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Ash
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10916
Experience:  Solicitor with 5+ years experience
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I have signed a tenancy contract with a corporate tenant for

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I have signed a tenancy contract with a corporate tenant for three years. The property is in London. The tenant has an option to renew annually and if they choose to renew, as landlord, I am obligated to continue to rent them. The tenancy contract was not Assured Short Hold tenancy, but was signed with the company who then assigned an employee to occupy it. I now have an urgent need to sell the property. May I ask them to leave on the basis that I need to sell the property? If so, do I need to compensate them? What would be the compensation terms?
Submitted: 2 years ago.
Category: Property Law
Expert:  Ash replied 2 years ago.
Hello my name is ***** ***** I will help you with this.
For now please let me know what it says about termination ?
Customer: replied 2 years ago.

The tenant gives two months of notice after the first 6 months. The contract is 3 years, annually renewable by the tenant.

Expert:  Ash replied 2 years ago.
Automatic or option?
Customer: replied 2 years ago.

They have an option to renew at the end of each year. Once they choose to renew, the new rent increase will be in line with the CPI increase. So it is supposed to be automatic once they choose to renew it.

Expert:  Ash replied 2 years ago.
But its for 1 year though initially? Its residential also I assume?
Customer: replied 2 years ago.

It is residential. But the contract is three years, renewable annually.

Expert:  Ash replied 2 years ago.
Ok. This would usually be an AST regardless of what it says. That being the case then you could issue a Section 21 notice and ask them to leave at the end of the first year. It depends on how the Court approaches that if they refuse to leave.
As for breach of contract you can ask them to leave if you are selling anyway as the Court wont have a discretion if you are selling as you wont be the Landlord. As for compensating you would be responsible for the cost of alternative property. So if for example that is £500 a month you would be responsible for the higher rent (ie if they had to pay £650 a month, your cost would be £150 per month), plus the cost of moving fees and any agency fees.
So that would be your liability. Again you would only be liable for this for a maximum of 3 years or remaining term.
Can I clarify anything for you about this today please?
Alex
Customer: replied 2 years ago.

What is Section 21 notice? How should I cite it?

Regarding compensating for the alternative rent, at the moment, they have completed the first year and they want to renew for the second. Since no one knows what would happen for year three, i.e., they may not renew, I shouldn't be liable for the third year, should I?

Can I propose for any other compensation method?

Expert:  Ash replied 2 years ago.
Section 21 are available online. Technically you would only be liable if they wanted to stay, so you would be.
Yes you can propose other compensation.
Does that help?
Alex
Customer: replied 2 years ago.

I did a basic search of Section 21 online. Here is says under a automatically renewed period contract, which seems to fit my case, I can just issue two months notice under Section 21(a) to the tenant. See here http://www.houseswift.co.uk/faq/section214a

My question is, do I no longer need to propose a compensation if I have a right to end the contract by giving two months notice?

Expert:  Ash replied 2 years ago.
Yes that is right. If you are giving notice at the end of the period then you wont need to give compensation, that is correct.
Alex
Customer: replied 2 years ago.

Hi Alex,

Just to be clear I understand you, in my case the contract automatically rolls forward by a year and we are now at the first month of year 2. They just paid the new monthly rent. Do I still have the right to give the Section 4(a) notice of two months without compensating them?

Expert:  Ash replied 2 years ago.
No, if it has been renewed then you give notice now and that ends at the end of year 2.
Does that clarify?
Alex
Customer: replied 2 years ago.

Yes it does.

Further clarifying it, for a period contract, simply because the date has passed the 1st year end date, does such a automatic forward rolling count as renewal?

BTW, I in fact didn't agree with the renewal, nor did we sign any renewal agreement. The original contract that grants the three year period says the annual rental increase shall be in line with CPI or within a band of minimum of 2% and maximum 6%, for an automatic rolling forward. Because the CPI is below 2% this year, i.e. 1.3%, the tenant says they can stay by just paying the minimum 2%. I didn't agree with this.

Expert:  Ash replied 2 years ago.
If it was agreed they could renew for a further year and they did then it is a further 12 months. But if there was no mention and it was a 12 month fixed term then it is a periodic tenancy.
But if the original contract as you say is for 3 years and they dont need to renew it then its 3 years
Alex
Customer: replied 2 years ago.

"If it was agreed they could renew for a further year and they did then it is a further 12 months." Yes I think this is my case.

Does this mean if I issue a Section 21 notice now, they will leave in 12 months? Is Section 21 applicable in this case? Can they argue that despite my notice, because they did not breach the original contract, they still have an right to renew the contract for the third year? The original contract granted them the option to renew for two years.

Expert:  Ash replied 2 years ago.
If they renewed then they have to leave at the end of the current 12 month period.
So if it was signed and renewed in january 15 you give notice now and they move January 16. Yes they may say its breach of contract but that would be for a Judge to decide the meaning and interpretation of the contract.
Does this clarify??
Alex
Customer: replied 2 years ago.

"So if it was signed and renewed in january 15 you give notice now and they move January 16. "

Do you mean they move on Jan 16 in twelve months, since it has already been renewed a year by them?

If this is what you mean, what can I do to ask them leave asap, as I cannot wait 12 more months?

I will pay you a tip after the closure of this question. thanks.

Expert:  Ash replied 2 years ago.
Let me be clear.
Lets assume that they rented on 5th January 2014
The contract renewed on 5th January 2015. You now want them out and can serve a section 21 notice. But they will be entitled to stay until the end of the current rent contract, in my example 5th January 2016.
Does that clarify?
Alex
Customer: replied 2 years ago.

Yes, perfect!

I want them to move out asap so that I could sell my property, as I am now in much need of cash.

Expert:  Ash replied 2 years ago.
Indeed. You can ask them now but clearly may be responsible for breach of contract as we have discussed earlier.
If this answers your question might I ask you to rate my answer before you go today please, the button should be at the bottom of the screen.
If you need more help please click reply.
Alex
Customer: replied 2 years ago.

I will pay you a tip.

I need to evaluate how to bring this up to them. If I am liable for breach of contract, provided I propose a fair way of compensation, are they obligated to leave?

Also, I don't think they have observe the contract either and we had a dispute of the correct increase of the new rent. The original contract that grants the three year period says the annual rental increase shall be in line with CPI or between minimum of 2% and maximum 6%. Because the CPI is below 2% this year, i.e. 1.3%, the tenant says they can stay by just paying the minimum 2%. I didn't agree with this increase which is too low and asked for a 4% increase. Instead, their new rent paid a few days ago was only a 2% rise. Can I evict them on the basis that no renewal agreement was reached?

Expert:  Ash replied 2 years ago.
They are not obliged to leave, you may need a Court order.
You can only evict with a Court order. You could argue the non renewal yes.
Alex
Customer: replied 2 years ago.

Got it.

Final question, how to obtain the court order? Do I need to find a solicitor? Where could I find a solicitor who could help me with this?

Thank you very very much.

Expert:  Ash replied 2 years ago.
Dont need a Solicitor you can do it yourself.
Its this form:
http://hmctsformfinder.justice.gov.uk/courtfinder/forms/n005-eng.pdf
Alex
Ash, Solicitor
Category: Property Law
Satisfied Customers: 10916
Experience: Solicitor with 5+ years experience
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Expert:  Ash replied 2 years ago.
Hi

I am just following up to see if there is anything else I can help with?

If this answers your question might I ask you to rate my answer before you go today please, the button should be at the bottom of the screen.

If you need more help please click reply.

Alex

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