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  • Buy-to-Let

    Extending an AST (with slight complication)

    Hi

    I let a two bed flat to two sharers. The TA states that on guy pays monthly, the other every six months as he does not pass financial referencing.

    The TA is now up but the agent has told me that if the tenants stay on a periodic tenancy, both tenants will pay monthly. This would invalidate my rent guarantee insurance.

    Does anyone know of a way to keep the arrangement going as is?

    I don't really want to go for a new TA when all the paperwork is in place already.

    Also, having spoken to the agent who arranged my rent guarantee insurance, he seems to think that the arrangement would invalidate the insurance anyway, although I can't see why and he couldn't say why.

    Just wondering if anyone has any advice as I'm feeling a bit confused by it all.

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    Sack your agent.

    Period of contact can be 6 months.

    Just DON'T take a boilerplate monthly contract off the shelf and change dates.

    The period of the contract can be 6 months at a time - but this can of course mean you have to give 6 months notice etc

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    DISCLAIMER just my personal opinion - for legal advice consult a qualified professional grown-up.

    Have you spoken to your RGI provider to ask them if they would require a new contract or are prepared to carry on with a periodic? If they say no, then they will be able to explain why.

    I see you are as being in a better position with the periodic as you can issue a section 21 notice as soon as the rent is in arrears. If you sign a new contract and the money isn't paid at month 6, then you could try for possession under S8G10 but that is discretionary/subject to delays. You would need 3 months' notice to use S8G8

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    Thanks for your replies.

    I'm still a bit confused, does a "boilerplate monthly contract" mean just one off the internet kind of thing?

    I'm going towards letting it run as a periodic but slightly nervous about the whole thing.

    The issue with the RGI is because the one guy doesn't pass financial referencing, he needs to pay six months upfront but the agent says he can't do this on a periodic tenancy, only if a new TA is put in place. Re the broker saying it's invalid anyway, well I just can't see why that would be so will check with insurer direct.

    It's all a bit of a mess to be honest!

    Thanks again

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    From a professional point of view I have concerns about the tenancy arrangements.  If there is one tenancy, it is a single document with one set of rules and the tenants are jointly and severally liable.  I am therefore surprised by what your agent has done in splitting the tenancy.  Of course, if it sets out what is agreed and it works then no problem, but I would be worried about enforcement and you are already worried about your insurance.

    As a compromise why not get the tenant who failed referencing to pay another six months' rent again?  If this means he gets to stay in the house, and he's done it before then he may not have any problem.  What did you and your agent envisage would happen at this point when the original tenancy started?  How vital to you is the insurance?

    I think you need to make sure that your agent knows what they are doing and I suggest you meet them to go through this issue.  They need to explain to you what they have done and why they are advising you as they are.


    Graham



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    There may be issues taking 6 month's rent in advance when the tenancy is a monthly periodic - the extra 5 months can be considered a deposit and need protecting. I think there was an post about this recently on landlordlawblog.co.uk but I can only find https://www.landlordlawblog.co.uk/2010/08...-payments/. This post suggests that your existing arrangement may have been breaching deposit protection rules or that you may have a periodic tenancy with a 6 month period.

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    The issue about rental payments is easily resolved if the tenancy agreement is properly written.  Unfortunately many agents get this wrong.  As long as the rent amounts and rental periods are correctly stated in the agreement and are clear then there should be no issue with part being classed as a deposit.  There is no requirement for rental periods to all be monthly.

    If landlord and tenant agree that rent is payable six monthly, then that is what the tenancy agreement should say.  The problem occurs where the rent is stated in the agreement as being monthly but then six months' rent is collected in practice.


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