The first thing I would say to tenants is ‘don’t panic’! If a landlord dies the tenancy does not end. It becomes part of the landlord’s estate, just like the landlord’s other assets and after Probate has been granted it then passes to the landlord’s beneficiary/beneficiaries who will become the new landlords.
For the tenant, nothing changes – the tenancy continues until the end of its term as it would do under normal circumstances. The tenant cannot be evicted early as long as they keep paying the rent. Granting Probate takes time – weeks and often months – so even if the new landlord doesn’t wish to renew the tenancy agreement in due course, the tenant will have plenty of time to decide what to do next.
Every situation varies and what happens next will depend on the beneficiary’s personal circumstances. They may continue to rent the property to the existing tenant in which case nothing will change – although the landlord must inform the tenant in writing of the change to the tenancy. When the tenancy is up for renewal, the next agreement will be with the new landlord.
Alternatively, the new landlord may let the tenancy roll over and become a ‘Periodic Tenancy’ – this is when neither landlord nor tenant signs another agreement so a Periodic Tenancy automatically follows on with the same terms and conditions as the previous one. If the tenant wants to leave, they must give written notice of one month. The landlord must give the tenant at least two months’ notice.
The tenant’s deposit remains protected as it should be held in an approved Tenancy Deposit Scheme. The executors or the new beneficiary must authorise the return of the deposit at the end of the tenancy in exactly the same way as the landlord would have done.
There are several other possible scenarios when the tenancy ends. Depending on the landlord’s finances, the property may need to be sold to raise funds to pay Inheritance Tax. This can be the case, particularly in London where property prices are very high. If there is more than one beneficiary, a property may need to be sold so that the proceeds can be divided between them. The tenant is still entitled to stay in the property until the end of the tenancy or until there is a break clause at which point the landlord will serve notice to the tenant. Again, as it can take some months for Probate to be granted and then for the property to be put on the market and sold, the tenant has time to find a new home ready for when the tenancy ends. The new landlord may be happy to continue renting the property to them after the current tenancy ends but on a shorter, six month tenancy agreement to allow flexibility on both sides.
This is what happened when a client of ours died last year. He owned an apartment in a new development in Kensington in his sole name. In his Will, he left the property to his wife and their two children. They decided to sell the property in order to split the proceeds. The tenant was seven months into the tenancy so there were still five months left to run. When the tenancy did end Probate still hadn’t been granted and the family were keen for the tenant to stay on in the meantime so the property could bring in an income until it could be sold. We liaised between the tenant and the family to arrange a new tenancy for just six months, which suited both tenant and landlord, giving the tenant plenty of time to find a new home. The family were also happy as they kept a rental income coming in until the property was eventually sold. The arrangement suited everyone.
In another case, our landlord owned a large portfolio of 12 properties in Hampstead and when he died he left the properties to his two sons. They split the properties between them and continued to rent them out, so for the tenants nothing at all changed. The key is that every case is different and flexibility is essential. Our role is to liaise between landlord and tenant to ensure that we reach a solution that suits everyone.
If a property is professionally managed, the letting agent will continue to act on behalf of the beneficiary, an easier option for the tenant who will liaise with their existing contact as before. If the property was previously managed by the landlord, the tenant will have to deal with the executors of the landlord’s Will and then the beneficiary so this will naturally be a more difficult transition.
In the past, we have discovered that tenants have been recommended by well-meaning friends to seek the advice of organisations such as the Citizens’ Advice Bureau but the law is already on their side and this simply isn’t necessary. We can reassure tenants that, when a landlord dies, nothing will change during the course of the tenancy. That is the law. And we will act on their behalf to find a solution when the tenancy ends at its due time, helping both tenant and landlord reach a satisfactory solution.
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