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The Masked Tulip

Letting Agent Wants Me To Sign A 6 Month Fixed Term Lease So Landlord Can Remortgage

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I just had a call from my letting agent.

The landlord wants to re-mortgage but needs me to sign a 6 month fixed term lease so that she can get the mortgage. Currently, I am on a flexible one month notice lease.

The letting agent said that the landlord will pay for any fees regarding the fixed term lease renewal.

I don't want to sign for 6 months as, frankly, I think buying a house over the summer is now my best option and I do not wish to be tied into 6 months staying here.

But I am concerned that if I do not agree to do this that my rent will be ramped or the landlord will want me to sign a new contract and I will be charged for it.

Thoughts?

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Could be a good time to negotiate your rent in a downwards direction.

Also you could insist on a break clause anytime after the first (say) two months

Have you spoken to the LL about it? Every now and again a LA does something in their own interests bu dresses it up as "the LL wants".......

Just saying.

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Could be a good time to negotiate your rent in a downwards direction.

Also you could insist on a break clause anytime after the first (say) two months

Have you spoken to the LL about it? Every now and again a LA does something in their own interests bu dresses it up as "the LL wants".......

Just saying.

The letting agent rang up last week saying that the landlord wanted someone to come around from the building society to do a mortgage evaluation - which someone did this morning.

So I assume the mortgage got approved on the condition that the landlord had someone in this property - the one I am living in - for a fixed 6 month term.

I would only be interested in signing it if I still had a one month get out clause or, as you say, a break clause any time after 2 months.

Edit:

Never seen or spoken to the landlord. She is a professional and I think she simply wants to remortgage this in order to buy more BTLs.

Edited by The Masked Tulip

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I just had a call from my letting agent.

The landlord wants to re-mortgage but needs me to sign a 6 month fixed term lease so that she can get the mortgage. Currently, I am on a flexible one month notice lease.

The letting agent said that the landlord will pay for any fees regarding the fixed term lease renewal.

I don't want to sign for 6 months as, frankly, I think buying a house over the summer is now my best option and I do not wish to be tied into 6 months staying here.

But I am concerned that if I do not agree to do this that my rent will be ramped or the landlord will want me to sign a new contract and I will be charged for it.

Thoughts?

Obviously don't be rude about it, but you have no obligation to sign another contract - you have one in place and you don't need to renew it - signing the contract could be detrimental to yourself.

Perhaps it is an opportunity to negotiate a lower rent - if it takes longer than six months for the right house to come up and sale to go through then you might want to consider it. Alternatively you could offer to buy the house off the landlord instead of having them go through the re-mortgaging process?

If you are thinking of moving out in 4 - 6 months anyway, it doesn't matter what the landlord does. They need to give 2 months notice prior to starting the eviction process, then you have a good 6 months plus to actually get out if you are being stubborn (or waiting for a house sale to complete....)

Assuming you are actually going to bite the bullet and buy. It is just business, if it makes financial sense go for it, otherwise don't. If you are going to get cold feet about buying, then it is probably best to keep the landlord as sweet as possible.

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Also you could insist on a break clause anytime after the first (say) two months

No you couldn't, the minimum fixed period on an AST is six months. That means no break clauses during this time.

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Obviously don't be rude about it, but you have no obligation to sign another contract - you have one in place and you don't need to renew it - signing the contract could be detrimental to yourself.

Perhaps it is an opportunity to negotiate a lower rent - if it takes longer than six months for the right house to come up and sale to go through then you might want to consider it. Alternatively you could offer to buy the house off the landlord instead of having them go through the re-mortgaging process?

If you are thinking of moving out in 4 - 6 months anyway, it doesn't matter what the landlord does. They need to give 2 months notice prior to starting the eviction process, then you have a good 6 months plus to actually get out if you are being stubborn (or waiting for a house sale to complete....)

Assuming you are actually going to bite the bullet and buy. It is just business, if it makes financial sense go for it, otherwise don't. If you are going to get cold feet about buying, then it is probably best to keep the landlord as sweet as possible.

Some good food for thought there Squeeky. When you say I have no obligation to sign another contract do you mean that in a legal sense as that I am not legally obliged to sign one.

