Unnecessary Tenancy Renewals and their cost.

What happens at the end of the “Fixed Period” of a tenancy agreement is quite clear.  Quite simply, in law, a tenant may continue to live at the property on what is known as a “Periodic Tenancy”.  Many tenancy agreements have a period, usually a month, where a “Contractual Periodic Tenancy” is built in for a variety of reasons, but in the absence of this, a tenancy still becomes a “Statutory Periodic Tenancy”.

As a result, there is often absolutely no need to renew a tenancy agreement.  Sometimes there is a valid reason for renewing an agreement, but the more unscrupulous of agents will try and insist upon a renewal of the tenancy.  It’s an easy additional and often entirely unnecessary form of income for the agent.

We’ve always cited this to prospective landlords as a reason to exercise caution when selecting an agent for a property.  After all, if an agent is doing this, what lengths will he go to in other ways to create additional income?

This morning, a member of our team had a telephone call from his landlord, wanting to know why he was leaving his property.  He was somewhat taken aback, since he wasn’t aware that he was leaving and had a very illuminating conversation with his landlord.  It transpires that the following had occurred:

His agent (also in Basingstoke) had written to this staff member, informing him that his tenancy was up for renewal and the renewal was going to cost him well over £100.  He had responded by telling the agent that he was content to continue to live at his property on a “Periodic” basis.  Apart from anything else, he is in the process of purchasing a property in Basingstoke and wants the agility afforded him by being on a “Periodic” basis.  Rather than wait until the end of the new agreement, he would like to continue until he was ready and then serve notice to leave as his purchase was coming together.  He has lived there for a number of years, so it is not as if his landlord is forever paying to find new tenants.

The agent had then contacted the landlord, forgetting that because the landlord managed his property himself he had the tenant’s contact details, and told the landlord that his tenant was leaving.  Presumably, the agent was to have served notice on the landlord’s behalf and without the landlord’s knowledge; why otherwise would he have told the landlord that his tenant was vacating?

So far as the agent is concerned, assuming that nobody lets the cat out of the bag, it’s a win-win situation.  He either charges both the landlord and tenant for the unnecessary and unwanted renewal, or he charges a new in-coming tenant an administration fee and the landlord new set-up fees.

Needless to say, the landlord also has the inevitable grief of a period between tenancies when his property is unoccupied and in the current market he might not even achieve the same rental income for a new tenancy.  The out-going tenant has the hassle associated with an entirely unnecessary move and all the arguing over the deposit.  This last item is almost a racing certainty since if this agent has this sort of process in its armoury, I’m pretty sure that he will also regard at least part of the deposit as a further income stream as well.

Whilst we were having a conversation about this, another member of staff stated that she was subjected to this with another agent.  In her case, her landlord chose to believe his agent rather than his tenant and, since she likes her home, she is forced each year to renew her tenancy at a cost.

Tenant fees are being banned within a matter of weeks and the whole industry is undergoing an overhaul of its fee charging structure.  This particular issue isn’t in itself responsible for the ban, but it is indicative of the practices of many agents.

Denied this obvious “easy-money”, what will an agent dream up to replace it?

Sadly, there is no way of determining exactly which agent will do this sort of thing in advance.  But maybe it’s worth asking the question and getting the answer in writing.