It’s the height of summer and peak season for the residential lettings market (notwithstanding the challenges presented by COVID-19). As 12- and 24-month tenancies from previous summers begin to expire, many of our landlords will be deciding shortly whether to renew a tenancy, remarket their property, or regain vacant possession. With that in mind, we have put together this comprehensive guide to walk you through each stage of the end-of-tenancy process regardless of how you choose to proceed.
Renewals, relets, and everything else...
The first step as the end of the tenancy draws near is to reach out to your renters. The best time to get in touch is 12-16 weeks before the end of the fixed term, as this gives you plenty of time to market the property if your renters decline to renew. Once you have confirmed the next steps with the current resident, you can proceed with renewing the tenancy, remarketing the property, or regaining vacant possession.
Renewals and periodic tenancies:
If your renters would like to stay at the property, read our article to learn more about the process of renewing a tenancy and get hints and tips for negotiating the best terms. If you rented your property through Home Made, we will process the renewal for you free of charge!
If neither party renews the tenancy agreement and no notice is served to regain vacant possession, the landlord and renters will automatically enter a statutory periodic tenancy. This is a rolling contract that runs from month to month with no fixed term. All the conditions of the original contract will remain in effect until there is a new tenancy agreement or the renters leave the property. This is a good option in some circumstances where both parties are flexible and unsure about next steps.
However, as a landlord, you should bear in mind that renters are normally only required to provide one month’s notice to terminate a statutory periodic tenancy. You will still need to serve notice in accordance with the requirements of section 21 evictions, meaning at least two months’ notice is required in the normal course of business (more on this below).
If your renters are planning to depart at the end of the fixed term, you should commence with remarketing the property as soon as possible to minimise the risk of a lengthy void period. Speak with the current residents to prepare them in advance to expect viewings and ask them to ensure that the property is presentable.
Due to the safety procedures required to ensure that all in-person viewings are covid-secure and the fact that many people are currently working from home, property viewings are likely to cause significantly more inconvenience to current tenants than usual. It’s worth taking the time and effort to properly thank your current occupants for their cooperation and reassure them that all viewings will be fully compliant with government guidelines. These are trying times for everyone and a little goodwill goes a long way.
Speak to your account manager or lettings negotiator and let them know that the property can go live on all relevant marketing channels. You should also discuss whether or not the marketing photos need to be updated to reflect any significant improvements or additions to the property since it was originally advertised.
If you need to regain vacant possession at the end of the fixed term (if you wish to move back into the property, for example) then you will need to serve a section 21 notice to your renters. A section 21 notice is a no-fault eviction proceeding that allows the landlord to repossess the property at the end of the fixed term without the need to establish any wrongdoing on the part of the tenant.
You can download form 6a (the document required to serve notice) from the government website. Once you have completed the form, you will need to send this to your renters and confirm they have received the document. You can do this either by hand-delivering the notice or sending the document via first class recorded delivery where a signature is required.
Your section 21 notice will only be valid if you are fully up-to-date with all of your compliance obligations, so be sure to check that you have completed all necessary safety inspections and provided the necessary documentation to your renters.
Coronavirus Update: The normal notice period is typically at least 2 months, but in order to protect renters for losing their home during the pandemic landlords are currently required to serve 3 months’ notice. This will be the case until the end of September at the earliest. The government has also imposed a moratorium on evictions until 23rd August at the earliest.
It is illegal to evict a tenant without a court order and hearings won’t resume until the 24th August. When hearings do resume, there will be additional processes for landlords to follow in order to move forward with an eviction. As such, landlords should prepare for a long wait before their case reaches court.
A Fond Farewell
There are several steps involved in ensuring the smooth departure of your outgoing renters. Once your tenants have confirmed their intention to leave, landlords (or the agents acting on their behalf) should proceed as follows.
Confirm the date and time of departure:
Your renters may want to leave slightly early or negotiate an extra few days in the property. If they intend to leave before the last day of the tenancy, this could help you close a deal with new prospective renters who are looking to move earlier than the advertised available date (though beware of the risks involved if they change their mind and factor this into your decision accordingly). If they would like to stay a little longer, you will need to calculate the pro-rated rent that is due for the additional time spent in the property and add it to the final monthly installment.
Take care of key logistics:
Once you confirmed the date of departure, you will need to arrange a time to meet your tenants to retrieve the keys and inspect the condition of the property. Alternatively, you can request that they return the keys to your agent or directly to the inventory clerk if you have arranged a professional check out. It’s also worth requesting that the agent or clerk let you know as soon as they have possession of the keys.
If you don’t live locally or work with a local agent, then it is fine to allow your renters to post the keys back to you for the sake of convenience. However, you should insist that they send any keys and fobs via first class recorded delivery (or courier) with full tracking and signature required at the point of delivery. Ask them to send a photo of all sets of keys before posting them and a copy of the receipt with the tracking number on it as soon as they have sent them off. You can never be too careful when it comes to keys and it is essential that you have all sets accounted for prior to the start of any new tenancy.
Arrange a check-out inspection:
It is important to check the condition of the property as close to check out as possible and after the tenants have confirmed that they have removed their belongings and cleaned to the appropriate standard. Renters are responsible for returning the property in the condition in which it was received with the exception of reasonable wear and tear. The check-out and check-in inventory inspections will form the basis of any deductions you need to make from the deposit to restore the property to its pre-tenancy condition.
