Best Tenancy Agreements for Landlords and Which to Use?
- November 2, 2022
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Whether you’re a new landlord renting out your first property or a seasoned owner with multiple rentals, nothing is more important than a tenancy agreement. Tenancy agreements will benefit you and your tenants by reducing the risk of problems and disputes while protecting your individual rights.
It’s easy to feel intimidated by the differing types, terms and tricky terminology. However, tenancy agreements don’t have to be complicated or overwhelming. That’s why our property management team at Flex Living have put together this ultimate guide to tenancy agreements for landlords in the private renting sector so you can enjoy a simplified, streamlined landlording experience. If you want to know more about tenancy agreements, read on. Alternatively, download a tenancy agreement template now.
In this article, we are going to discuss :
What is a Tenancy Agreement?
A tenancy agreement is a contract between a property’s landlord and the person renting that property (the tenant). The signed agreement will give a tenant the right to rent the landlord’s property for an agreed period of time and rent (both of which should be clearly written into the tenancy agreement).
Types of Tenancy Agreements for Landlords and Tenants
There are several variations of both fixed-term and periodic agreements that landlords can offer potential tenants. It’s important that both parties check the type of agreement and how it applies to their arrangement before signing it.
The four main types of tenancy agreements you should be aware of include the following:
- Assured Shorthold Tenancy Agreement
- Short-Term Tenancy Agreement
- Assured Tenancy Agreement
- Joint Tenancy Agreement
When it comes to how long a tenancy agreement can last, it depends on whether the agreement is a fixed-term agreement or a periodic agreement.
- Fixed-term agreement: runs for the length of tenancy written into the contract. Agreements usually contain a 12 or 18 month term (although it’s not uncommon to have 6 month, 24 month or even longer contracts). If your fixed-term agreement ends, it may then become a rolling contract (a periodic tenancy). Alternatively, you can sign a renewal agreement
- Periodic agreement: a rolling agreement usually starts with a fixed term (as above) and then becomes rolling after the fixed-term ends. It is applied based on how often the rent is paid. For example, if rent is paid every month then the contract will run on a month-by-month basis.
Ensure you pay attention to the following tenancy agreement elements; they should exist in every contract:
- Full name of the landlord(s) and tenant(s)
- The amount of rent paid by the tenant per rent payment schedule (e.g., monthly, quarterly, weekly)
- The deposit amount to be paid by the tenant to the landlord
- The length or term of the tenancy agreement
- Any special or additional conditions the landlord sets for renting the property, such as:
– Your landlord pet policy (read our ‘Can Landlords Refuse Pets?’ blog for more information on your landlord rights regarding renting and pets.)
– Break clause (a term in the contract that allows for early termination before the set end date)
– Address for service of notice (or email address)
It’s uncommon for contracts to last less than 6 months. While most assured tenancy agreements used to be annual, it’s becoming more popular to have agreements with a longer term of 18 to 24 months.
Remember: Before signing an agreement and obtaining the tenant’s signature, ensure you’ve completed all your tenant referencing checks. If you’re unsure about where to start, read our complete guide on tenant referencing for some essential advice.
What Does Each Tenancy Agreement Mean?
So what do each of these tenancy agreements mean? We’ll explain the following:
- Assured Shorthold Tenancy Agreement
- Short-Term Tenancy Agreement
- Assured Tenancy Agreement
- Joint Tenancy Agreement
1. Assured Shorthold Tenancy Agreement
An assured shorthold tenancy agreement is the most common tenancy agreement for landlords. Assured shorthold tenancy agreements are usually fixed-term. They typically begin with an agreed minimum term of 6 months for the initial tenancy and offer protections to both landlord and tenant. You cannot raise rent prices during this initial period, nor can you evict the tenant (without following lengthy eviction proceedings in court). Furthermore, you are legally required to protect the tenant’s deposit in the government deposit protection scheme. This is why it’s important to verify your potential tenants using tenant referencing processes before signing any agreements – it can be difficult to recoup compensation from a tenant’s deposit because of these Government-enforced measures. Once the agreed fixed term is over, the tenancy agreement will often become ‘periodic’ (that is, a rolling contract), unless you sign a new contract with your tenant.
Pay attention to the following when agreeing to shorthold tenancy agreements:
- Both the length and the break clause of the agreement. These factors will impact when you can end the agreement early.
- It’s common for shorthold tenancy agreements to renew automatically for the same amount of time as the initial occupation and then continue to renew on a rolling basis until the agreement is changed (i.e., either the tenant moves out or the landlord decides to end the tenancy). However, this is not always the case.
2. Short-Term Tenancy Agreement
A short-term tenancy agreement (also known as a short fixed-term agreement) is a tenancy agreement that typically lasts for less than 90 days but can be applied for up to six months.
