If your tenancy is about to expire and you have nowhere to live, you might be beginning to panic.
We understand that the threat of homelessness, or even the uncertainty of couch surfing can turn your life upside down. You might think that you have to leave your rented accommodation as soon as your tenancy has expired leading to high stress – but this isn’t strictly true.
Depending on your lease, you may be able to ‘hold over’, which means to stay at the property after your lease has expired. Whether you can or not will depend on the type of lease you have.
In this article, we’ll thoroughly explore the ins and outs of holding over on a lease.
Table of Contents
What does holding over on a lease mean?
Holding over on a lease is when a tenant remains at a rented property after their lease has expired.
Someone is holding over on a lease if they don’t have security of tenure as a clause in their lease, which is governed by the Landlords and Tenant Act 1954.
Security of tenure under the Landlord and Tenant Act 1954, gives commercial tenants the automatic right to keep possession of a business premises after the lease term has ended.
Most residential tenants will not have security of tenure.
It’s worth noting that a holdover period can be ended at any time by the landlord or the tenant.
What is a holdover tenant?
You may be referred to as a holdover tenant if you are in the situation where you are staying at your rented accommodation after your lease has ended. Tenants in both residential and commercial properties can be holdover tenants.
What are the potential outcomes of holding over?
Holding over can create a new tenancy or you may be accused of trespassing by your landlord.
The uncertainty caused by either situation means that holding over is not generally recommended, as depending on the circumstances, legal ramifications can be created for both parties, including legal cases with mounting costs.
Holding over may create a new tenancy – either a tenancy at will, a periodic tenancy or an annual periodic tenancy – or the landlord will consider it trespass and issue repossession proceedings.
What are the risks of holding over?
Holding over presents a lot of uncertainty over the legal positions of both tenants and landlords.
When a tenant is allowed to stay past the expiry of their current contract, this can create two new contract situations, or be considered trespass.
Either a tenancy at will is started, or a periodic tenancy begins.
Let’s start with a tenancy at will. This type of tenancy can be created or exist by implication. They can be ended by either party at any time.
They do not give the tenant a right to an automatic lease renewal. They can be useful to tenants and landlords as they offer flexibility to both parties if they wish to create a short-term tenancy that can easily be bought to an end. As a tenant, you can be evicted at any time with short notice under this time of tenancy, so beware!
If the tenant stays after a tenancy has ended, a landlord can bring a damages claim against the tenant. A landlord does this by claiming for reasonable rent for the occupation period past the contract expiry. The claim is based on whether the tenant stayed without the landlord’s permission, implied or expressed through a contract. The amount of compensation is determined by the rent previously paid during the tenancy.
How to avoid holding over?
As holding over on a contract is a grey area between a tenancy and trespassing, it offers little protection to either party. A one-line contract or a monthly rolling contract can often easily negate the uncertainty of holding over.
If a landlord or tenant doesn’t want to hold over on a contract, there are a few strategies they can employ.
Both parties should express their intentions for the point when the contract ends, well in advance of the expiry. Landlords can further protect themselves by including a clause in the original contract stating what they expect to happen at the end of the contract and their position on holding over, including how they would issue eviction proceedings. An example is a one-year contract lease that states that it will convert into a monthly rolling contract when the year comes to an end. This can help protect a landlord’s asset and ensure they don’t lose out on rent.
If you as the tenant decide you would like to remain at the property, your best option is to transparently indicate this to your landlord. This will allow negotiations for a new contract to begin. Your landlord will then appoint a solicitor to draw up a new contract. You may also wish to appoint one to ensure the contract meets your requirements.
If there are only weeks to go before the tenancy ends, the landlord will usually send a legal letter via their solicitor to the tenant with a demand for possession of the property when the lease expires, in essence asking them to vacate the property. Alternatively, the landlord may be happy to enter into a new lease - in this case, the landlord’s solicitor can send a letter to the tenant informing them that the landlord retaking possession of the property will be paused to give both parties an opportunity to negotiate a new lease.
What is a periodic tenancy?
When a tenant occupies a property and continues to pay rent after their lease has ended, an implied periodic tenancy can be created. Periodic tenancies can happen by agreement or by circumstances. They are typically tenancies with no fixed end date, sometimes known as a rolling tenancy. Under a rolling tenancy, a tenant has rights under the Tenant and Landlord Act 1954 - these include the statutory right to a new tenancy and the right to remain at the property.
Learn more in our full guide to what is a periodic tenancy.
What is an annual periodic tenancy?
Annual periodic tenancies are a tenancy agreement that roll over on an annual basis, periodically, until either the landlord or the tenant ends the agreement.
There are two types of annual periodic tenancy and they both follow on from a fixed tenancy term. Contractual periodic tenancies run month to month via a clause in the contract that states it will take the place of the fixed contract once it expires.
Statutory periodic tenancies follow assured shorthold tenancies after they come to an end of its fixed term, and the tenant remains at a property without renewing a contract. When the tenant continues to pay rent which the landlord accepts, tenancy will continue on a periodic, or rolling basis.
Advice for landlords and tenants
A holdover tenant’s rights depend on the wording of the original lease. Additionally, the landlord’s goodwill comes into play – they may let the tenant stay until they find somewhere else to live, or enter into a mutually beneficial short-term arrangement or contract.
Get support with Lawhive
This area of property law can become complex, quite quickly. Whether you’re a tenant that wants to understand their rights or a landlord that requires advice on a legal evictions process, we can help.
For personalised advice on commercial property law, contact our legal assessment team for a fee case assessment and fixed fee quote today.