Flexibility and freedom – the advantage of an AST
Recently, one of our landlord clients asked us to write an assured tenancy agreement for a new tenant that he had found for his property. The prospective tenant wasn’t prepared to rent the property without an assured tenancy agreement and was prepared to pay £25 more per month than the previous tenant. Tempting.
However, we had to advise against this and recommend that the tenancy agreement would be written as an assured shorthold tenancy (AST). You see, there’s a bigger difference between assured tenancies and assured shorthold tenancies than the names suggest.
What is an assured shorthold tenancy?
An AST is usually written for a fixed period, most commonly for six or 12 months. During the first six months, the tenant cannot be evicted, except should they be in serious breach of the terms of the tenancy. When the AST comes to an end, it automatically becomes a periodic AST, providing the tenant wishes to continue to rent the property.
This periodic AST will run indefinitely from one payment period to the next unless you write a new tenancy agreement for a renewed fixed term. This latter option isn’t used very often – you can read why in our article “All the buy-to-let landlord needs to know about periodic tenancies”.
What’s the disadvantage of assured tenancies?
A major advantage of ASTs is that you can regain possession of your property at any time, without needing to provide a reason. The only stipulation is that you must give a minimum of two months’ notice.
If you let using an assured tenancy agreement, the scales are tipped firmly in the tenant’s favour. You cannot regain possession of your property unless the tenant breaches the terms of the tenancy agreement. In practice, if they are paying the agreed rent and keeping the property in a clean and tidy condition, they could be there for a very long time. If you need to sell your property for any reason, you can forget it. Further, if you let under an assured tenancy, you cannot then change to an AST.
An assured tenancy agreement puts the ball firmly in the tenant’s court. An assured shorthold tenancy levels the playing field, giving the landlord more flexibility and freedom.
Once we had explained all this to our client, he informed the potential tenant that he would only let with an AST agreement between them. The prospective tenant refused. Within a week, we had found a new tenant. And they paid the price that the landlord’s self-found tenant was willing to pay – on an AST agreement.
Make sure you don’t get caught out by a tenant who wants the cards stacked in their favour. Call Ezytrac and benefit from effortless property management, and the knowledge and experience that will make a real difference to your property portfolio.
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