For private rentals, the most common type of tenancy in the England is an Assured Shorthold Tenancy (AST). These tenancies usually begin as fixed term tenancies where the duration is defined from the outset, typically anywhere between 6 months to three years (but can be up to seven years) as mutually agreed between the landlord and tenant.
An AST can be ended at the end of a fixed term or in line with a pre negotiated break clause within the agreement and by either party. A landlord must always serve a prescribed notice (a Section 21 Notice) to gain possession of the property and may need to obtain a court order. Currently it is necessary to give tenants at least six months’ prior notice and which cannot be served until after the initial four months of the tenancy have expired. This supersedes any notice period that may be contained within and exiting tenancy agreement itself. However, if the tenant is in serious breach of the terms of the tenancy agreement (including rent arrears) then the landlord can apply to the courts for a possession order, citing one of the Grounds for Possession contained in the Housing Act 1988 (as amended).
At the end of the fixed term, a new fixed term agreement is often made or the tenants move out. Alternatively, the tenancy might become a periodic tenancy. Periodic tenancies do not have a fixed end date, but continue on a month by month basis until ended by either the landlord or the tenant. Again if the landlord wants to end the tenancy he/she must serve a Section 21 Notice or one of the Grounds for Possession Notices as above to end the tenancy.
Fixed term tenancies
Fixed term tenancies can be for any length of term agreed between the landlord and the tenant to suit their circumstances (up to seven years) - longer fixed terms can often provide security to landlords and tenants. For landlords a longer tenancy is a good indicator that there will be a steady stream of rent and a reduced risk of the property being empty. For a tenant, a long tenancy gives them more time to settle in to the property.
The type of tenant your property is likely to attract should be considered when deciding the term of a tenancy. If you have a property that is likely to appeal to a family, a six month tenancy may be less appealing. Although it may not necessarily occur this way as it is also dependent on the prospective tenants circumstances. If the term is more than three years, then the tenancy agreement it will need to be prepared and signed as a Deed.
You will be unable to increase the rent during a fixed term tenancy unless you have already agreed this with the tenant within the tenancy agreement. It is important for you to communicate with your tenant before the fixed term is due so they can decide if they want to stay or move out. If you appoint a letting agent, they can negotiate rent increase on your behalf. By giving the tenant sufficient time to make this decision, you will have more time to find a new tenant should the current tenant decide to move out at the end of the agreed term.
Short let rentals
Short let rentals, typically a few weeks to six months, often command higher rents and may appeal to certain types of tenant. If the property appeals to tenants looking for short lets, this approach can be lucrative for landlords and home owners looking to temporarily let their property.
As short lets bring with them an increased turnover of different tenants, there is often more administration, wear and tear and the risk of void periods is increased.
Short lets may also appeal to homeowners who have a vacant property for a short while, such as when they are away on holiday.
You can find out more in our guide to short let properties.
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