Can You Sign a New Tenancy Agreement with New Tenants Before the Existing Tenants Have Moved Out?

Received from Tessa Shepperson at Landlord Law

I recently came across this blog from Tessa Shepperson at Landlord Law, and I felt the need to share it with you because it’s something that really interests me.

There’s often a focus for landlords to rush tenants out in order to avoid void periods and the dreaded council tax bill that comes in the landlord’s name between tenancies. By the way, it still baffles me that if a tenant leaves on a Monday and the new tenant moves in on a Tuesday, the landlord still gets charged for one day of council tax.

To avoid this, landlords often try to schedule move-outs and move-ins on the same day—tenants vacate in the morning, and new tenants move in that afternoon. But after reading Tessa’s blog, it really made me stop and think about whether this is always the best approach.

Can We Sign a New Tenancy Agreement with New Tenants Before the Existing Tenants Have Moved Out?

This is a question to the blog clinic from Catriona, who is a landlord in England.

My tenants have served two months’ notice, as required under our rental agreement, that they will be leaving on 15 March. However, they are buying a flat and as yet there is no agreed completion date.

I plan to start marketing the flat this week, with March 17 as the move-in date. What is my legal position if I sign a contract with some new tenants for them to move in on 17 March but then it turns out that the existing tenants haven’t actually completed by then?

You need to be REALLY careful about this. Landlords can only get vacant possession of their property in two circumstances:

•The existing tenants move out, or

•A court bailiff or High Court Enforcement Officer acts under the authority of a court order for possession

So, if the tenants fail to vacate—in this case, because they have not completed on their house purchase—you will not be in a position to let the new tenants in.

If you have already signed a tenancy agreement with the new tenants, you could be in breach of contract. They may be able to claim compensation through the courts.

You can guard against this by making the new tenancy conditional upon the existing occupiers moving out, but for this to be legally enforceable, you would need to prove:

•That this condition was clearly drawn to their attention, and

•That the clause was given prominence in the tenancy agreement document.

However, my advice to landlords is that you should not sign up new tenants until you have vacant possession and have been able to enter and inspect the property first.

Why Landlords Need to Leave Time Between Tenants

For example, the property may require:

•Serious repair works

•Energy efficiency upgrades (such as insulation or boiler replacements)

•Refurbishment or decorating work before it can be marketed

Most works are best done while the property is empty.

Additionally, if the previous tenants have left the property in a dangerous condition—for example:

•Removing unauthorised additional wall lighting, leaving live wires exposed

•Infestations, such as bed bugs

You will be liable to the new tenants for this, even though the problem was caused by the outgoing tenants.

Moving new tenants in just two days after the previous tenants have vacated may not give you enough time to deal with potential issues. You may be laying yourself open to complaints and compensation claims.

With the new Renters’ Reform Bill on the horizon, landlords will face:

•Increased standards for rented homes

•Harsher penalties for non-compliance

•A new Redress Scheme, making it easier for tenants to complain

This is why it is crucial to ensure the property is fully inspected and compliant before allowing new tenants to move in.

There is a shortage of decent rented accommodation at the moment, so assuming your property is in good condition and in a desirable location, it shouldn’t take too long to find new tenants.

However, it’s far better to take the time to inspect and prepare the property properly rather than rush new tenants in and risk legal disputes.

This blog by Tessa Shepperson is a valuable reminder that while void periods are frustrating, the risks of rushing a new tenancy could be far greater in the long run.

If you want to stay legally compliant and protect yourself from unnecessary liabilities, make sure you only sign a new tenancy once the previous tenants have fully vacated and you’ve had time to inspect the property.