Renewing a tenancy in the UK is a crucial process for tenants and landlords alike. Whether you’re planning to stay in your current home or are considering more affordable housing options, understanding the renewal process ensures you can make informed decisions.
At Remitly, we understand that tenancy renewals can sometimes feel overwhelming for UK citizens, but even more so for immigrants unfamiliar with the process. That said, we’re here to guide you through the process, helping you approach tenancy renewals with clarity and confidence.
Benefits of the Rent Renewal Process
For landlords, renewing a tenancy with a reliable tenant offers stability and eliminates the hassle of finding new occupants. Money transfer services can also help tenants manage rent payments efficiently, especially for those sending money from abroad.
For tenants, this is a chance to negotiate rent adjustments, request necessary repairs, or transition to a rolling tenancy. Knowing your rights and responsibilities for the rent renewal process can help you secure the best possible outcome when discussing terms with your landlord or letting agent.
Understanding Tenancy Renewals in the UK
When a fixed-term tenancy ends, your first step is to review the tenancy agreement. It’s the legal contract that outlines the rights and responsibilities of both parties.
Why it matters:
- Clear terms: The agreement outlines rent, payment schedules, and maintenance responsibilities, helping to reduce the risk of disputes. It ensures that both parties know exactly what is expected of them throughout the tenancy.
- Legal protection: If disagreements arise, the agreement acts as evidence of what was agreed upon. This means that in case of a dispute, the terms can be referred to in order to settle any issues fairly.
- Security: Tenants understand their rights regarding eviction, while landlords have a structured process for regaining possession of the property. This clarity helps to prevent misunderstandings and ensures a smoother process for both parties.
- Deposit rules: The agreement clarifies how to handle tenancy deposits, helping to avoid misunderstandings. It specifies the conditions under which the deposit can be retained or returned, ensuring both parties are clear on their rights.
What happens when a fixed-term tenancy ends?
When a fixed-term tenancy ends without a new agreement, it automatically becomes a periodic tenancy. There are two types:
Statutory periodic tenancy
This type of tenancy automatically occurs when the fixed term ends, provided the tenant remains in the property and continues paying rent. The tenancy continues on a monthly basis, with rent payments made according to the original terms.
- Ending the tenancy: UK landlords serve a Section 21 notice, usually giving at least two months’ notice. Tenants need to provide one month’s notice or a full rental period.
Contractual periodic tenancy
If the original tenancy agreement states that the tenancy will continue on a rolling basis after the fixed term, it becomes a contractual periodic tenancy.
- Key difference: The rolling period does not always match rent payments; it follows the contract’s agreed-upon terms.
- Ending the tenancy: The required notice period depends on what was specified in the original agreement.
How tenancy type affects rent increases
Rent increases in the UK depend on whether your tenancy is fixed-term or periodic:
- Fixed-term tenancy: A landlord can only increase rent if the tenancy agreement includes a rent review clause stating when and how rent can be raised. If no such clause exists, rent cannot be increased during the fixed term unless both parties agree.
- Periodic tenancy: If the tenancy continues on a rolling basis after the fixed term, the landlord can propose a rent increase. However, they cannot increase the rent more than once a year without the tenant’s agreement.
How your landlord can increase rent
Even when a rent increase is allowed, landlords follow strict legal procedures to ensure fairness and transparency:
- Mutual agreement: If you and your landlord agree to a rent increase, it will be in writing to avoid future disputes.
- Rent review clause: If your tenancy agreement includes one, the landlord will follow the terms set out in the clause regarding when and how rent can be raised.
- Section 13 notice: If no rent review clause exists and the tenancy is periodic, the landlord will serve a Section 13 notice (Form 4) to formally propose a rent increase. They have to provide at least one month’s notice for monthly tenancies, and this process can only be used once per year.
Handling a rent increase request
If your landlord gives you the proper legal notice, you must choose between accepting, negotiating, or challenging the rent increase. Here’s what to do:
- Assess the offer: Compare the proposed rent with similar properties in your area to see if it’s reasonable. You can check online property listings or speak to local letting agents.
- Negotiate with your landlord: If the increase is too high or beyond your budget, try negotiating. Most landlords would rather keep a good tenant than go through the process of finding a new one.
- Challenge the increase: If you believe the proposed rent is unreasonable and can’t reach an agreement, you can appeal to the First-tier Tribunal (Property Chamber) (Residential Property) before the new rent takes effect. The tribunal will review the market rates and decide if the increase is justified.
How to renew a tenancy agreement
Start the conversation early
Either the tenant or landlord should express interest in renewing around two months before the tenancy ends. This allows enough time to discuss, negotiate, and finalise the new terms without any last-minute pressure.
Review and update the agreement
Before agreeing to a renewal, both parties need to review the existing tenancy agreement and consider any necessary updates:
- Rent adjustments: Does the rent reflect the current market rate?
- Responsibilities: Do maintenance or repair clauses need updating?
- Other terms: Do rules on pets, subletting, or notice periods need changing?
The new contract will include any agreed-upon updates to avoid misunderstandings in the future.
Negotiate fairly
If the landlord proposes changes, tenants have the right to negotiate. For example, if rent must increase, a tenant might ask for a smaller increase amount or request improvements to the property in return. Open, clear communication is key to reaching a fair agreement.
