What is a Tenancy Agreement?
A tenancy agreement is an agreement made between a tenant and a landlord for a specific rental property. The tenancy agreement gives a tenant the right to live in the property based on the terms agreed under it. Although a tenancy agreement can be written or oral, it is best practice to have a written tenancy agreement so all parties are aware of their rights and obligations.
Most individuals renting from a private landlord, who does not live in the property, will have an assured shorthold tenancy agreement. Whereas, if the landlord lives in the property, it will be a licence and the individual will be considered a lodger.
In this article we will uncover what these key clauses are in an assured shorthold tenancy agreement and the key elements a landlord and tenant should consider.
Rent, Deposit and Other Costs
It is important to include a clause on rent. The clause must include the total amount of rent payable, the date the tenant must pay rent and how the rent must be paid. The tenancy agreement may also expand to include details on how pro rata rent is apportioned alongside details of how interest is calculated where a tenant fails to pay rent on the rent due date.
If the landlord requests a deposit from the tenant, the tenancy agreement must include details on how much deposit is required, which tenancy deposit scheme it is held under and when the deposit will be repaid after the tenancy ends. This clause will include details of reasonable costs that may be deducted from the deposit.
The agreement should also include details of who is responsible for the utilities and council tax at the property and other reasonable costs incurred by the landlord that the tenant is required to reimburse.
It is important to note the Tenant Fees Act 2019 reduces the costs tenants can face at the outset, and throughout the tenancy. When drafting a tenancy agreement you should ensure you are not in breach of this act.
Tenant Obligations
The tenancy agreement should include details of what the tenant can and cannot do in the property and to the property.
It may include details of what antisocial behaviour is prohibited, whether the tenant can decorate the property, how the tenant must notify the landlord of a repair alongside a range of other restrictions and obligations.
The tenancy agreement should also include details of when the landlord, or an agent, can enter the home. It is useful to include details of how much notice the landlord has to give ahead of a visit in case of prospective viewings or in the event of an emergency.
Repairs and Damages
The tenancy agreement should include details of how the tenant should deal with repairs. It should stipulate:
- Which repairs are the tenant's responsibility and which repairs are the landlords responsibility.
- How the tenant should report repairs.
- What happens if the disrepair is not reported properly.
- Details of an emergency contact.
Bills
It is important to clearly distinguish who is responsible for what bill so there is no ambiguity. Often tenants' may change the utility provider, where you do not wish for the tenant to change provider, you should clearly word this within the written tenancy agreement.
Sub-letting
In some cases a tenant's situation may change and they may wish to leave the property during the term of the tenancy agreement, in which case they may resort to sub-letting the property. Sub-letting is also becoming a growing issue where tenants supplement their income by taking in other renters. If you want to prevent the tenant from doing this, you need to ensure there is clear wording in the agreement restricting the tenant from sub-letting. If the tenancy agreement restricts the tenant from sub-letting the property but the tenant proceeds to do this, the tenant will be in breach of the agreement.
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Pets
The government has removed the ban on pets in the Model Tenancy Agreement. Where a landlord does not have the Model Tenancy Agreement the landlord must clearly word within the agreement whether pets are permitted or not. A blanket ban on pets may be considered as an unfair term under the Consumer Rights Act 2015, where pets are not permitted wording should be added to state the tenant must request consent from the landlord (which cannot reasonably be withheld).
Cleaning
Not adequately cleaning a property may lead to serious issues for landlords. This can often be a huge cost for landlords at the end of a tenancy, including clauses in tenancy agreements to prevent this will save both time and money,
Landlords cannot require tenants to pay for professional cleaning at the end of the tenancy, under tenancy agreements, as this is restricted under the Tenant Fees Act 2019.
Instead a landlord may wish to include clauses in the agreement which require the tenant to leave the property in the same condition as when they moved in, or require the tenant to maintain a level of cleanliness throughout the tenancy.
Notice Period
There are a number of instances in which a landlord may require the tenant to give notice. One example includes the tenant giving the landlord notice for when they will not be in the property for an extended period of time.
The tenant must also give notice of disrepair in accordance with the tenancy agreement.
The tenant may also need to refer to the tenancy agreement to identify how notice must be served when terminating the tenancy.
Key Dates
Tenancy agreements must include details of key dates impacting the tenancy. For example:
- Start date, where there is a fixed term tenancy, specify the end date and total term of the tenancy agreement.
- If there is a break clause which allows you to terminate the agreement sooner than the end date.
Given the complexities around tenancy agreements it is important you do not take a copy and paste approach and use the same tenancy agreement for each property or tenant. Each rental property will require its own agreement which is specific and unambiguous. You may choose to use a template provider such as Legislate or alternatively seek legal advice where there is a more complex issue at hand.
About Legislate
Legislate is a legal technology startup which allows landlords, letting agents and small businesses to easily create, sign and manage contracts that are prudent and fair. Legislate’s platform is built on its patented knowledge graph which streamlines the contracting process and aggregates contract statistics to quickly unlock valuable insights. Legislate’s team marries technical and legal expertise to create a painless, smart contracting experience for its users. Legislate is backed by Parkwalk Advisors, Perivoli Innovations and angel investors.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.