I had already decided to buy - things are just getting nuttier and nuttier in my part of the world. Every year since I have been here on HPC things have been getting worse for me to buy as, amazingly, house prices have not suffered any correction in my target area. In fact, virtually every house half-decent under 300K asking went SSTC in the last 2 months.

So I have decided to buy and get on with my life. This 'issue' just complicates things for me.

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I just had a call from my letting agent.

The landlord wants to re-mortgage but needs me to sign a 6 month fixed term lease so that she can get the mortgage. Currently, I am on a flexible one month notice lease.

The letting agent said that the landlord will pay for any fees regarding the fixed term lease renewal.

I don't want to sign for 6 months as, frankly, I think buying a house over the summer is now my best option and I do not wish to be tied into 6 months staying here.

But I am concerned that if I do not agree to do this that my rent will be ramped or the landlord will want me to sign a new contract and I will be charged for it.

Thoughts?

It comes down to what are you going to get out of signing a new contract, as i can see it the answer is nothing.

If the landlord wants you out they need to give 2 months notice, if they try to raise the rent you can say no and they give you notice, so this is a minimum of 2.5 months from now

In reality, thats not going to happen, as they would have to get you out and then get another tenant in on a fixed term contract to satisy the mortgage, If they attempt this then deny them all viewings thus causing them pain back.

The only reason i can see why you would sign the contract would be for massively reduced rent, basically they are asking you for a favour, a favour which could be to your detriment. so my advice would be either say no or say "make it worth my while" and if they refuse to lower the rent (and im not talking £50 a month off) then refuse to sign a new contract and make them give notice

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It comes down to what are you going to get out of signing a new contract, as i can see it the answer is nothing.

If the landlord wants you out they need to give 2 months notice, if they try to raise the rent you can say no and they give you notice, so this is a minimum of 2.5 months from now

In reality, thats not going to happen, as they would have to get you out and then get another tenant in on a fixed term contract to satisy the mortgage, If they attempt this then deny them all viewings thus causing them pain back.

The only reason i can see why you would sign the contract would be for massively reduced rent, basically they are asking you for a favour, a favour which could be to your detriment. so my advice would be either say no or say "make it worth my while" and if they refuse to lower the rent (and im not talking £50 a month off) then refuse to sign a new contract and make them give notice

Thanks for your thoughts Rozza.

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Some good food for thought there Squeeky. When you say I have no obligation to sign another contract do you mean that in a legal sense as that I am not legally obliged to sign one.

It will probably just be hot air and will blow over if you don't humour them, so I wouldn't get worked up over it.

By obligation I did mean legally. The landlord and agent can of course try and persuade you to sign a new AST at any time, and you may feel obligated to sign, but you don't have any legal obligation to comply.

Thinking through the worse possible scenarios:

1) Increase the rent

2) Try and get you out/evict.

3) Landlord goes bust due to being over leveraged and unable to access additional credit as you won't sign...

4) Gives a bad reference.

1) The cost increase will be unlikely to be equal to a single months rent, so if you stay any less than 6 months you would be out of pocket by playing along.

2) They will never be able to act swiftly enough to actually cause you any inconvenience. If you are worried about it, make sure you take at least 7 - 14 days to respond to anything, and always do it in writing. It just drags out the process and ensures you have plenty of time.

3) Besides possibly having to pop in to a bankruptcy hearing, they won't act quickly enough to actually inconvenience you. If you are worried about it, keep an eye out for letters marked "to the occupier"...

4) Your mortgage company won't care; unless it is for non-payment; even then, they may not care.

Edited by Squeeky

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No you couldn't, the minimum fixed period on an AST is six months. That means no break clauses during this time.

I signed a 6 month AST with a break clause which I then enacted to end my notice early and had no problems. I'm sure the bank wouldn't be happy though if an AST was a requirement for the mortgage, but otherwise I don't see how a tenancy can be enforced if both parties agree to a termination.

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I signed a 6 month AST with a break clause which I then enacted to end my notice early and had no problems. I'm sure the bank wouldn't be happy though if an AST was a requirement for the mortgage, but otherwise I don't see how a tenancy can be enforced if both parties agree to a termination.

