for the education value?
              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).

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                #22
                I expect he decided that

                DO NOT LET FOR MORE THAN SIX MONTHS

                is not a mantra which wards off the evil eye.

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                  #23
                  Originally posted by jpkeates View Post
                  So, despite pretty much unanimous advice not to do an 18 extension, you did.
                  Care to tell us why, just for the education value?
                  Because the tenants wanted it for their security and they are marvellous (hardly there). I figured a 3% stamp duty increase in a new property I would purchase is less than the 18m rental upfront. Plus he was willing to pay it "all" upfront and there is value in having this cash now. Its in a midlands area - and the signs are that its more investable than London and hence a keeper over the next years. Also I know the the property back to front and how to fix it. Also convenient when I am visiting friends and family. Does that make sense?

                  It could go pear shape - he could sublet it now to 15 immigrants behind my back - but I would not know that.

                  Why the mantra - surely good long term tenants are good thing and gold dust.

                  Comment


                    #24
                    It makes sense, but I'd still not have done it.

                    Hope it all goes well for you.
                    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


                      #25
                      Originally posted by jpkeates View Post
                      It makes sense, but I'd still not have done it.
                      Why? - the reasoning about doing month-to-month is what? In this situation the tenant is more available to move in December - if I did 6m's they could have been off this December.

                      My point is that is surely an individual decision based on circumstances of the Landlord - thus I am questioning why there should be a "mantra" that fits all?

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                        #26
                        If you read your first post, you were unsure if you were selling.
                        Hence advice was to not sign an unusually long contract.
                        Allow tenants to protect their own deposits. I want free money when they do it wrong

                        Comment


                          #27
                          The tenant has a wish for security, I don't have the same wish or need.
                          I can rent the property to anyone, it's just a bit more work one month, so no issue for me.

                          But what I do know is that situations change all the time.

                          The tenant's can lose a good job, die, become drug addicts.
                          Same goes for me (I guess).
                          Interest rates might rise, the government may impose new restrictive laws on landlords, lots of things might happen.

                          And 18 months is too long to have to live with the consequences.
                          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


                            #28
                            Oh and check the proposed tenancy agreement VERY carefully - I'd run the section past some of the smarter legal brains on the site.
                            With 18 months in advance there's a very real risk of creating a very long "periodic" tenancy.
                            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


                              #29
                              Originally posted by jpkeates View Post
                              With 18 months in advance there's a very real risk of creating a very long "periodic" tenancy.
                              AST for 18m has to be that - no idea how things can be presumed as periodic? - and even it does - it will be periodic either way (i.e them 1m notice, LL 2m notice). Right?

                              Comment


                                #30
                                Sorry, I wasn't clear.

                                You want the tenancy agreement to document quite clearly that rent has been paid in advance, because it's a problem if it could be seen as a deposit against future rent rather than rent itself.
                                Unless the wording is correct, the periodic tenancy that would arise after the end of the fixed term could be an 18 monthly periodic tenancy, because the period of the tenancy is set by the last rental payment of the previous tenancy.

                                So you want it to be really clear that the tenant has paid 18 lots of a month's rent in advance, and that it's not a deposit.
                                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

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