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Tenancy Agreements: A Guide for Landlords

Published by Susan Basnet
Posted Date: May 23, 2024 , Modified Date: June 5, 2024
Categories: Landlords

Embarking on the journey of becoming a landlord involves crucial steps, starting with property purchase. One pivotal aspect of renting out a property is the tenancy agreementβ€”a vital contract outlining the terms and conditions of the tenancy. This guide delves into the basics of tenancy agreements, covering types of tenancy agreements, essential inclusions to be made in the lease contract, and the process of termination.

Join us on this exploration to gain insights into the foundational aspects of managing tenancy agreements.

Understanding Tenancy Agreements and Their Significance

As a landlord, one of the most fundamental grounds for understanding with your tenants is a tenancy agreement. It is a contract between you and your tenants. Included within it are the legal terms and conditions of the tenancy.

Establishing a clear understanding between landlords and tenants is paramount, and a tenancy agreement serves as the foundational document in this regard. The agreement is not required to be in writing, but it's better to have it written down. It outlines the legal terms of the tenancy, which is important for many reasons.

Explicit Terms

Understanding Tenancy Agreements and Their Significance

The tenancy agreement explicitly outlines the terms governing the landlord-tenant relationship, including rent amount, duration, and other pertinent conditions.

Dispute Resolution

In the event of disputes, the tenancy agreement provides a framework for resolution. Both parties can refer to the agreed-upon terms to find mutually agreeable solutions.

Mortgage and Insurance Requirements

Many mortgage lenders and insurers require a tenancy agreement to be in place before granting loans or insurance.

Rights and Responsibilities

The landlord-tenant relationship revolves around a shared set of rights and responsibilities defined in the tenancy agreement. Here is a breakdown of key obligations both parties need to follow:

Landlord Responsibilities

  • Obtain relevant licenses, such as HMO licensing. E.g., if the property is a House of Multiple Occupations (HMO), the landlord may need to obtain a mandatory, additional, or selective license, in line with the HMO Rules
  • Conduct Right-to-Rent checks
  • Protect tenants' deposits
  • Provide necessary documentation
  • Fulfil health and safety obligations

Tenant Rights

  • Living in a safe property
  • Receiving their deposit back at the end of the tenancy
  • Accessing an Energy Performance Certificate
  • Challenging high charges
  • Protection from unfair evictions

Tenant Responsibilities

  • Pay rent and other bills on time
  • Maintain the property
  • Be considerate to neighbours
  • Report repairs promptly

Different Types of Tenancies

Tenancies vary in structures and conditions, catering to the diverse needs of landlords and tenants. Here is an overview of common types of tenancy agreements:

Assured Shorthold Tenancies

Regulated by the Housing Act 1988, Assured Shorthold Tenancy (AST) stands out as the predominant form of tenancy within the private rented sector, especially where the landlord does not reside in the property.

Assured Shorthold Tenancies

However, there are specific circumstances under which landlords cannot apply the AST. These include:

  • When the annual rent exceeds Β£100,000 or falls below Β£250 (Β£1,000 for properties in London)
  • For properties utilised for business purposes or those designated as licensed premises
  • For properties exclusively designated as holiday lets

Excluded Tenancies

Excluded tenancies apply when the landlord lives with the tenant and shares rooms like kitchen or bathroom. Tenants usually have less protection from eviction in this arrangement.

Rolling Periodic Tenancy

A rolling periodic tenancy, often referred to simply as a periodic tenancy, represents an arrangement where the tenancy persists on a rolling basis without a defined end date. This stands in contrast to fixed-term tenancies, which have a pre-determined duration. In a periodic tenancy, the lease is automatically renewed, providing a flexible structure for both landlords and tenants.

For Example, 

A tenant enters into a lease agreement with the landlord on 1 January, opting for a quarterly periodic tenancy with rent payments due at the start of each month. As each quarter begins, the tenant pays rent accordingly. Importantly, the lease automatically renews at the commencement of the next quarter, in this case, 1 April.

However, this automatic renewal is contingent on neither the tenant nor the landlord issuing the required notice to terminate.

This periodic tenancy structure offers flexibility for both parties, allowing them to reassess the arrangement at regular intervals. Whether it is the tenant's changing circumstances or the landlord's evolving plans, the periodic tenancy adapts to the dynamic nature of the rental relationship, providing a practical and adaptable framework.