Sign the renewal agreement
Once both sides agree on the terms, the renewal will be put in writing and signed. This can be done in two ways:
- A new tenancy agreement: A fresh contract replacing the old one.
- An addendum: A document updating specific terms while keeping the rest of the agreement the same.
Signing before the tenancy expires prevents it from automatically switching to a rolling month-to-month tenancy, which may have different rules. Both parties should keep a copy of the signed agreement for future reference.
Legal Considerations for Tenancy Renewal in the UK
Apart from drafting a renewal agreement when renewing a tenancy in the UK, both landlords and tenants should follow certain legal requirements:
Housing regulations and safety standards
The property has to meet legal safety and habitability standards. This means landlords are responsible for:
- Keeping gas and electrical safety certificates up-to-date.
- Ensuring smoke alarms and carbon monoxide detectors are in working order.
- Carrying out necessary repairs to keep the property safe and liveable.
Failure to meet these requirements could result in legal consequences for the landlord.
Right to rent checks
Before renewing a tenancy, landlords should conduct Right to Rent checks to confirm that all tenants have the legal right to work and live in the UK. This involves checking and keeping copies of identity documents, such as passports or residency permits. Not following this rule could lead to penalties.
Tenant Fees Act 2019
The Tenant Fees Act 2019 protects tenants from unfair charges when renewing a tenancy. It places strict limits on what landlords and letting agents can charge during the renewal process.
For tenants:
- Renewal fees: So, when tenants renew their lease, letting agents and landlords can’t hit them with a renewal fee. In other words, tenants won’t have to pay extra just to stay put under a new agreement.
- Permitted charges: Landlords can charge up to £50 for some changes to the lease, like adding a new tenant to the agreement. But if the landlord pays more than that for the change, they need to show proof of the extra cost before they can charge the tenant more.
For landlords:
- Letting agent fees: If a landlord uses a letting agent to manage their property, they may be charged a renewal fee when a tenant renews their contract. This fee is usually a percentage of the annual rent and varies between agencies. Landlords should check their agreements with letting agents to understand these costs.
What To Do if Your Landlord Doesn’t Renew Your Tenancy Agreement
If your landlord decides not to extend your tenancy, you may find yourself in a confusing and overwhelming situation. But don’t worry—here’s what you can do to handle the situation smoothly.
Check your tenancy agreement
Take a moment to look through your tenancy agreement. It should clearly say when your tenancy ends and if your landlord needs to give you notice before deciding not to renew. Usually, they need to give you written notice ahead of time.
Seek legal advice
If your landlord will not renew your lease and you are uncertain about your rights, it is advisable to consult a housing attorney or a tenants’ rights group. They can inform you what your landlord can and cannot do following the Housing Act. This is especially helpful if you believe you have been mistreated or the request to vacate seems unreasonable before the last day.
Try negotiating
If you want to stay, try speaking with your landlord. Some landlords may be willing to allow you to remain longer, particularly if you have been a good tenant. If they are going to sell or carry out work on the property, they may allow you to remain for a short time. If you come to an agreement, ensure that you have it in writing so that there is no misunderstanding later.
Look at other options
If staying isn’t possible, start looking for a new place soon. Check rental websites, speak to letting agents, and consider temporary options if you need somewhere to stay. You could also ask friends or family for help while you look for a permanent home.
What happens when a fixed-term Assured Shorthold Tenancy (AST) ends?
When an Assured Shorthold Tenancy (AST) with a set end date comes to a close, it doesn’t just fade away on its own. You’ve got options! One route is with a brand-new fixed-term agreement. This lets both the landlord and tenant carry on and even adjust the rules.
But if there isn’t a new contract and a tenant stays, the tenancy automatically becomes a “periodic” one.
A tenant might also just pack their bags and leave when the fixed-term agreement is up. Just a heads-up: it’s a good idea to double-check the tenancy agreement as both a tenant and a landlord. Some contracts demand that tenants give notice, even if they skip town at the fixed period’s end.
FAQs
How do tenancy renewals work?
When a fixed-term tenancy ends, the landlord and tenant can either sign a new fixed-term contract or let the tenancy automatically become a rolling (periodic) tenancy, usually continuing with a month-by-month agreement. If the tenant chooses to leave, they should check the agreement to see if notice is required.
Do you have to pay another security deposit?
Usually, tenants don’t need to pay another security deposit when renewing under the same terms. The original deposit stays protected in a government-approved scheme. However, if major changes occur—such as adding new tenants—the landlord may adjust the deposit and update its protection.
Can you increase rent on a rolling tenancy?
Landlords can increase rent in a periodic tenancy, but should follow legal rules. Increases usually happen once a year, with at least one month’s notice if rent is paid monthly. A formal ‘Section 13’ notice is often used, and tenants can challenge an unfair increase through a tribunal.
What are the benefits of a fixed-term vs. periodic tenancy?
A fixed-term tenancy offers stability, with set rent and a clear timeframe. A periodic tenancy is more flexible, allowing tenants to leave with shorter notice and landlords to make changes or end the tenancy more easily, as long as they follow legal procedures. The best option depends on both parties’ needs.