A tenancy agreement is, or should be, an important document. It sets out the terms under which you agree to let your property to your tenant and, ideally, it should also set out all the legal rules that apply.
The document can then stand as a reference manual – something to consult when problems arise – so you will know what your rights are and the respective obligations of you and your tenant.
So lets take a look at some of the important elements that you need to include. We’ll start with the obvious ones:
These are the names of the landlord and the tenant(s). Sometimes this will also include the guarantors. You should also have contact details – in particular for the landlord (as the tenant can be presumably contacted at the property).
It is particularly important that an address for the landlord in England or Wales is included as this is a requirement under section 48 of the Landlord & Tenant Act 1987. If the address is not included then the tenant does not have to pay rent until he has been served with a notice (known as a section 48 notice) giving this information. A few possession claims based on rent arrears have been lost due to landlords being unaware of this rule.
Note that if two or more tenants sign a tenancy agreement together, they will automatically have ‘joint and several’ liability, which means that, for example, they will all be liable to the landlord for ALL the rent, not just their share. It is good practice to explain this in the tenancy agreement so your tenants are aware of this.
This needs to be clearly stated and you need to make clear exactly what is included. For example, if you are renting out rooms in a shared house, it is normal either to number the rooms or to give their location in the property – for example first floor back bedroom etc.
It is also good practice to include reference to things like garages, parking spaces, rights of way across the property and any part of the property retained by the landlord for his own use.
This is the length of time the parties have agreed that the tenancy will last for. In a sense it is a bit of a moveable feast – as it can be cut short if there is a break clause and the tenancy will run on automatically as a periodic tenancy if the tenants stay on after the fixed term has ended.
However, the term length is important. For example, landlords cannot evict tenants under the ‘no fault’ section 21 procedure during the fixed term – so long fixed terms for unknown tenants are not usually a good idea.
This is pretty crucial – the main reason landlords let property is to get the rent. Most is charged on a monthly basis – this is generally best, as most people are paid monthly. However, if your tenant gets paid weekly you may want to consider a weekly tenancy.
Note that the period of the rent will affect the period of the periodic tenancy, which follows on after the fixed term. So charging rent on a quarterly or six-monthly basis is not normally a good idea, as it will lead to very long periodic tenancies.
Not all landlords take deposits of course, but if you do, it is vital that this is referred to in your tenancy agreement and that there is a suitable clause saying what deductions are allowed – otherwise you are not entitled to make deductions!
This is the boilerplate text that appears after the main information listed above and covers things like payments, what the tenant is or is not allowed to do in the property, the ‘landlords covenants’, termination clauses and the like.
Many landlords want this part of the agreement to be as short as possible. However, you need to be careful about very short agreements – they are probably short because clauses that would otherwise protect your interests have been left out!
Many agents’ tenancy agreements on the other hand are very long – agreements of upwards of fifteen to twenty pages are not unusual.
If I were to discuss all of the things you need to include here, this article would be interminably long. However, I need in particular, to warn you about:
The Unfair Terms in Consumer Contracts Regulations 1999 apply to tenancy agreements and provide that if clauses are ‘unfair’ they will be invalid and unenforceable.
This is something you need to be very careful about you decide to amend the terms in your tenancy agreement yourself – if you don’t do it properly you may find that you have actually made the clause unenforceable. For example:
Prohibitions and pets
Clauses prohibiting tenants from doing something, for example keeping a pet, must include wording which says that the tenant can ask for permission to do whatever it is, which permission will not be refused unreasonably.
If you take this wording out, you will almost certainly be invalidating the prohibition. This is a particular problem with pets clauses as landlords often remove this wording on the basis that they are never going to allow pets. However, there is a binding legal case which confirms that this wording is essential.
On the other hand, if you allow your tenant to keep a pet, you need to include clauses about this and, in particular, the name and address of someone who has agreed to look after the pet if anything happens to the tenant – otherwise this will be down to you.
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