A tenancy agreement is a contract between you and your tenant(s). This agreement is incredibly important as it provides crucial rights and information to landlords and tenants alike. Any prior arrangements that have been made about the tenancy will be included in the tenancy agreement - provided they don’t conflict with the law. The question then, is what needs to be included in a UK tenancy agreement?
In this article, we’ve gone over the tenancy agreement musts - everything that needs to be included in a tenancy agreement. Being thorough with your contracts will help ensure a smooth tenancy.
What’s an Assured Shorthold Tenancy Agreement?
By far the most common type of agreement is an assured shorthold tenancy (AST), with almost all lets having one of these. An AST provides you and your tenants with certain rights and duties that can’t be wormed out of.
Any unfair clauses that are included in a tenancy agreement - such as saying that you’re entitled to visit without giving advanced notice - will be invalid. Similarly, any legal obligations that aren’t mentioned in the contract will still apply. Though, we’d recommend including all necessary points in writing for maximum clarity.
What Needs Including in Your Tenancy Agreement
So what exactly needs to be included in your tenancy agreement? To help answer this question, we’ve listed the 11 most important points that should be found in your next contract.
- The basics
To begin with, there are several small (but very important) details that need to be included. These are the landlord’s name and that of the tenants, the property’s address and the start date of the tenancy. Be sure to mention if any parts of the property are excluded, such as the garage.
If there are multiple tenants then the tenancy agreement should state that each person is ‘jointly and severally liable’ for the full rent. This means that if one tenant leaves or stops paying, the other tenants still have to pay the full amount, rather than just their portion. This should be explained to sharers upfront - as it can be a pretty hefty commitment.
- Tenancy length
By law, you can’t end an assured shorthold tenancy before six months has elapsed, so there’s no point in setting an initial fixed term that’s any shorter than that. You can extend this tenancy length beyond 12 months, but some lenders don’t allow terms of more than a year. This is because you’re then unable to get rid of tenants before this period expires, unless there’s a serious contract breach such as rent arrears.
Any tenancies longer than three years have to be executed as a deed. Very few landlords and tenants are willing to commit to a tenancy this long.
In practice, 12-month tenancies are what tend to find the best balance between flexibility and security for landlords and tenants alike. Be sure to specify the start and end dates of the tenancy.
- Rental cost, when it’ll be reviewed and how it’s paid
State the rent and how it’ll be paid. For example, every month (by far the most common payment period), in advance and to a specific bank account. You can decide how much rent to charge by looking at similar properties nearby and considering factors like whether your property is furnished or unfurnished and proximity to amenities.
You should also say when the rent will be reviewed - we’d recommend annually. Unless your contract provides for a rent rise, you can’t increase it before the end of the fixed term.
You should state who will be responsible for paying utility bills and council tax. This usually falls on the tenants, but you might take on the role in a student let or HMO.
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5. Deposit information
Most tenancy agreements include a tenancy deposit which needs to be paid to the landlord before a tenancy begins. You need to name the deposit amount (this is usually the same as 4 or 5 weeks’ rent), how it’ll be protected and that no interest will be paid.
You also need to state what can lead to deposit deductions, such as property damage, unpaid rent, unpaid bills and other contract breaches. Specify any admin fees that would go along with this.
- Tenant and landlord responsibilities
Your tenancy agreement should list any tenant and landlord responsibilities during the tenancy. While the law explains the majority of these duties, you can still add clauses relating to minor repairs and who is responsible for them. For example, tenants are usually required to make small alterations like replacing lightbulbs. This list of responsibilities should extend to bills and who needs to pay them, including utilities, water and council tax.
- Guarantor information
A guarantor is someone who agrees to cover the rent if a tenant is unable to make the payment themselves. Landlords can ask the guarantor to pay what they’re owed when tenants go into rent arrears.
If your tenancy agreement requires a guarantor then written confirmation is needed, stating that the guarantor will pay if the tenant defaults or commits a breach that costs the landlord. By default, a guarantor will be jointly liable for the total rent in a shared house.
- Notice period and break conditions
You should state that both parties - landlord and tenant - need to provide two months’ notice to end the tenancy at or after the end of the fixed term. This is a recommended length of time - tenants can also be entitled to leave with less in certain circumstances.
Where longer-term contracts are concerned, you should say whether the tenancy can be ended early and the process for doing this. When it comes to disputes, the courts will deem a break clause unfair if it only applies to the landlord.
- Reasons for termination
It’s important to list the factors that could lead to a tenancy being ended early. These grounds for termination will be listed in the Housing Act 1988 and can include rent arrears, late payments and property damage. For accidental landlords, this termination can also occur when you used to live in the property and need to return.
- Are pets allowed?
Though still not that common in the rental sector, pet-friendly properties are starting to become more accessible to prospective tenants. While marketing your property as pets-included will undoubtedly attract more tenants, there are also drawbacks, including potential property damage and noise complaints from neighbours (and other tenants if in a shared home).
If you’re happy to have pets in your property then add a pet clause.
Subletting occurs when an existing tenant lets out some or all of their home to someone else - a subtenant. This subtenant will then have a tenancy for some or all of the property with exclusive use of that accommodation.
You should state in a tenancy agreement whether or not the property can be let to someone else and if lodgers are allowed.
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