If you are a new landlord and you are ready to sign up your first tenants, you’ll probably want some sort of assured shorthold tenancy agreement. This article will tell you what the main sorts are, where to find them for free and give some advice on whether you need to pay for one or not. Just remember, I’m not a lawyer so don’t take what I say as legal advice.
What is an assured shorthold tenancy?
Most new tenancies that buy-to-let landlords have to deal with these days are what are known as assured shorthold tenancies (AST). These first came into force in 1980 but became really widespread in January 1989 when they became the dominant form of new agreement.
The big thing to remember about a tenancy agreement is that it has two elements. One element is that it is a contract between a landlord and tenant. Under this part of the tenancy, you set down the amount of rent that a tenant has to pay as well as many of the other rights and obligations between the two.
A tenancy is a bit like marriage
The second part of a tenancy is the part where the government gets involved. In this, entering a tenancy is a bit like getting married. By this I mean that when you enter into a tenancy you give up some rights over the property. You lose the right to simply march into whenever you want to. You lose the right to change the locks or kick someone out. And like a marriage, sometimes the only way you can end it is by going to court. Even if a tenant is in breach of the agreement, they have rights under law that allow them to keep occupying the property until such time as a bailiff knocks on the door. Remember this because you should always keep this in mind when entering a tenancy.
Do I need a tenancy agreement?
Strictly speaking you can find yourself in a tenancy agreement with nothing in writing. A verbal agreement is strong enough to establish a tenancy. As a landlord this is not an ideal situation at all because if you allow someone into a property and start collecting rent from them, you are granting them all sorts of rights over the property without you having secured your rights. So always make sure you have a signed agreement before you hand over the keys.
Among other things that can happen if you do this, according to landlordlaw.co.uk (I highly recommend you go to this site) is that your tenants can paint all the walls black and change the locks.
What should a tenancy agreement contain?
According to the government, the basic elements of a tenancy agreement should include.
- the names of all people involved
- the rental price
- the deposit amount and how it will be protected
- the property address
- the start and end date of the tenancy
- any tenant or landlord obligations
- which bills the tenant is responsible for
You could also include information on:
- how to pay rent
- whether the tenancy can be ended early and how this can be done
- who is responsible for minor repairs
- whether the property can be let to someone else (sublet) or have lodgers
In addition the contract that a landlord draws up must have the following characteristics:
- be fair
- not go against legal landlord duties
- is balanced between the two parties
- must cover rent payment
- must cover deposits
What else should an agreement contain?
The additional clauses that you want in a tenancy agreement are all about trying to protect your rights.
- You want to ensure that you have the right to inspect the property after giving due notice (usually 24 hours) and that the tenant should not unreasonably refuse this.
- Set out terms on what the tenant can do with the property (ie, they may not change the locks, should move furniture back to where they found it and should not do major redecoration without your permission).
- You should also state that your tenants do not have the right to sublet the property. The last thing you want is to find that someone else is living in your property and you have no idea who they are.
- You must include an address (yours or a managing agent) in England for the service of notices. Normally you would do this in the agreement but if you have forgotten then you can send a notice to your tenant giving them your address. If you don’t provide your address and then subsequently try to regain possession of the property for rent arrears, the tenant will be able to successfully defend themselves in court against your claim.
What can’t I put in a tenancy agreement?
According to the Office for Fair Trading (OFT) tenancy agreements are not allowed to contain unfair terms and conditions.
If unfair conditions are included in the contract, they may be unenforceable? Examples of this include trying to get tenants to agree to pay disproportionately high compensation (fines in other words) if they fall behind in rent or breach the contract in some other way. On the other hand you can claim reasonable expenses, for instance a few pounds to send a reminder notice for late rent, as long as these are reasonable and fair.
How long is the minimum tenancy?
By law you can draw up a contract that is for any length of time that you like, and if you and the tenant agree then all is dandy. The problem is that by law, tenants do not have to leave a property within the first six months, so if you agree to a shorter-term tenancy of say 1 or 2 months and your tenant changes their mind, then as long as they are paying their rent and doing what they are supposed to do, you can’t kick them out within six months.
Where can I get a tenancy agreement?
There are a variety of places where you can find a tenancy agreement.
- You can either use pre-printed ones that you can buy from a stationary store such as WH Smith. These usually cost about £10 each. You can also download an agreement from a landlord’s site such as the LRA, PropertyHawk or LandlordLaw. In these cases you need to be members of the associations or sites in order to get the downloads.
- These are usually a step up from the basic preprinted ones as they allow you to customise the agreement.
- You can also find free ones, but these are not always advisable as they may not be up to date or properly drafted by a solicitor.
Further resources:
http://www.direct.gov.uk/en/HomeAndCommunity/Privaterenting/index.htm
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