In an assured shorthold tenancy, signing an original agreement at the end of the original contract is unnecessary, contrary to many landlords’ beliefs.
If a tenant stays in the property after the fixed term ends, it becomes what is known as a ‘periodic tenancy’. This means the tenancy continues indefinitely (potentially many years) on the same terms and conditions in the original tenancy agreement unless both landlord and tenant agree otherwise.
Why sign a new fixed-term tenancy agreement?
The advantage for landlords and tenants is security. This is because the renewed shorthold tenancies will give an initial minimum fixed term of 6 months, and the monthly rental income will typically be fixed during this period.
Suppose the original fixed term of a tenancy agreement has ended and turned into a ‘periodic tenancy’. In that case, the landlord can notify the tenant if there is no new tenancy agreement. However, if the landlord agrees to a different notice period, this exception to the notice period applies.
When renewing a tenancy agreement, landlords (or their agents) often request a renewal fee to cover administrative costs. However, in reality, this fee is usually waived because if a suitable tenant moves out, the property may remain empty for several weeks or longer, and the landlord will have to incur advertising expenses, which will cost significantly more than any renewal fee. It’s important to note that renewal fees are now considered illegal under the Tenant Fees Act 2019.