Many landlords are concerned that their tenants may leave too soon, which brings about the additional stress of having to replace good tenants and the uncertainty of what the new tenants will be like.
Many tenants are concerned about being given notice by their landlord and facing the stress caused by the dreadful experience of having to re-establish themselves yet again in another home, so they’ll be pushing for a renewal agreement.
How A Renewal Agreement Benefits All Those Concerned
When a tenancy comes to an end it can be a nervous time for landlords and tenants alike.
It is always best to remove that uncertainty as promptly as possible with a renewal agreement, here’s why:
A new fixed term – gives certainty and security to the landlord that their tenant will be around for at least another 12 months and this allows them to plan their cash flow and finances better (and relax more when you go away on holiday!). You have the option to set a tenancy for up to 36 months. 12 months is what we recommend and usually best practice.
Stability – The same way you can relax, the tenants can also. They feel secure knowing they are around for at least another 12 months so they can sign up with a local gym with a 12-month commitment or enrol their children to the local school in confidence without having to worry about their home not being conveniently located anymore. They are more likely to stay longer not having the stress of being asked to leave at an unplanned inconvenient time. It is a win-win for all.
Reduced ‘Tenant Turnover’ – The summer months are a prime time for tenants to switch about, this is the time you are most likely to lose a reliable tenant. Having your tenants locked in reduces the risk of them deciding to move on the spur of the moment.
Less Wear & Tear – Lower ‘Tenant Turnover’ means less wear and tear because you have had the same tenants for several renewals now. Having the same tenant for 5x 12-month agreements will lead to less wear and tear than having a new tenant come and go every year for 5 years. Less wear and tear will mean less money spent on maintenance and bringing the property up to standard each time a new tenant needs to move in.
Cost Efficient – It is far more cost-efficient to lock in your existing tenant for another 12 months than to have to replace them. Imagine the cost, time and resources spent finding a new tenant every year for 5 years.
You already know the tenants – You already know that they pay their rent on time and most importantly they keep the property in a good condition. Good tenants are worth their weight in gold, and this way you reduce your risk of ending up with bad tenants because you have kept the good ones in for as long as possible.
No Surprises – Tenants can end the tenancy during unfavourable times like Christmas. People can be busy at this festive time and finding a new property is not a priority at this time. Not having a signed renewal could lead to you getting stuck with an empty property, and at this time often means a void period of a month or more, or even lower rent achieved due to lack of demand.
The same is the case for times like Easter when many people are going on holiday leading to a shortage of tenants looking for a property. A sudden departure of a tenant often leads to the landlord having to do a lot of work in a short period of time.
Fewer Void Periods – According to statistics, void periods in 2018 and 2019 were approx. 2.9 weeks or 3 weeks respectively. That means, over a five-year period there is an open risk of losing 3.75 months’ worth of rent, not accounting for the wear and tear and potential rent arrears that could also be experienced. That is almost 4-months’ worth of rent at risk. Having a consistent tenant ensures regular income with no void periods and minimal wear and tear. Click here to see the statistics referred to above.
More Protection – The law is changing every year. The rental property market is becoming more regulated every passing moment leading to agreements becoming out of date very quickly. We review legislation every year to ensure all loopholes open to abuse by a tenant are combated with clear and concise wording to ensure maximum protection for the landlord. Over a five-year period, you’ve protected yourself five times against any risks just by signing a renewal agreement.
Rent Review – Although many landlords prioritise quality tenants over the rental amount, it gives an opportunity each year to assess the rent. Some landlords may freeze the rent for another 12 months to incentivise their tenants to stay even longer.
Some decide to increase it to keep up with inflation or the local property market. Where possible, a rental increase should be referenced with inflation statistics such as RPI or CPI to ensure they are not excessive, this ensures your tenant does not need to look elsewhere.
We begin the renewal process up to 3 months before the end of the fixed term. This gives us plenty of time to ensure the right decision is made. Some of the key points we will be taking into consideration are:
Routine inspection report – to see if the property has been well maintained during the existing fixed term.
Promptness of rent – Are the tenants paying on time every month and are they currently up to date with rent and not in arrears?
Maintenance History and Property Access – Has the tenant maintained the property during their stay and are they demanding? Has access been given each time it was requested?
Rental Value – Are they paying the correct amount or too less? Should we increase the rent or keep it the same?
Equipped with all the information to make an informed decision we will get the relevant renewal documents sent out to be signed ahead of time.
We handle the whole process for you, but also involve those landlords who take an active interest in being involved.
Renewal Tenancy Agreement
Once all is agreed upon, we take care of all the legal paperwork. We review our ‘Tenancy Agreements’ each year and update them to stay in line with the latest guidelines and legislation. Tenants will sign the latest agreement; this will ensure your protection is increased on every renewal.
Brilliant! That is another 12 months of certainty for everyone. A true win-win for all.
Abbey Property has a tenancy agreement to suit all types of wants and needs, and we can draw one up specifically for you whilst protecting both parties!
Get in touch with our property experts to have a discussion about a renewal, or if you’d like a managed tenancy option to oversee the entire process!
* Void Period Statistics: https://www.statista.com/statistics/421102/rental-properties-void-periods-in-the-uk/