This is a question to the blog clinic from Thelma (not her real name), who is a landlord in England.
Can I move a long-term tenant (in arrears due to benefits mess up and having to move from housing benefit to Universal Credit), from a fixed term lease to a periodic tenancy?
And if so, without a written agreement, how do I increase the rent going forward – would a signed and witnessed written agreement suffice legally?
And will the guarantor still be fully liable as the original guarantee states “.. I will pay any sums due from the tenant as a result of the tenant’s failure to pay rent or any breach of the tenancy or any extensions or subsequent tenancy”?
Answer
Here are answers to your three questions:
1. Changing from a fixed term to a periodic tenancy
If you do not want your tenant to have a fixed term tenancy, then you just don’t give them a new fixed term agreement at the end of their current fixed term. The tenancy will then run on as a periodic tenancy, if the tenant remains in the property.
However you cannot change the fixed term which already exists.
2. Increasing rent during a periodic tenancy
You can always increase the rent by consent during a periodic tenancy, and a written note signed by both parties would probably suffice. However, the best way to increase rent during a periodic tenancy is via the statutory notice procedure.
To do this, you need to use the proper form, form 4, and serve this on your tenant. This will give your tenant one month’s notice of the new rent.
Your tenant will have the right to challenge this to the First Tier Tribunal during the month’s notice period, but this challenge will only succeed if your new rent is higher than the market rent. So, if you ensure that your new rent is slightly lower than the current market rent for the property, any challenge will fail.
The rent will increase either at the end of the notice period or, if the rent is challenged, when the First Tier Tribunal direct that it will be effective from.
3. The effect of increasing rent on guarantees
If you increase the rent you will need to get the guarantee deed re-signed as increasing the rent will cause it to lapse.
The reason being that your guarantor did not agree to guarantee a tenancy at the higher rent. They only agreed to guarantee the tenant at the original rent, so if the rent is increased, this will have the effect of ending the guarantee.
Even if the guarantee provides for the guarantee to be effective at a higher rent, I this clause would probably be invalid under the unfair terms rules.
For more answers to questions and all the forms you need to run your property, visit Landlord Law.