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Choosing a Tenancy Agreement – by Solicitor Tessa Shepperson

Many landlords new to letting, for example new ‘buy to let’ landlords and ‘accidental’ landlords are unfamiliar with the paperwork needed for letting property. With the ever increase of regulation in the letting industry, it is important to have the correct paperwork in place, at the right time and in the right form.

One of the most important documents is the tenancy agreement. However many landlords do not bother too much about it, considering it to be a disagreeable necessity, something filled with legal ‘mumbo jumbo’, and just try to get the shortest and/or cheapest one they can find.

This is a mistake. A tenancy agreement sets out the rights and obligations between you and your tenant/s, and needs to be clear and unequivocal. You also need to use the correct agreement for the type of tenancy concerned.

Most tenancies nowadays will be an assured shorthold tenancy (AST). However if:

• the rent is over £25K 

• the tenant is living in self contained premises in the same building as the landlord, or

• the tenant is a limited company

the tenancy cannot be an AST (which are regulated by the Housing Act 1988), and will governed by the underlying ‘common law’. You need to use a slightly different form of tenancy agreement which makes this clear. Otherwise mistakes could be made in error, for example by your legal advisor, if he is not made aware of the type of tenancy concerned. This could result in a claim for possession (for example) being thrown out by the court.

Assuming the tenancy is an AST, slightly different forms of agreement need to be used depending on whether:

• there is one or more tenants occupying the whole flat or house, or

• there are a number of tenants who all have a separate tenancy agreement for their own room, with shared use of the rest of the property 

Other things you need to take into account are:

– Whether, if the term is over six months, you will want allow either party to end the agreement early. This is done by including a break clause

– Whether you will want the rent to be a weekly or monthly rent (most rent is paid monthly).

– Whether you will allow the tenant to have pets (in which case it may be advisable to use a tenancy agreement specially designed for this)

– Whether you will pay the utility bills or whether you will want the tenants to be responsible for this (for example landlords often pay the bills in shared houses).

When choosing a tenancy agreement it is a good idea to look for one which is written in a plain English style. These are much easier for both you and the tenant to understand, and tenants are more likely to read and comply with something they can read easily.

Finally, a word of advice about signing the agreement – make sure that your tenant does this before you give him the keys and allow him into the property. Once the tenant is in, there is no way you can force him to sign anything. You will be left with an oral tenancy only. This is highly unsatisfactory, for example, if you ever need to evict your tenant you will not be able to use the quicker ‘accelerated’ possession procedure.

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Tessa Shepperson is a solicitor, and editor of www.landlordlaw.co.uk, an online legal information service for landlords and tenants. Landlords will find more information about tenancy agreements in the Landlord-Law Which Tenancy Agreement guide.  A slightly different version of this article first appeared in Tessa’s blog, The Landlord Law Blog on 4 July 2009.

If you would like to contribute to our Spot On Blogspot, or would like me to guest on your Blog, please contact Paul Hajek, Solicitor, at Clutton Cox dot co dot uk