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Thomas, Lawyer
Category: UK Property Law
Satisfied Customers: 7618
Experience:  BA (Hons), PgDip, Practising Solicitor
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We have a tenancy agreement and let our property for around

Resolved Question:

We have a tenancy agreement and let our property for around ?3500 per month.
We have dropped the price recently to ?2800 and now have a prospective tenant who says they could stay for two years. However we want to reserve the right to increase the rent in the second year to maybe ?3100 so will agree a one year agreement. What is the best approach with this tenant before they sign? Should we tell them that if the market recovers we would increase the rent by 10 -15%?
There is 2 month clause in the agreement for termination, would we activate this and draw a new agreement for the second year?
Submitted: 7 years ago.
Category: UK Property Law
Expert:  Thomas replied 7 years ago.



Thanks for your question. It is really more of a practical issue - ie. how to ensure you get the tenant to stay for two years paying rent 1 in the first year and rent 2 in the second.


I would say that the best way forward is to be honest with them the tenant at the outset that you may/are to increase the rent for the second year by granting a new tenancy for that second year, then propose to grant a one year AST at rent 1 (with appropriate break clause if you wish), then serve the notice under s21 of Housing Act 1988 requiring possession at the end of the term of the AST and then upon expiry you and the tenant execute the second AST at Rent 2.


If they take the tenancy at rent 1 saying that they may pay rent 2 in the second AST then they may become settled and wish not to leave. If they decide not to enter in to the second AST then you can take possession of the property and simply remarket at rent 2.


A final note, please tell me you are aware of your responsibilities under the tenancy deposit scheme?

If this has been useful please kindly click accept so that I am rewarded for my time. It will be gratefully received.


Kind regards,




Customer: replied 7 years ago.
I am aware of the Tenancy deposit scheme which is being handled by our agent.
My understanding of out tenancy agreement is that is not an assured shorthold tenancy agreement because the rent is over £25k per year.
The contract is headed "Tenancy Agreement"
It has a clause for the deposit scheme.

So I guess that we just give them a contract for 12 months, as you say it is a practical matter, Im not sure what standard practice is in this type of case where the rent increase could be fairly high.
Expert:  Thomas replied 7 years ago.



You're correct in that because the rent is greater than £25, 000,00 it will not be an assured shorthold tenancy.


Be honest with tenant, hopefully he will be honest with and you say whether he is likely to agree to the higher rent. If he is not then you can either let him have the one year and remarket at the end of the tenancy, or find another tenant now who will agree to the two years and the increase.


Please kindly click accept.



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