Key Inclusions in Tenancy Agreement

As mentioned above, tenancy agreements outline the terms and conditions of a rental arrangement. It is essential to ensure that this agreement is comprehensive and covers crucial aspects to protect both landlords and tenants. Here are the key inclusions that should be part of a well-structured tenancy agreement:

Names and Details

  • Full names and contact details of both landlords and tenants
  • The specific address of the rental property

Rent Information

  • Agreed upon rent payment amount
  • The agreed upon method of rent payment
  • Provisions for rent reviews and increments, specifying how and when these will occur

Deposit Details

  • The amount of the security deposit
  • The method of protection for the deposit

Tenancy Duration

  • Clearly mentioned start and end dates for the tenancy

Responsibilities

  • Clearly define the responsibilities of both tenants and landlords

Additional Considerations

  • Any restrictions on terminating the tenancy early, along with the established procedures for doing so
  • Designation of responsibilities for minor repairs and maintenance
  • Clarity on whether subletting or having lodgers is permissible

Ending a Tenancy: Landlords

Terminating a tenancy before the agreed tenancy period ends is possible. However, the method of termination is contingent upon the form of tenancy agreement and the terms within it. Here is a breakdown of the notice period on several tenancy types:

Assured Shorthold Tenancies (AST)

Section 21 Notice: For periodic or ended fixed-term ASTs, landlords can serve a Section 21 Notice without providing a reason. This notice initiates the process of ending the tenancy, allowing landlords to reclaim possession.

Section 8 Notice: In certain circumstances, such as tenant breach, landlords can use a Section 8 Notice, specifying grounds for eviction under the Housing Act 1988.

Assured Tenancies

Assured tenancies are a more secure type of tenancy agreements as the landlord cannot force the tenants out of their property for the agreed upon period.  

For assured tenancies, landlords must have valid reasons or 'grounds' for termination, as outlined in the Housing Act 1988. Grounds may include non-payment of rent, property damage, or breach of tenancy terms.

Excluded Tenancies

In excluded tenancies, landlords typically need to provide a 'reasonable notice' to end the tenancy, usually equivalent to the rental payment period. If tenants pay the rent monthly, this notice period is generally one month.

Non-Excluded Tenancies

In non-excluded tenancies, landlords can end the tenancy at any time by serving a written 'notice to quit,' usually with a notice period of four weeks. A notice to quit typically names the people ordered to vacate the premises, the leaving date, the total sum of unpaid rent, etc.

Eviction Process

If tenants refuse to vacate after receiving proper notice, landlords may initiate eviction proceedings through the courts.

Eviction Process

It is important to note that forceful removal of tenants is not permissible, except in the case of excluded tenancies, where eviction without a court order is possible.

Ending a Tenancy - Tenants

Ending a periodic tenancy as a tenant involves providing written notice, typically 28 days or 4 weeks for weekly rent, and continuing rent payments until the notice period concludes, even if you move out earlier.

 Agreement with the landlord may alter the notice period or lead to other arrangements. In specific situations, landlords might have eviction grounds, but legal processes must be followed.

Keep a copy of the written notice for documentation and coordinate a property inspection with the landlord before departure to agree on the property's condition. Adhering to the tenancy agreement and local housing laws is essential, and seeking legal advice can provide clarity if needed.

Conclusion

To wrap up, the tenancy agreement is a critical document for both the landlords and the tenants. It is essential to understand the details of each type of agreement and its key provisions. Having knowledge in these areas is crucial for maintaining a harmonious relationship between tenants and landlords.

Frequently Asked Questions:

How can I change the terms of the tenancy agreement?

If the tenancy agreement requires any changes, this should be done with a mutual agreement between the landlord and the tenants.

What happens to a tenancy agreement if a tenant dies?

If a tenant dies, the tenancy transitions to the next of kin or the estate executor. However, if the tenant does not have an executor, the tenancy is temporarily transferred to the public trustee.

What is a break clause in a tenancy agreement?

A break clause is an agreement clause that allows the tenants and the landlords to terminate the lease earlier, i.e. before the tenancy period ends.

What is the eviction process if there is a break clause in the tenancy agreement?

If there is a break clause in the tenancy agreement, landlords can give notice after it is activated.

Need expert advice on Tenancy Agreements?

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Susan Basnet
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