There are always a number of factors to consider during any rent or leasehold renewal. However, the current situation has been complicated by the possibility of changes to the law for both commercial premises and private home rentals.
Here Maunder Taylor, who offer lease renewals advice to clients across North London, outline some of the key issues which should be considered if your renewal is due before the Renters’ Rights Bill (formerly the Renters’ Reform Bill) becomes law, or if the current Law Commission investigation into commercial rental legislation results in any changes.
Being Proactive
Whatever you do, don’t just adopt a ‘wait and see’ approach. It’s worth opening discussions with your landlord several months before the lease’s expiry date. The last thing you want is confusion in any negotiations – you need to know where you stand, both in the long term and the short term.
Knowing Your Current and Future Rights
It’s important that you know not just your current rights, but those you are likely to have in the months and years ahead. Make sure you read through your current agreement and understand all the clauses. Ask an expert if there are any elements that you don’t understand.
You also need to know how the Bill is likely to change your situation in future. For more details on the current provisions of the Bill, and the timetable for its enactment, check out our previous blog post here.
Knowing the Current Market
You should always research what the current market rates are for your property, whether it’s a private home or commercial premises. These will still form a large element of any lease negotiations, so if you know what similar properties are being charged, you should have a strong negotiating position (particularly if your rent is already higher than the local average).
Your Basic Options
Under the provisions of the Bill, all current fixed-term tenancies will be abolished. All new tenancies will be periodic (rolling), and existing fixed-term tenancies will convert to periodic tenancies once their fixed term expires. This means tenants can give two months’ notice to leave at any time, offering more flexibility. Landlords will need to give four months’ notice if they want to sell or move in.
So, one of the main issues facing both parties is if they should convert to a periodic tenancy before they are legally required to do so. It might seem convenient to take this course of action, particularly if both parties agree. However, you are still bound by the provisions of the existing law, so tenants could still be subject to a Section 21 ‘No Fault’ eviction in the meantime.
One of the main provisions of the Bill is the abolition of Section 21 (although landlords should have more protection against tenants who are either persistently in arrears, or who are guilty of anti-social behaviour), so once it becomes law, this won’t be an issue.
From a landlord’s perspective, once the Bill is enacted, you will only be able to increase rent once a year, in line with market rates, and you will have to use a Section 13 notice to give at least two months’ advance notice of any proposed increase.
Commercial Renewals
Although the Bill is intended to protect tenants in private homes, much the same advice applies to anyone whose commercial lease is due for renewal. However, The Law Commission is looking at ways the current legislation which surrounds commercial leases (enshrined in the Landlord and Tenant Act of 1954) can be strengthened and improved.
The Commission’s initial conclusions, having spoken to various stakeholders and interested parties, broadly recommended retaining the core framework of the 1954 Act. This means commercial tenants would have the statutory rights to renew their leases, unless they have ‘contracted out’ and effectively waived this right.
The Commission is considering raising the short-term lease threshold for security of tenure from six months to two years, which could impact some shorter commercial arrangements. A second consultation paper is expected later this year.
Rent and Lease Renewal Advice in North London from Maunder Taylor
Totteridge estate agents Maunder Taylor offer private rent and business lease negotiations advice in Hertfordshire and London for tenants and landlords. We are happy to carry out any local research for you into local market conditions, as well as inspect the property in question (whether it’s for an existing tenancy or a new one).
If an agreement can’t be reached over the level of rent – and we always prefer a negotiated settlement – then we can act as Expert Witnesses if the case ever goes to a court or tribunal.
For more information about our advice services, follow this link. You can also call us on 020 8446 0011 or 020 8492 5526.