Advice for landlords: Tenancy agreements explained

The tenancy agreement is probably one of the most important documents created in the landlord/tenant relationship, and it is the responsibility of both parties to ensure they have read and completely understood their obligations and responsibilities. However, many people take extraordinarily little time to really read or understand the tenancy agreement.

Type of agreement

The type of agreement will depend on the circumstances of the tenant, the property and sometimes the landlord. The Housing Act 1988, as amended by the Housing Act 1996, in most cases will create the best-known type of tenancy agreement: the assured shorthold. It is really important to understand that the law will dictate the type of tenancy agreement used rather than that being a decision for either the landlord or tenant.

For an assured shorthold to be created, the property will be the main residence of the tenant, the tenant will be person rather than a company and the rent will fall below £100k per annum. The assured shorthold gives the landlord a little more flexibility in terms of the length of the tenancy, with a potential to offer between one day and three years to the tenant. From the tenant’s perspective, they have some protection; the landlord has to serve a Section 21 notice before possession can be sought and the legislation protects them more than non-Housing Act tenants.

The content

For any landlord, the agreement should be in writing, clearly outlining the obligations of the tenant in relation to the payment of rent and the condition of the property. It is important to tailor the tenancy to the landlord, the tenant and the property, with clauses being relevant and applicable. For example, if there is no garden then ensure the tenancy agreement has no reference to the garden or any obligation to maintain such. If the tenancy agreement requires the landlord to provide the tenant with a copy of the building’s insurance or a summary of the main points, then the landlord must provide this. Failure to do so could cost the landlord money at some point.

Special clauses

It is quite common for one party to suggest a special clause be inserted into a tenancy because of a particular situation. This could range from a clause to allow the tenant to end the fixed term earlier than agreed (commonly referred to as a break clause) or maybe a clause to allow someone in addition to the tenant to reside at the property (known as a permitted occupier). These clauses must be constructed fairly and be easy to understand because where ambiguity arises, it is highly likely that any judge, if it went that far, would favour the tenant’s interpretation of the clause. If there is any doubt about how to word such clauses, it is recommended the landlord seek professional advice.

Signatures and witness signatures

It would be advisable for any landlord to obtain the signatures of all parties involved in the tenancy agreement, and that they have been provided for all the copies of the tenancy that may be produced. If there are either joint landlords or tenants, it is recommended they all sign, to provide evidence that they have read and understood the obligations and responsibilities as set out. Sometimes you may want to consider that signatures are witnesses, although legally there is no obligation for this to be done unless you are creating a tenancy for more than three years in length. If the landlord requires witness signatures, they should not be the other party in the agreement as this could create and be seen as a conflict of interest.

Summary

It is imperative a landlord understands and tailors each tenancy to fit the needs and requirements of each and every one of their properties and tenants. If the landlord just hopes they can use the same agreement over and over again by simply changing the tenant’s name, dates and the rent level, it is likely that at some point they will become unstuck and have trouble either enforcing the tenancy or regaining possession. The consequences could be serious for a landlord not spending those few extra minutes making sure the tenancy is compliant and reflective of the situation.

If you have any questions, please do not hesitate to contact the experienced lettings team at Foxes. Call us on 01202 299600 or email lettings@foxes.co.uk 

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