Types of tenancy agreements

If you are renting a property today, most likely you are entering into an assured shorthold tenancy (AST). This type of agreement applies if: you are a private landlord; the tenancy begins on or after 28 February 1997; and the flat is its own separate accommodation and the tenant’s main home. An AST grants the landlord the ability to end the contract after an initial six-month period via advanced written notice.

As an AST is a fixed-term tenancy, this means the contract will end on a specified date. After this date, landlords can propose a renewal and a new end date, and it is generally advisable to do so. Otherwise, the tenancy will be converted into a periodic tenancy (with a rolling or unspecified end date). However, landlords cannot force tenants to sign a renewal or eject tenants without engaging in a formal eviction process. If a fixed-term tenancy ends without a new signed agreement, it automatically becomes a statutory periodic tenancy with the same rent and terms with the tenant able to move out with a month’s notice.

How to get started

There are many different approaches to creating a tenancy agreement, with each carrying its own strengths and weaknesses.

One option is to seek the advice of a solicitor. As renting your property to a tenant confers certain legal rights to them, using the services of a solicitor to professionally prepare the tenancy agreement can be an iron-clad way of protecting your interests. They can offer counsel on the legal implications of leasing your property to a tenant, find the most appropriate type of tenancy for you, draft the tenancy agreement, and more. While a solicitor might be expensive, it can save money and headaches by ensuring you are on the right side of the law and well-safeguarded in case of a tenancy dispute.

Many landlords opt instead to use the services of a letting agent. Letting agents take on the tasks of finding and screening tenants, rent collection, and other managerial duties, but they also will draft the tenancy agreement, eliminating the need for the landlord’s involvement. While letting agents can help a tenancy run smoothly and relieve a lot of the burden of managing a property, agent fees in the range of 15 to 20 percent of the monthly rent are fairly typical in addition to any other extra fees the agent may charge.

Finally, landlords can create the tenancy agreement themselves, whether through an online service or on their own from scratch. For starters, the government offers a model agreement for an AST, but it may not be the most intuitive or safest way to go if you are unfamiliar with all the legal terms or requirements. Alternatively, you can use a web-based service such as legalcontracts.co.uk, which runs through a questionnaire of the property’s features and needs to craft a custom-made tenancy agreement.

Whether you craft the document yourself or avail yourself of a service, there are certain items and considerations that every tenancy agreement should contain. These include:

  • Name and details of both the landlord and the tenant
  • Any other parties associated with the agreement (letting agent, for example)
  • Complete address of the property
  • Commencement date and duration of tenancy
  • Conditions for early termination of the tenancy
  • Length of required notice periods
  • Rent amount and payment due dates
  • Security deposit amount and specifics of the deposit protection scheme
  • How repairs and maintenance are handled and who is responsible
  • What utilities are required and who is responsible for paying them
  • End of tenancy cleaning and how the property will be returned after the tenancy.

Some tenancy agreements might also include pet clauses, which indicate whether the tenant can keep a pet on the property or not and what they need to do in order to have one. Subletting might also be covered and whether renters have permission to let others use or rent out the property.

Finally, there are the common issues that cause many disputes. Covering the following in a tenancy agreement can prevent a lot of stress and potential legal trouble down the line: whether smoking is or isn’t allowed; rules about noise, disruptions, and other nuisances; allowed uses for the property including business or illegal purposes; rules for what to do if the property is left vacant; whether the property is provided furnished and how furniture can be moved in and out of the property; and any other clauses or considerations that have been negotiated with the tenants before the commencement of the tenancy.

A well-written, legally sound, and thorough tenancy agreement not only fulfils legal requirements but protects your interests as a landlord. While you can rent out your property without having one, it is an important safety net and one of the cornerstones of a successful letting.

Key points

Private landlords who live outside of the rental property commonly enter into an assured shorthold tenancy (AST), which usually has a fixed endpoint. After the tenancy period ends, tenants may enter a rolling or periodic tenancy or renew into another fixed term.

Drafting a tenancy agreement might be done by a hired solicitor, a letting agent, or by the landlords themselves.

The tenancy agreement should always include a minimum of considerations, as well as some recommended items and anything negotiated upon by both parties before the tenancy begins.