Why would you extend a tenancy agreement!?

In a market where it is easier than ever to find a new tenant and harder than ever to get a bad one out renewing a tenancy agreement is usually a bad idea for landlords.

Currently, the tenancy agreement used in the UK is an Assured shorthold agreement which starts with an agreed fixed term usually of 6 or 12 months (the assured period) and then automatically rolls on at the end on a periodic basis.

A lot of letting agents encourage landlords to renew at the end of the fixed-term portion of the agreement. The Letting agent will usually charge a fee for drawing up a new agreement and because there is a financial incentive oftentimes the letting agent will push for this rather than discussing both options.

For the most part, I advise Landlords not to renew on a fixed-term basis and instead allow the tenancy to roll on periodically because there are more negatives than positives.

Firstly, you cannot increase rent in a fixed-term contract and with how fast rent prices are increasing this can leave you underachieving.

More importantly though it means you cannot serve a section 21 notice which is a more straightforward notice to serve than a section 8 which is what must be served in a fixed term contract.

In a market where there is a great deal of competition among tenants for properties and rents seem to only be increasing why would you limit your flexibility and put yourself at risk of a long and costly eviction by agreeing to another fixed term?

Alternatively, if you allow the contract to continue periodically it can essentially roll on indefinitely while allowing you the flexibility to serve a 2-month section 21 notice at any point or adjust the rent where needed.

The only time I would recommend a landlord to consider agreeing to an extension would be if the tenants were 10/10 perfect, they had absolutely 0 intention to sell the property and the tenants explicitly asked for an extension for the security of having a longer-term let.

I hope you find my thoughts on extensions enlightening if you do favour extending rather than allowing the tenancy to roll on, at the property centre we do not charge for them anyway. If you feel you have been encouraged to extend in the past by your letting agent against your best interests and would like an agent who puts their landlord’s interests first, please get in touch to discuss our services.


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