Posted: Thursday 19 January 2012
Would you like another year’s rent from your tenant?
By Hugh Angus
With occupancy rates falling, and the rental levels flat at best in most sectors, most landlords would say yes. So how much time and effort does a switched on and actively engaged landlord have to put in to achieve this? What vast expenditure on legal fees? Possibly nothing.
The flip side of this is that a tenant can end up paying an extra year’s rent, again by doing nothing.
In Scotland if neither party to a lease brings it to an end, it continues for another year on the same terms and conditions. The established view is that a lease can only be brought to an end by either party serving a notice to quit.
If the landlord wants to be able to secure vacant possession at the end of the lease the notice has to be in a statutorily prescribed form. The statutory forms are archaic, badly drafted and look terrible.
The law is in a bit of a mess, but the safe course for a tenant is to serve an equivalent notice if it wants to bring the lease to an end, within the same timescales. Recent case law indicates that the tenant may be able to escape a little more easily, and few tenants wish to pay for premises they don’t need.
Periods of notice are also interesting. Many of you will know that 40 days is the most common period. Shorter periods may apply to leases of less than a year. Many people have trouble remembering how large premises have to be before the notice period increases to a year.
Will the rent necessarily be the same if the lease is automatically extended? Not necessarily if the lease provides for an ongoing cycle of rent reviews, which can be a relief for a landlord who forgot to serve a notice in a rising market.
