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Ash, Solicitor
Category: Property Law
Satisfied Customers: 10914
Experience:  Solicitor with 5+ years experience
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I need to understand the legal position if we cannot negotiate

Customer Question

I need to understand the legal position if we cannot negotiate a satisfactory rent increase from the company to which we rent our flat, and which they (with our permission) sub-let.

The company's 3 year fixed term ended nearly two years ago. But since that date they have twice, without attempting to negotiate a further term from us, given their sub-tenant a further 12 month AST. The current one ends in March.

If we cannot negotiate a satisfactory rent increase, and if we therefore give the company notice to quit, what might happen if it goes to court?

Someone has told us that a judge would probably let the tenant stay to the end of her AST, and that we would automatically become her landlords, with the company 'dropping out'.

However I don't want to be in breach of our contract with the company, which contains a clause that we 'will not enter into a tenancy agreement subsequent to this one directly or indirectly with the occupying tenants. Any breach of contract by the landlord will make the landlord responsible for all court and legal costs of [the company].'

The same adviser has told us that the company would not be able to take action against us for breach of contract because the situation would be of their own making. Is that really true? And does it depend on whether the rent increase we seek from them is 'fair'?

Would it help if we withdraw the permission to sub-let (and can we)? In a separate document from the 3-year tenancy agreement, headed 'Authority to Sub-let', we gave the company permission to sub-let 'to whom they wish as long as they abide by the rules and regulations set by the Agreement signed by us under the Housing Act 1988'.

Could the company trap us in low rent forever, if they repeatedly give their tenant ASTs and don't break any other rules?
Submitted: 2 years ago.
Category: Property Law
Expert:  Remus2004 replied 2 years ago.
Thank you for your question. My name is Jo and I will try to help with this.

When does the AST end?
Customer: replied 2 years ago.



AST ends in March 2014. Not sure what exact date. The tenant told me it is 'at the beginning' of March. I could ask her for exact date if you need it.

Expert:  Remus2004 replied 2 years ago.
Thank you.

You need to serve a section 21 notice upon your tenant the company bringing this AST to an end. It will only end in March 2014 but at least it will and then.

That still leaves you with the problem of the sublet tenants. You could try to evict her but she could rely on the AST.

If she does then the worst that will happen is that you will have to sit it out and wait until that AST ends having served a S21 notice upon her bringing it to an end.

Once you have a possession order against the company they cannot create any other ASTs.

So, in short, it is a sadly long process but you can get control of your property again.

Can I clarify anything for you?

Customer: replied 2 years ago.

Oh dear, you have answered my question as if the agreement that I have with my tenant (the company) is an AST. I presumed you would know that it is not, because by law it cannot be. (Correct me if I'm wrong but I understand that certain conditions have to be met, to create an AST, and one of those is that the tenant

cannot be a limited company).

The AST which the company created with their tenant ends in March 2014. The three-year fixed term of the (non-AST) tenancy agreement between us and the company came to an end nearly two years ago.

Sorry it is complicated.

Expert:  Remus2004 replied 2 years ago.
Is this isn't an AST then thats not my area so I'll pass this onto somebody else for you.
Customer: replied 2 years ago.


Expert:  Ash replied 2 years ago.
Hello my name is Alex and I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply as this is not an ‘on demand’ live service, but rest assured I will be giving your question my immediate attention upon return. There is no need to wait here as you will get an email when I respond.

I see the expert has opted out - do you still need help?

Customer: replied 2 years ago.



Yes I still need an answer to my question as originally submitted.



Expert:  Ash replied 2 years ago.
Do you not have any trigger for a rent review please?

Customer: replied 2 years ago.

No, the tenancy agreement does not mention rent reviews.



I'm afraid I signed the form of words the company wanted me to sign, even though I knew it wasn't the right form. They used Oyez agreement 20/4 which is intended to create an assured shorthold tenancy (but which I believe can't have actually created an AST because the tenant is a company).

Expert:  Ash replied 2 years ago.
Indeed. What is the minimum term for this please? Are they out of this now?
Customer: replied 2 years ago.


It states:


TERM A fixed term of THREE YEARS from 2nd February 2009.


So they've been out of it since February 2012.


But in March 2012 they gave their tenant a further 12 month AST without consulting me. And again in March 2013. Cheeky but perhaps not illegal?



Expert:  Ash replied 2 years ago.
That makes no different and indeed that is not your problem. You are the Landlord, they are the tenant and it makes no difference whether or not they have a sub tenant.

You can serve notice to quit and ask them to vacate within 28 days or say you will issue proceedings. You have no contract with the sub tenant and that sub tenant could sue their Landlord (your tenant) for breach of contract.

The sub tenant could apply to the Court under new legislation to give them a little more time and the Court has power to extend that to two months before they have to leave.

But just because there is an AST between your tenant and the sub tenant does not prevent you from giving notice and asking your tenant to vacate.

Can I clarify anything about this for you today please?

Customer: replied 2 years ago.



That is useful to know.


We will now approach the company and see how they react.

Expert:  Ash replied 2 years ago.
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