If there was a one month notice clause - as per I have now - I would have no problem. The letting agent did not mention this though and just mentioned a standard 6 month AST -whatever that is..

When I initially signed it was a 12 month one with, after 12 months, a one month notice on either side being allowed. I was happy with that at the time but now, well, I am used to having my one month notice.

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I signed a 6 month AST with a break clause which I then enacted to end my notice early and had no problems.

Maybe so, but I don't think this clause would have stood up in court as statute says 6 months and statute overrides contracts.

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Just to clarify the position: there is no minimum term for an AST. What statute provides is that under section 21 HA 1988 the landlord cannot obtain an order for possession to take effect until after the tenant has been in occupation for six months. See section 21(5).

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Just to clarify the position: there is no minimum term for an AST. What statute provides is that under section 21 HA 1988 the landlord cannot obtain an order for possession to take effect until after the tenant has been in occupation for six months. See section 21(5).

So can that AST have a one month notice clause in it?

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Any tenancy intended to be an AST can include a right for the landlord or tenant to break at any time.

If the landlord exercise the right the tenancy ends when the notice expires, but if the tenant remains in occupation a statutory periodic tenancy arises.

If the tenant exercises the right the tenancy ends when the notice expires. If the tenant stays on after the notice expires no new tenancy arises unless the landlord accepts or demands rent, when a contractual periodic tenancy will arise. If the tenant stays on as a trespasser the landlord can apply for an order for possession without serving a section 21 notice.

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So can that AST have a one month notice clause in it?

I think you're going up a dead end here.

The bank won't remortgage unless the landlord has a 6 month AST in place.

A 6 month AST with an immediate 1 month break clause doesn't give the bank any more security than the current situation: namely the tenant could scarper at almost any time. I don't see why the bank would accept this (if they won't accept the current situation)

Can you come to mutual agreement? EG you accept a longer term in return for a reduced rent or a cash bung? Realistically even if you find a place to buy soon it's unlikely you'll be moving out for months.

If not then i'm not sure what the landlords options are. Your old contract may say that he can give you notice in a month but i'm not sure that stands up: it's a SPT now which means the landlord has to give you two months (and you can give him one). At best he'll have a new tenants in 3 months time which doesn't help him much.

My offer to the landlord would be: I really don't want to commit to 6 months. However i will in return for 2 months rent as cash. That way if i do leave in say 4 months i'm no worse off (being as I'll be committed to paying rent for 6 months)

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The OP needs to make sure he does not do anything which makes him complicit in any misleading of a lender. Producing a tenancy agreement to a lender which provides that the rent is x and having an understanding that the rent collected will be less than x is misleading a lender. Apart from that, the landlord may be liable to pay tax on x.

As with most things, the OP is best advised to keep it simple. If the landlord cannot get a mortgage without him doing something he does not want to do he simply should not do it.

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The OP needs to make sure he does not do anything which makes him complicit in any misleading of a lender. Producing a tenancy agreement to a lender which provides that the rent is x and having an understanding that the rent collected will be less than x is misleading a lender. Apart from that, the landlord may be liable to pay tax on x.

As with most things, the OP is best advised to keep it simple. If the landlord cannot get a mortgage without him doing something he does not want to do he simply should not do it.

Thanks Damocles - that was something going through my mind overnight.

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I had a phone call today from the letting agent saying that the landlord will be happy with a 3 month or 6 month contract.

Apparently he, as my first post, will pay for any contract renewal fee.

I don't have anything in writing - just the call from the letting agent.

I would be grateful for thoughts.

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What do you want?

Well, I am moving increasingly into the idea of buying a house this summer... so I am thinking about taking the 3 months and using that time to house hunt and buy.

It goes against everything that I have been hoping for - i.e. a house price crash - but things just go from nuttiness to madness re house prices in my part of the world.

Edit:

But I am open to thoughts on the tenancy.

Edited by The Masked Tulip

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But I am open to thoughts on the tenancy.

I don't see what you lose in signing a 3 month tenancy. No way you'll be buying a place and moving in within that time.

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I don't see what you lose in signing a 3 month tenancy. No way you'll be buying a place and moving in within that time.

Yes, that is what I am thinking and what friends have also said. Thanks for your thoughts.

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  • 242 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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