A guide to handling the renewal of a tenancy agreement

The renewal of a tenancy agreement is a crucial task for landlords who want to maintain long-term tenancies with their tenants and avoid costly void periods. A well-structured and simple tenancy renewal for the tenant helps maintain a positive relationship between landlord and tenant, encouraging the tenant to stay in the property for longer.

In this comprehensive guide, we’ll cover every step of the renewal of a tenancy agreement, explore best practices, and answer key questions such as: can a landlord refuse to renew a tenancy agreement?

Why a smooth tenancy renewal is essential

The renewal of a tenancy agreement might seem like a task that doesn’t require much attention, but it’s actually quite the opposite. It’s just as vital as making the tenancy agreement in the first place. 

A well-written tenancy renewal with a positive and comfortable experience for the tenant can make the difference between them staying and leaving the property. Keeping the same tenant in the property brings a myriad of positives. This means you will not have a void period, so the monthly income is retained.

It prevents landlords from having to go through the process of getting a new tenant, which includes tenant screening and various other onboarding processes.  

Understanding how to deal with the renewal of a tenancy agreement

Sorting out a tenancy renewal involves a structured process. Here’s a step-by-step guide to getting it right: 

Step 1: Review the existing tenancy agreement

Landlords should know their tenancy agreement anyway, but it’s worth reviewing and refamiliarising themselves with the details. This review helps you identify what’s working and what needs updating for the tenancy renewal. 

Step 2: Assess legal changes and market changes 

Laws and regulations are constantly changing in the world of property rental. There’s a good chance something included in your existing tenancy agreement will need changing to comply with current legislation. It’s important to keep an eye on this throughout the tenancy to see if anything needs updating, but it’s imperative that you do it when making a renewal. 

It’s also worth checking if everything is still compliant. For example, an EICR needs to be renewed every five years. 

Assessing the market changes is also an essential part of a tenancy renewal. Perhaps some of the rentals in the local market have started to offer something unique or different that you could also get. The rental price might have jumped 5-10% in the local area, which you also want to match when the new agreement commences.

Step 3: Inventory check

An inventory documents the property’s condition and its contents at the start of the tenancy. This record can later be used to assess the property’s state at different stages of the tenancy or upon the tenant’s departure. A tenancy renewal is a good time to check the state of the property and document any changes.

Step 4: Draft updated tenancy agreement

Prepare a fresh agreement with clear terms regarding rent, duration and responsibilities. Include any new responsibilities, such as maintenance obligations. Any circumstantial changes should also be included in the updated tenancy agreement.

In addition to these basic terms, the updated tenancy agreement should also include any new clauses or changes that you and your tenant have agreed upon. For example, you may want to add a clause about pets or smoking. You may also need to update the agreement to reflect any changes in the law, as suggested above.

Step 5: Communicate with tenants early

Timing is critical. Notify tenants 2-3 months before the lease expires to discuss the renewal of a tenancy agreement. Send a polite letter or email outlining your intent to renew, proposed changes (e.g., rent adjustments), and a timeline for their response. Early engagement prevents last-minute stress and shows you value their tenancy. This subsequently helps build a positive relationship between landlord and tenant.

Negotiating rent adjustments during a tenancy renewal

Rent increases often come up during the renewal of a tenancy agreement. To negotiate effectively:

• Research market rates: Use sites like Rightmove to compare local rents. A £50 increase might be fair if nearby 2-bedroom flats have risen from £900 to £950.
• Justify the change: Explain the increase (e.g., inflation, property upgrades). Tenants are more likely to agree if it’s reasonable.
• Be flexible: Offer options—a smaller increase for a longer term, say.

Listen to tenants and act quickly

A tenant may raise concerns that can affect the outcome of a tenancy renewal. This could include some property maintenance concerns, perhaps they have noticed some dampness that they want to solve. The landlord should act quickly and try to fix the issue as soon as possible. For instance, fixing a £200 plumbing issue now might save you a vacant month costing £1,000. Completing this will boost your chances of tenant retention.

Practical tips for a smooth tenancy renewal

Follow these tips during a renewal of a tenancy agreement:

• Clear documentation: Record all emails, letters, and signed agreements. This protects you if disputes arise.
• Set firm deadlines: Ask tenants to confirm within 30 days. A clear cutoff helps both parties stick to the required timeline.
• Seek professional input: For tricky cases (e.g., major rent disputes), consult a solicitor or letting agent familiar with tenancy laws.

Can a landlord refuse to renew a tenancy agreement?

Yes, a landlord can refuse to renew a tenancy agreement. This is a decision the landlord can make at the end of a fixed-term period. While there is no legal obligation to complete a tenancy renewal, it’s important to make sure the reason is legitimate. For example: 

• Reclaiming the property: You plan to live in it or sell it (Section 21 notice required, with 2 months’ notice).
• Tenant issues: Breaches like unpaid rent or property damage (Section 8 notice, with grounds specified)

Landlords must make sure they are not discriminating against the tenant. Under the Equality Act 2010, decisions cannot be based on race, religion, gender, sexual orientation, disability, or other protected characteristics. 

Landlords should ensure clear and good communication with the tenants, as it can be quite a complex process for them. It’s best to give as much notice and information as possible, with detailed reasons, so they can understand the decision.

The Renters’ Rights Bill, which is likely to become law in Spring 2025, may tighten the eviction process. Without valid grounds, refusing a tenancy renewal risks legal pushback. All reasons should be documented, and landlords should seek professional legal advice if they are unsure. If there are tenant issues, then you should document the issues in detail.

A tenancy renewal is an important step to take during your time as a landlord. But there are also other important renewal deals you might need to make. This could include landlord insurance. It’s important to protect your property and investment as much as possible with landlord insurance. To compare landlord insurance quotes, contact us at 01788 818 670 today to find out more, or get a quote online.