As a landlord, you will have vetted your tenants quite carefully before they come into your property. However, unfortunately, there is always room for something to go wrong. This is where the importance of tenancy agreements comes in.
Firstly, What is a Tenancy Agreement?
Essentially, a tenancy agreement is a legal document/contract between the landlord and the tenant. It allows the tenant to live in your property as long as they follow the rules and pay rent. It sets out the tenancy’s legal terms and conditions and it can be in written or oral form.
A tenancy agreement is beneficial for both parties and therefore, itis used in almost all cases.
Required Contents in a Tenancy Agreement
A tenancy agreement should include:
– The names of the landlord and the tenants.
– The rental price and the method of payment.
– Information regarding the reviewing of the rent.
– The deposit amount and how it will be protected.
– Instances when the deposit might be fully or partly withheld.
– The address of the property.
– The start and end dates of the tenancy.
– Tenant or landlord obligations.
– Any bills the tenant is responsible for.
It can also include information on:
– Early end of the tenancy and how it’s done.
– Responsibility for minor repairs (outside of the landlord’s legal obligation).
– Whether sublets or lodgers are allowed in the property.
Types of Tenancy Agreements
– Fixed-term. This type of tenancy agreement runs for a set period of time.
– Periodic. This type of tenancy agreement runs on a week-by-week or month-by-month basis.
AST agreements (usually one per household) are the most common form of tenancy. Most new tenancies are automatically this type. However, there are other types that exist:
1 Assured shorthold tenancies (ASTs)
A tenancy can be an AST if all of the following apply:
– The property you rent is private
– Your tenancy started on or after 15 January 1989
The property is your main accommodation
– Your landlord does not live in the property
A tenancy cannot be an AST if:
– It began or was agreed prior to 15 January 1989
– The rent is more than £100,000 a year
– The rent is less than £250 a year (less than £1,000 in London)
– It’s a business tenancy or tenancy of licensed premises
– The property is a holiday let
– Your landlord is a local council
2. Other tenancies
There are other tenancies that are not as common as ASTs, including:
-Excluded tenancies or licences
You may have an excluded tenancy or licence if you lodge with your landlord and share rooms with them, like a kitchen or bathroom. You’ll usually have less protection from eviction with this type of agreement.
-Assured tenancies (AT)
Tenancies starting between 15 January 1989 and 27 February 1997 may be assured. You’ll have increased protection from eviction with this type of agreement
Tenancies starting before 15 January 1989 may be regulated. You’ll have increased protection from eviction and can apply for a ‘fair rent’.
What is an Assured Shorthold Tenancy Agreement?
An Assured Shorthold Tenancy (AST) Agreementis a contract entered into between the landlord and the tenant on a short-term basis. They are protected under the Housing Act 1998 and the Housing act 2004. It is advised that the tenants read the agreement very carefully as there are several items in the agreement to abide by.
Both assured and assured shorthold tenancies are the most common methods of residential leases in the UK. They were both introduced by the Housing Act 1988 in their current form. Housing Act 1996 ensured that the assured shorthold tenancy was to be used unless otherwise stated. The Housing Act of 1988 was in many ways the beginning of the Buy to Let revolution.
Prior to these, residential lettings were largely governed by the provisions of the 1977 Rent Act. This archaic bit of legislation saddled landlords with tenants that had the security of tenure, making it virtually impossible to get them out.
What are the Benefits of an AST over an AT?
The Assured Tenancy (AT) gives a tenant extensive security of tenure. This means that at the end of the agreed term, the tenant does not have to leave, having the legal right to stay unless the landlord can establish grounds for possession. They also allow tenants the right to have their rent referred to the Rent Assessment Committee if they consider it to be excessive.
For most landlords and tenants ATs are not suitable. From a tenant’s perspective, one attraction of renting is that it offers short-term flexible accommodation. A landlord, on the other hand, wants to be able to charge a market rent and obtain vacant possession quickly and easily. This is why the majority of tenancy agreements are Assured Short holds or ASTs, as they respond to more realistic needs of both the landlord and the tenants, making it easy for landlords to get their properties back at the end of the term.
Where to Get an AST?
Luckily for us, there are numerous AST agreements available from a variety of sources. Ensure, however, that these agreements are up to date and also grant the tenancy that you want. Agreements in a digital format can generally be amended to suit your specific requirements and are, therefore, preferable.
The document will include headings such as description of the property, payment of rent, interest on arrears, council tax, water charges/utility, repairs and decoration, alterations / damage to property, use, insurance, assignment / transfer to other people, subletting, address for service, rent increases, and so on. However, it is worth noting that most landlords do not and are not required to get into this level of detail on the tenancy agreement. This is because they simply buy or acquire a standard Assured Short hold Tenancy Agreement (AST), most of which have a set of ‘standard’ terms and clauses which make them suitable for most lets.
Things to be Aware of with ASTs
In some cases, an assured short hold tenancy can be prolonged by signing another AST agreement for another 6 or 12 months. Be aware that the new AST doesn’t guarantee the tenant’s stay for the agreed period, as the initial agreement did. As a landlord, you can give a notice before the expiry date. That is why there is little point in following one AST with another. A periodic agreement is probably a better alternative.
Make sure to contact Independent Mortgage Brokers for a reliable source of information and online mortgage advice. They specialise on bad credit mortgages and remortgages, Buy to Lets, and more.