Here is a question to the blog clinic from Mike who is a landlord:
I let a flat on an AST for 12 months from 1st Dec 2009. The tenant remains in occupation and it is therefore now an assured statutory periodic shorthold tenancy.
The rent has been unchanged at £900 pcm for the past four years and I have now agreed with the tenant a new rent of £1000 pcm (the market value is around £1150 pcm). The flat is in the Richmond area of London.
Can I simply create a new AST agreement at the new rent, or do I need to formally terminate the tenant’s existing agreement?
No you are fine Mike, you can just give the tenant a new fixed term tenancy agreement. The granting of the new tenancy agreement will automatically terminate the old periodic tenancy agreement.
There is no need to do anything special.
However a few notes of warning. If you have taken a tenancy deposit, you need to make sure with your scheme that it is still protected (and pay any extra fee needed) AND also (per the Superstrike case) you should re-serve the prescribed information.
This last is an irrirating beaurocratic exercise and serves little practical purpose, but unfortunatly until the problems raised by the Superstrike case are resolved, landlords are at risk if they do not do this.
“The granting of the new tenancy agreement will automatically terminate the old periodic tenancy agreement.”
Is there specific legislation relating to this or it just implied because both parties have mutually agreed to create a new contract?
It will be implied.
If all the parties to a contract sign a new one which will replace it, then that is inconsistent with the intention to continue the old contract.
In the same way that parties to a contract can vary it if they all agree.
Making a contract does not force you to continue with it, if everyone who is a party to the contract does not want this.
These things don’t have to be in writing either – the importance of having something in writing is so you can prove what was agreed (eg if someone later denies this).
Mind you if one of the parties to a contract does NOT agree, then that is a different matter …
If the only reason for a new contract is a rent increase then a section 13 notice would simplify matters by not *needing* the tenants agreement, not tying the landlord in for a further fixed term and avoiding deposit re-protection fees / admin.
The problem with the s13 procedure is that tenants can challenge it by referring it to the Rent Assessment Committee (or whatever it is called nowadays).
Mind you the RAC can put the rent up as well as put it down, so an application is a risk for both parties.
When you re-serve the PI don’t make the mistake of just repeating the original information.
It needs to be correct at the date of issue to the best of the Landlord’s knowledge. Be careful – also gives golden opportunity to correct any omissions or errors in the original, so not such a nuisance after all?
S13 Landlord will ALWAYS win provided they ask for no more than is easily demonstrated to be current market rate for that type of property