UK Landlord Forum / Life

Hi All,

I am a private landlord looking to remortgage my current BTL mortgage.  There was an Assured Shorthold Tenancy Agreement in place with my current tenants for the first year of the rental, but this was not renewed and therefore lapsed into a Statutory Periodic Tenancy which has been in place now for a further 1.5 years.  HSBC are saying I need an Assured Shorthold Tenancy Agreement in place to qualify for a remortgage.  Is this usually necessary?  Is it wise to get the current tenants to sign up to one if the original agreement is now a periodic tenancy?  Are there any pitfalls in doing this??  I've queried it with HSBC and should get an answer from them soon.  Will let you all know what comes back.  But I would appreciate it if any of you have come across this before and can say what your experience is.....

Many Thanks in advance,

Mike

An SPT is not a different thing to an AST. They're the same thing... just without a fixed term. It hasn't "lapsed" as such, that carries negative connotations, somehow, it's just done what plenty of normal tenancies do.

Give HSBC the AST document and inform them the same tenancy is running as a SPT.

Hi Hippogriff,

Thanks for your post in reply to my question.

Yes, I understand the difference between an AST and a SPT and how the former naturally changes into the latter once the assured tenancy period ends, (unless a new AST is signed at the end of the assured period, of course, in which case a new AST is created).

I am still scratching my head as to why HSBC need an AST and seem unwilling to accept the SPT.  The mortgage adviser came back to me having queried the requirement with the underwriter and said yes an AST is definitely required.  He said that it was something to do with it being harder to gain possession of the property (2 months rather than one month).  By underwriter, am I to assume he was speaking to an insurance underwriter and therefore it was all to do with the lender's ability to repossess the property should I default on the loan?  I don't know.....The advisor has been on leave and not contactable, so I can't confirm this with him....

If it is about my ability as landlord to take back possession of the property from the tenant, then surely under the rules of the Section 21 of the Housing Act it would take me longer to take back possession of the property under an AST (not possible till the end of the assured period) than a SPT (with only 2 months' notice)!  If the tenant has not abided by the rules in the tenancy agreement (AST or SPT) then surely I could issue a notice of eviction under Section 8 and would not need to wait till the end of any assured tenancy period either way....

You say that there is no difference between the AST and the SPT apart from the fixed tenancy term part.  I would tend to agree, except that I did read somewhere that one difference is that if you issue a Section 8 notice for eviction when an AST is in place and the tenant moves out, the tenant is responsible for payment of Council Tax till the end of the assured term, whereas with a SPT the landlord would become responsible.....I would be keen to know if this is actually true, or not.

I can't see that HSBC would care who pays the Council Tax, or would they?

I find all this legal stuff intriguing, until it causes problems for me and then it can be so frustrating.  Wish I had a friend who is a lawyer!

Mike

Hi again Hippogriff,

Thanks for the suggestion about asking HSBC to accept the original AST agreement and explaining to them the fact that the SPT is virtually identical to the AST apart from the assured term....I will try this and see what response I get!!!

Cheers,

Mike

It's not just virtually identical: a Statutory Periodic Tenancy is an Assured Shorthold Tenancy. It's the default form of residential tenancy in England & Wales (ignoring lodgers for the moment). Your tenants were on an AST when they started. They're still on an AST now. An AST is what you've got.

I imagine HSBC just want to make sure you haven't got some weird or archaic agreement that gives your tenants extended rights of tenure. If they can't grasp the concept of a SPT, then you might be better looking for a lender who can.

Simon,

Thanks for your message.

I do understand what you are saying.....my wording (virtually identical) was probably wrong.....what I meant was the assured term is different now, in that now there is a SPT, I can give the tenants two months' notice to vacate so that I can take possession of the property.  The difference, when there was the original AST in place, is that the tenants had a longer period of assured tenancy earlier in the tenancy.  For instance, with a 6 months AST, at the very beginning of the tenancy I wouldn't be able to give notice of possession (Section 21 notice) to get the tenants to leave before the end of the 6 months assured tenancy period (unless they did not conform to certain agreed rules of the tenancy agreement and there were therefore grounds for eviction).   So in that way, the AST and SPT are different!!

Simon,

If a AST and SPT were the same, why would anyone ever renew a tenancy agreement, instead of letting the original AST roll on as a SPT?

It's because the renewed AST, once signed by both parties, provides a longer assured tenancy period moving forward than the SPT... until the end of the assured term and the AST then changes to a SPT again....

They're not the same: SPTs are a subset of ASTs, i.e all SPTs are ASTs but not all ASTs are SPTs (just as all VW Golfs are cars but not all cars are VW Golfs).

Quote from: Lets Prey on December 12, 2016, 10:40:57 PM
Simon,

If a AST and SPT were the same, why would anyone ever renew a tenancy agreement, instead of letting the original AST roll on as a SPT?

It's because the renewed AST, once signed by both parties, provides a longer assured tenancy period moving forward than the SPT... until the end of the assured term and the AST then changes to a SPT again....

Security, fixed term.

Ok, both tenancy agreement forms are assured to a degree.  The AST gives at least a 6 months assured tenure by law, unless the tenant does not abide by the terms of the agreement and gives the landlord grounds for eviction.  The SPT gives the tenant at least 2 months' security of tenure by virtue of the notice period the landlord has to give the tenant to regain possession, plus any additional time it takes the landlord to evict him/her.

The main difference under the law is that the AST is a fixed term, i.e. whatever term was stipulated in the tenancy agreement - usually between 6 months and 3 years, whereas the SPT is a periodic tenancy which rolls on from week to week or month to month or quarter to quarter (in accordance with whether rent was paid weekly, monthly or quarterly, etc).  The Statutory bit comes from the legal statute that says that an AST will automatically change into a SPT if the original AST is not renewed with a further fixed term.

All interesting stuff in my book!!

Yes, we know.