This is a myth largely created by letting agents, as an important part of their income stream comes from charging landlords for ‘renewals’ for tenants. But they are not actually necessary.
In a way, this post follows on from my last Urban Myth post about tenants staying on after the fixed term not being squatters. In that post I explained that under the Housing Act, assured and assured shorthold tenancies continue automatically after the end of the fixed term, as either a monthly or weekly ‘periodic’ tenancy, depending on how the rent is paid.
This does not mean to say that tenancies should not be reviewed at the end of the fixed term. Or, so far as the landlord are concerned, two months before the end of the fixed term, as that is the length of notice he will have to give if he wants them to leave.
However many, many tenancies run on as periodic tenancies quite happily for years. Often landlords and tenants prefer the flexibility of a periodic tenancy and do not want to be tied in for a longer term. For example if tenants expect to be moved to another town for their job but do not know exactly when.
The most important reason for ‘renewing’ a tenancy is to increase the rent. This is often done at this time, as if a tenant signs a new tenancy agreement or renewal form with the new rent, they cannot then challenge the rent figure if they think it is too high.
Another important reason for ‘renewing’ a tenancy for a further six months or a year, is to create certainty, and tenants often want the security of a fixed term, where they can only be evicted if they fail to pay rent.
However if you and your tenant would prefer the tenancy to roll on on a periodic basis, do not allow your letting agent to bully you into a ‘renewal’ for a further fixed term.
Do you know of any ‘urban myths’? Or have you had any problems with this particular urban myth? Please post a comment if so, I would love to hear from you.