How to take over an existing tenancy and amend terms

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How to take over an existing tenancy and amend terms

By RentiD Admin

How to take over an existing tenancy and amend terms

Our Founder and CEO Dev was recently asked this tricky question on Property Question Time.

You can watch his response here but we thought the question warranted a more detailed inspection for followers of our blog.

Question

I have found a property I wish to buy, this will be for my own use.

The slight downside is there is an existing assured shorthold tenancy currently in occupation.

The tenant’s lease goes on for about nine months after I am required to complete on the purchase. I am happy that the tenant stays for that period and my bank have agreed. It just suits me time wise.

However, there are terms in the tenant’s lease that I do not like. Because I will be the new landlord can I either issue a new lease or alter the terms of the existing one?

Telling the tenant about change of ownership

Firstly, there is no need to issue a new lease. But you do need to let the tenant know that you are now the landlord by way of both Section 3 and Section 48 notices.

The Section 3 tells the tenant of the transfer of ownership. You have to provide your name and home address.  You have two months to serve this notice after the transfer and failure to do so leaves the old landlord liable for any breach of contract and you, the new landlord open to prosecution and fines of up to £2,500.

The Section 48 is needed to serve an Eviction Notice and assures that the tenants are provided an address to serve notices on the landlord.  The address needs to be within England and Wales but doesn’t need to be the landlord’s home – it can be a managing agent.  Without the Section 48, rent cannot be demanded from a tenant, meaning any claim for rent arrears will not be enforceable in court.

Altering the terms of an AST

The terms of an AST are fixed for the duration which in this case is 3 months into a 12 month contract.

The only way you can alter the terms of the AST is for both parties to agree the changes.

Put yourself into the tenant’s shoes. If you were the tenant and happy with the lease agreement only recently signed, there would need to be a pretty compelling reason why you would accept amended terms.

Especially if it’s something like pets no longer allowed and you’re already enjoying the property with Mr Tinkles the cat.

The old landlord – and a smooth exit of the tenant in 9 month’s time

Before taking on any property with a tenancy in-situ it is vital that you get some history about the tenant and the tenancy.

  • Does the tenant pay their rent in full and on time? The vendor should provide you with a rent statement to back this up.
  • Have they caused any problems?
  • Did the vendor (or their agent) provide the tenant with Government How To Rent guide, a valid EPC, EICR and annual Gas Safety Inspection?  
  • Was an inventory compiled and signed-off?
  • Was the tenant’s deposit correctly registered with one of the Government approved schemes?

These are questions you need to be comfortable with the answers for before you agree to buy any property with a tenancy in-situ.

In nine month’s time you’re aiming for the tenant to vacate without any dramas. If the tenancy was not correctly set-up or the vendor has in anyway not kept-up on their side of the terms then taking back possession may not be straightforward. If no inventory was compiled, it may not be so easy to claim against the deposit for dilapidations above fair wear and tear.

How to take over an existing tenancy and amend termswhat’s the real issue here?

Why do you want to alter the terms of the lease?

We would be more concerned about whether you’ve got a reliable tenant who pays their rent on time and who takes care with the property so you’re not left out of pocket.

In 9 month’s time when you take possession for your own personal use, you will probably want to do a deep clean and some decoration anyway.

Stick to the terms of the existing contract, give the tenant no cause for complaint, have them vacate with minimal fuss and enjoy your new home in 9 month’s time.

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