If you are inspecting the property yourself, make sure to take dated and time-stamped photos as evidence if you discover any discrepancies and write detailed notes. It’s also a good idea, if practical, to complete the inspection in the presence of the outgoing tenants and ask them to sign a preliminary inventory report acknowledging any defects for which they are liable. If you make the check out procedure as fair and transparent as possible and include renters in the process then it is less likely that there will be any dispute over the deposit.
Though many experienced landlords prefer to compile their own reports, we strongly recommend arranging for a professional inventory inspection at the start and end of the tenancy by an independent third party. Though it is rare, if there is a dispute over the amount of deposit to be deducted then the check-out and check-in inventory reports will form the primary basis of your claim with the deposit protection scheme. Your reports will carry more weight with an independent adjudicator if they were produced by an impartial inventory clerk. It also spares you from the considerable time and effort required to complete a thorough report.
You can request a sample copy of an inventory report from our Operations team (contact details below), who are more than happy to answer any queries you might have about the check-out process.
When terminating a tenancy, either you or the agent acting on your behalf should gently remind your renters of their responsibilities under the tenancy agreement. Following the introduction of the Tenant Fee Act, it is no longer possible to stipulate that renters must arrange for a professional end-of-tenancy clean or check-out inventory as a condition of entering into the contract. But, as already mentioned, it is still their responsibility to return the property to you in the condition in which it was received.
It is helpful to provide renters with the details of any cleaners or tradespeople you worked with prior to the commencement of the tenancy to help them prepare the property for the check-out inspection. Even if they don’t follow up with your contractors, it will serve as a reminder that the property needs to be returned to its original condition.
The most sensitive stage of the end-of-tenancy process is negotiating the deposit release. Though the vast majority of tenants end amicably and without any major disagreements over the deposit, negotiating any deductions can prove contentious. This is particularly true if the landlord doesn’t have comprehensive inventory reports from the beginning and end of the tenancy to serve as the basis of any claim.
Work out fair deductions:
In order to determine fair and appropriate deductions, you should carefully inspect the check-in and check-out reports to identify discrepancies in the condition of the property. Where any defects are not the result of reasonable wear and tear, establish the costs of any work required to make good the damage with quotes for parts and labour from professional contractors. If the property has not been cleaned to the required standard, get the work quoted by professional cleaners.
Once you have fully costed all the remedial action required to restore the property to its pre-tenancy condition, send a detailed summary of your proposed deductions to your renters with quotes or prices of replacement items included to demonstrate the rationale behind each claim. With regards to the standard of cleaning in the property - do not take action before discussing the scope of work with the outgoing tenants.
If you arrange an expensive professional clean before giving the renters the opportunity to remedy the issue then it will be difficult to recover costs if the dispute goes to an independent adjudicator. If you have new renters moving in shortly after the end of the previous tenancy, raise the issue immediately. There are circumstances where it will be necessary to act quickly, but even where this is the case you should contact the outgoing tenants as soon as possible to alert them to the issue and give them the opportunity to resolve it.
Release the deposit:
The next steps depend on the type of scheme in which the deposit is registered. If you protect the deposit with an insured scheme and hold the funds in your own bank account, you should return the funds to the tenants directly within 10 days of agreeing to the amount to be released. If your renters write to formally request the deposit you must respond to them within 10 days of receiving the notice. All parties must then allow time to negotiate any proposed deductions.
If the deposit is protected in a custodial scheme, the money will be held by your chosen deposit protection provider and either the landlord or the tenants can initiate the release process online. Both parties need to confirm that they agree to release of the deposit (less any deductions) before any funds are returned. When everyone has confirmed that they are happy to proceed, funds will be transferred to each party within 5 working days.
In the event of a dispute:
If you reach an impasse with your renters over your proposed deposit deductions, you can escalate the dispute to the deposit protection scheme’s independent arbitration service. In a custodial scheme, the undisputed portion of the deposit will be released to the renters while the contested amount will remain with the scheme provider while they litigate the dispute. In an insured scheme, the landlord must transfer the disputed sum to the scheme provider and release the remainder to the tenants directly.
Both parties will be required to submit evidence to the dispute resolution service in support of claims and counterclaims, but the onus is always ultimately on the landlord to justify the proposed deduction. In the absence of conclusive evidence, the scheme will always rule in favour of the renters.
This is why comprehensive inventory reports from check-in and check-out are essential, alongside evidence of all correspondence between landlords and renters and any quotes or invoices for professional works or replacements for damaged items. It can take several weeks for a dispute to reach a resolution once it is escalated to the arbitration service, so it is in the best interests of all parties to negotiate a settlement before a disagreement gets that.
If you instructed an agent to register the deposit on your behalf they will be able to assist with the deposit administration. If your property is managed, services will normally include negotiating with renters on your behalf. Check your service agreement and see what is included before you start negotiating.
Preparing for a new tenancy
If you are reletting the property, you will need to ensure that everything is ready for the arrival of your incoming tenant. This includes:
- Commissioning all safety inspections required by law and gathering the necessary compliance documentation.
- Addressing any special conditions negotiated as part of the tenancy agreement. An example would be providing or removing furniture.
- Ensuring that all smoke and carbon monoxide alarms are in good working order before the start of the new tenancy.
- Arranging check-in with the new renters.
We’ve compiled this handy checklist to keep you up-to-date with all of your pre-tenancy compliance obligations. At Home Made, we work with several trusted third party traders and can assist with the range of services to help get your ready to let.
You can visit our landlord’s page to learn more about our services. If you would like to speak with us about your property needs, contact us via our website to find out how we can help.Check out more of our landlord advice here and follow us on Twitter, Linkedin, and Instagram for regular updates on industry compliance standards, market news, and Home Made.