Renewing a tenancy agreement

Valentina GolubovicValentina Golubovic
Last updated on:
December 2, 2022
Published on:
November 29, 2022

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If you're a landlord, you want to be sure that you're on the right side of the law when it comes to renewing tenancy agreements. If one or more of your tenancies are coming to the end of their fixed-term, consider the points in this article before renewing a tenancy agreement.

Do tenancy agreements need to be renewed?

Renewing a tenancy agreement isn't a legal requirement, so there is no obligation on the landlord or letting agent to renew a fixed-term tenancy once it comes to the end of its term.

What happens when a fixed-term tenancy ends?

If the tenant remains in the property after the end of the fixed term without a renewal agreement, the fixed-term tenancy agreement automatically becomes a periodic tenancy agreement. There are two types of periodic tenancies. The agreement will continue under a statutory periodic tenancy or a contractual periodic tenancy.

signing a tenancy contract

What is the difference between a statutory periodic tenancy and a contractual periodic tenancy?

A statutory periodic tenancy agreement

A type of tenancy created when an assured shorthold tenancy ends, but the tenant remains on the property without renewing their contract and the landlord accepts it. According to section 5 of the Housing Act 1988, this will automatically create a new tenancy which will run from one period of time to the next, such as from month to month, until one of the parties gives notice.

A contractual periodic tenancy agreement

A type of tenancy is created when both a landlord and tenant agree in their contract that the tenancy will exist on a rolling basis. This means that it will run from one period of time to the next, such as from month to month until one of the parties gives the notice to end the agreement.

How much does it cost to renew a tenancy agreement for the tenant?

Under the Tenant Fees Act 2019, as of the 1st of June 2020, letting agents can no longer charge the tenant an agreement renewal fee. Landlords or agents are responsible for costs associated with the renewal of tenancies, no administration cost should be passed on to tenants for the renewal.

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How much does it cost to renew a tenancy for the landlords?

If you are a landlord, renewing a tenancy with a letting agent can come at a price. However with that being said, some letting agents may not charge you for this. It's important to check a letting agent's schedule of fees if this is something you may wish to avoid.

In London, the price of renewing a tenancy varies with different agents. Savills charges £180 for the paperwork service of renewing a tenancy, while Dexter charges a renewal fee of £240. Letting agents like Reeds Rains in Manchester, charge £120 and £60 for renewing a fully managed tenancy and a let-only tenancy agreement. It's important to note that while some agents may be cheaper for renewing a tenancy, other letting agent fees may be significantly higher so it is vital to consider all factors.

How to renew a tenancy agreement?

Renewing a tenancy means the tenant simply signs a new tenancy agreement for a new fixed term. Your letting agent can help with this however if you don't have one present then presenting your tenant with a new assured shorthold tenancy agreement would do the trick.

When to renew a tenancy agreement?

Depending on the type of service a letting agent offers, they will most likely handle the process of renewing tenancies for the landlord. Usually, the tenant will be contacted a few months before the end of their fixed term tenancy to see whether or not they wish to renew. If they do, the arrangement can continue under the same terms or new terms can be negotiated between the landlord and tenants. This is usually an opportunity for the landlord to increase rent or amend other terms in the contract.

Should a landlord renew a tenancy agreement?

Depending on your preference both renewing or waiting can be advantageous. If you are happy with your tenants and wish to have the security of agreed continuous rent for the next year or two, then consider proposing to your tenants to renew their tenancy agreement as this would lock them in for another fixed period and allow you to budget your rental income.

On the other hand, if you have plans to sell your property, considering living in it or maybe are not keen on your tenants and wish to let it to someone else, it would be best to proceed under a  periodic tenancy as this would give you the flexibility to suggest a renewal at a later stage or serve a two-month notice period. 

The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.

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