Short-term tenancy agreements are not very common due to landlords’ and tenants’ strong desire for longer renting periods. When considering a short-term tenancy agreement, consider the following:
- They are most appropriate for cases where a property is only likely to be vacant for a limited period, such as renting a holiday let out of season.
- Tenants are still protected but rent prices for short-term agreements are typically higher, providing a boost for landlords.
- You must register any tenancy lasting more than six months as an assured shorthold tenancy (see above).
3. Assured Tenancy Agreement
An assured tenancy agreement is a tenancy agreement that offers a tenant the right to live in your property long-term. In some cases, this duration might extend to the rest of their life! The main difference between an assured tenancy agreement and an assured shorthold tenancy agreement is the time factor – assured tenancies are usually lifelong agreements that only cease if the tenant decides to leave or if they are evicted. These tenancies are rarely offered by private landlords. They are usually provided by housing associations or councils.
Typically, assured tenancy agreements will only apply to tenancy agreements formed between the 15th of January 1989 and the 12th of February 1997. As a result, assured tenancies are less common now than they used to be. A private landlord is also less likely to agree to an assured tenancy agreement due to the increased protection and rights it affords a tenant.
When considering an assured tenancy agreement, keep the following points in mind:
- Assured tenancy agreements also become periodic (rolling) when the fixed term ends.
- Assured tenancy agreements are far more difficult for a landlord to terminate early without the tenant’s agreement, as the tenant is offered the right to live in the property for the whole of their initial agreement.
- If the tenant dies within the fixed term of their initial tenancy agreement, assured tenancy agreements can, in some cases, be inherited by the tenant’s next of kin.
- As a landlord, you will have the tenant occupy your property but could also end up dealing with their descendants!
4. Joint Tenancy Agreement
As the title indicates, a joint tenancy agreement is signed by multiple parties who have a shared responsibility for the tenancy of a property. These will usually be made between couples, students living in a house share or friends living together.
It is important to remember the following when signing joint tenancy agreements:
- Joint tenancy agreements can have as many tenants as desired, with new tenants added and removed as necessary (providing the landlord agrees).
- They will usually work the same way as assured shorthold tenancy agreements in practice
- However, joint liability applies to this type of tenancy, meaning all parties share responsibility for rent arrears and property damage
- If one person on a joint tenancy is at fault for rent arrears or damage to a property and cannot pay it, then the responsibility also passes to the other tenants.
- Whilst this increases liability if things go wrong, it can prove a problem for landlords if tenants dispute each other or try to avoid paying for things!
5. Excluded Tenancy Agreement
This agreement applies to landlords who live with their tenants in the same property and share the same facilities (i.e., ‘lodgers’). Under an excluded tenancy, you do not have to put tenants’ deposits in government-approved schemes. However, you must still provide tenants with reasonable notice if you intend to end the agreement (that is, 4 weeks notice if they pay weekly and one month’s notice if they pay monthly).
What Does a Tenancy Agreement Look Like?
Most types of tenancy agreements adopt a basic template pattern that is then used over and over again.
You can find a simple tenancy agreement template with this shorthold assured tenancy agreement sample from the UK Government website. This template is intended only for a situation where a private landlord and tenant enter into a fixed term assured shorthold tenancy for a privately rented property in England. It should not be used when forming agreements related to holiday homes, social housing or commercial properties.
Do I Need a Written Copy of My Tenancy Agreement?
If you are in England or Wales, you do not have to provide tenants with a hard copy of the agreement, but you do if you are in Scotland.
While you are not legally obliged to provide tenants with a hard-copy of the agreement, it will save time later on if there are any misunderstandings or tenancy disputes.
Things to Remember with Tenancy Agreements
As a safeguard, you (or your letting agent) should ensure that a lawyer oversees all tenancy agreements and documents to check for any errors or irregularities.
Failure to complete a tenancy agreement correctly or follow the required procedure with supporting documents could lead to an invalidated tenancy agreement. This could have consequences in the event of evictions, rent disputes or renewing agreements.
As we mentioned above, always remember to check the following before signing any tenancy agreement as a landlord:
- The type of tenancy agreement written on the document
- Whether the agreement is fixed-term or periodic
- The start date for the agreement
- The length of the agreement
- The minimum term for the agreement
- Break clauses and notice periods
- That the deposit and rent amount is written on the agreement
- All tenants and landlord’s names are written correctly
- Liability for contents, fixtures and fittings stated
- Enclosed a copy of the your landlord inventory list
- That you have enclosed your copy of the property’s:
- EPC
- EICR and;
- Gas Safety Certificate
Stress Less with Flex
At Flex Living, our dedicated team handles everything from property refurbishment to paperwork. Yep, that includes tenancy agreements. By using our property management services, you can sit back and relax while we do all the hard work for you. If you are still stuck at the stage of finding tenants for your property, read our article on How to Find Tenants for some advice.
For more information on safety certificates required to let your property, visit the following articles:
- Landlord gas safety certificate (Gas Safety)