Creating Your Tenancy Agreement

There can be a lot of factors to consider when leasing a property, but a legal tenancy agreement is vital. Although creating a tenancy agreement is not always a legal requirement, landlords without one often find that there can be legal ramifications, which can also be costly in many ways. 

For example, a tenant refusing to leave a property could not only lead to lost revenue but also create a series of legal costs. A tenancy agreement ensures that tenants are fully aware of all aspects of the agreement, including payment of rent and the length of the tenancy. 

Some may assume that creating a tenancy agreement is costly, but the fee charged when using a professional will always be less than the costs that can occur if a legal agreement is not in place. 

A landlord must have a tenancy agreement in place and ensure the agreement is relevant to the advertised tenancy. The following is a breakdown of the common tenancy agreements and instances when they are used. 

Assured Shorthold Tenancy (AST)

An Assured Shorthold Tenancy (AST) is commonplace among private landlords and lasts between six and 12 months. The amount paid in rent cannot be less than £250.00 or more than £100,000.00 per year. The exception to this is some properties in London, where the rent cannot be lower than £1,000.00 per year.

An AST can only be created between a private landlord and a tenant, so it will not be relevant for local councils.

The fixed-term aspect of an AST ensures that both the landlord and tenant are fully aware of the tenancy length, which can only end if both parties agree to a termination of the AST, or if a tenant breaches the contract. For example, if a tenant stops paying their rent, then the landlord can begin eviction via a Section 8 notice.

Once an AST has expired, the lease is considered a periodic tenancy, meaning the lease can be indefinite if both the tenant and landlord agree. Should the landlord wish to reclaim the property, a Section 21 notice will need to be served, giving tenants two weeks’ notice.

What Is the Difference Between an Assured and Non-Assured Tenancy?

The main difference between an assured and non-assured tenancy is that landlords can regain control of the property as soon as the tenancy ends when using an assured tenancy. However, there can be some other differences to consider, so a detailed breakdown of each tenancy type is detailed.

Assured Tenancy

An assured tenancy is used by housing trusts and associations and is considered a secure form of residence for tenants and landlords. The agreement allows residents to remain on the property indefinitely if the agreement conditions are met.

Although not every agreement is the same, many assured tenancies will show the maintenance and upkeep of the property is the tenant’s responsibility, the landlord must ensure all plumbing and electrical work is carried out using licensed professionals, and any repairs impacting the lifestyle of tenants are carried out immediately.

Non-Assured Tenancy

Although non-assured tenancies are less common than assured, there are still occasions when they are used. When a non-assured tenancy is used, instances include the tenant having property elsewhere or the rent being less than £250.00 per year. A non-assured tenancy is also used when the landlord lives on the property but does not have access to the same facilities as the tenants.

Regulated Tenancy

A regulated tenancy is like an AST and assured tenancy because it is private. The Valuation Office Agency sets the maximum rent for a regulated tenancy. Landlords can charge rent based on a valuation of similar accommodations in the area.

Another noticeable difference regarding a regulated tenancy is that eviction of tenants needs to be handled differently. A Section 21 eviction cannot be used, and the landlord must obtain a possession order instead.

What Is Fair Rent? 

A fair rent is a maximum amount that can be charged for rent to those with a regulated tenancy. 

The Valuation Office Agency sets the fair rent following a request from a tenant with a regulated tenancy or the landlord. Fair rents are often lower than conventional rental prices and ensure that tenants are protected regarding their rights. 

The regulated tenancy is used as it ensures landlords follow the guidelines set out by the VOA. Of course, there can be instances when a regulated tenancy is not the best fit for a property, meaning another type of tenancy will need to be used. 

Can I Create My Own Tenancy Agreement?

Although landlords, associations, and agencies can create their own tenancy agreement, it is not advised unless they are well-versed in property law. What may have been legal in the past may be considered an illegal clause today. For example, The Tenants Fees Act 2019 made some tenancy payments illegal.

There is also the type of tenancy agreement that needs to be considered. Although some are familiar with standard tenancy agreements, there can be instances when further guidance is required. The following is an overview of other tenancy agreements and examples of when landlords would use the contract.

Other Tenancy Agreements to Be Aware Of

In addition to standard tenancy agreements, there can be other instances when legal documentation is required to safeguard the rights of tenants of landlords. Many people will understand the concept of subletting and short-term lets, some may not be aware that there are several tenancy agreements associated with subletting.

Excluded Occupier

An excluded occupier is often a lodger, meaning they will rent a portion of the property instead of the whole building.

The tenancy agreement drafted can be either fixed-term or periodic. Periodic tenancy agreements mean the landlord does not have to serve written notice to leave and can simply ask the tenant to move on,

The length of the agreement can vary, but unless a tenancy period is mentioned, it will be a periodic tenancy.

Subtenancy

A subtenancy is when a portion of the building is rented to a tenant by another tenant with the landlord’s permission. The length of the tenancy often depends on the agreement between the original tenant and landlord. Still, there are opportunities for a contract to be made with the landlord, depending on the circumstances.

Which Agreement is Best for Me?

In some instances, landlords will create a tenancy agreement for the first time, whereas others may want to use a contract for a different property type.

Whether you are creating your tenancy agreement for the first time or want advice on other types of leases, then why browse Legal Matters Made Simple for a wide range of professional legal documents that omit the confusion and provide the best fit for your requirements in every instance.

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