What Happens When a Tenant’s Fixed Term Contract Ends?

Fixed term contract

As a landlord, it’s important to understand what happens when the fixed term tenancy agreement you have signed with your tenant, comes to an end. The law in the UK tries to create a balance between the rights of the tenant to have somewhere decent to live, and the rights of a landlord to have their property respected and to be paid rent as agreed. The law also covers what can and cannot happen at the end of a tenancy agreement.

What options does your tenant have?

As a fixed term contract ends, your tenant has three options to choose from.

1. Agreeing a new fixed term contract

The first option, to renew the contract, is often welcome if the rent has been paid regularly and the property has been well cared for. There is scope for renegotiating new terms and increasing rent, just remember that the tenant does not have to agree! The benefit of this route for both parties is security of tenure and rental income.

2. Rolling or Periodic tenancy

If a tenant remains in the property after a fixed term contract ends, it automatically becomes a rolling or periodic tenancy. The term (or period) of the agreement depends on the frequency of rental payment during the prior fixed term. Weekly rental payments become a rolling weekly agreement, monthly payments become a monthly agreement and so on.

This option is very often used when the tenant is in the process of either signing a new rental agreement elsewhere, or is in the process of buying their own home.The terms and conditions remain the same as the previous agreement. As a landlord, you do however have the right to raise rent by a ‘fair and realistic’ value, once every twelve months, giving at least one months’ notice.

3. Tenant moves out

The tenant may choose to walk away at the end of a fixed term agreement. Both landlord and tenant should check the exact terms of the original agreement, to see if notice needs to be servedIt is good practice to use a ‘moving out’ checklist, to ensure the property is left in an acceptable state and there are no unexpected surprises for either party!

Can you insist the tenant leaves at the end of a contract?

No, unless you have served the correct notice. Under UK law, so long as the tenant is paying rent and is not displaying antisocial behaviour, they have the right to remain in the property. There is an eviction process, however this can be time consuming and potentially costly.

Communication is key!

It is really important to communicate regularly and clearly with your tenant, to ensure that both you and they know what the options are, and which route they may wish to take. Knowing that the tenant is planning to stay for ‘a few more months whilst they finalise buying a home’ can help you plan for a new tenant, and reduces the worry that comes from uncertainty.

Advanced notice of the desire to renew the contract for another fixed period, allows you to negotiate on terms that suit both parties. This is important if legislation has changed since the previous agreement was signed. Good communication and great support from your agency is vital to successful and profitable property rental.

What to do next?

The end of a fixed term contract is often a time when landlords think about the support they have been getting from their agency too. We take great pride in ensuring all our people are fully qualified and up to date with the latest legislation, so we can offer our landlords the best advice. We very strongly believe that the solution to stress free property transactions is good communication.

If you would like to find out more about how we can support you as a landlord, please get in touch. We would love to chat with you and explain how we can help.

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