The tenancy agreement is the essence of a successful tenancy – it protects the property, outlines the landlord and the tenant’s responsibilities, and can prevent disputes from arising. A comprehensive tenancy agreement safeguards the interests of both parties to create the foundations for a smooth tenancy. It is important to have a clear tenancy agreement, what should be included in a tenancy agreement and what to do when the agreement expires. Here is how to avoid tenancy disputes with better communication.
Being a landlord can be extremely rewarding but it can also be challenging. There are many tasks to be carried out, as well as the duty of care to your tenants and legal responsibilities to keep up to date with. The tenancy agreement is part of these requirements and is the bedrock of a successful tenancy.
Why you need a residential tenancy agreement
Without a tenancy agreement in place, landlords and tenants have no written record of their contract, which leaves both with reduced legal options if a dispute occurs. Rental agreements are about protecting the legal rights of both parties, so everyone benefits from having an AST in place.
A tenancy agreement is a binding contract between you and your tenant(s). It sets out, clearly and without room for misinterpretation, what is expected of the landlord and the tenant, and the length of the agreement between both parties. It also explains what either can do if the other person doesn’t keep to their side of the agreement.
Although it is not a legal requirement, having a written tenancy agreement from the outset will make things much simpler:
- It states all the terms of the tenancy
- Most insurers insist on one being in place before offering landlord insurance
- Disputes are more likely where just an informal arrangement exists
- Accelerated eviction procedures can only be used with a written agreement
- Tenants on benefits will need a tenancy agreement for any claim
What you should include in your residential tenancy agreement
In the event of a dispute between you and your tenant, the tenancy agreement is one of the most important pieces of evidence you will need to provide to an adjudicator as it outlines both your responsibilities as the landlord, as well as your tenant’s. For this reason, it’s vital that the agreement is comprehensive and contains all information you may need to rely on at a later date.
The clauses that should be included in any agreement are:
Your details and your tenant’s name
Names and contact details of any person party to the agreement, along with the full address of the property which is being let. This confirms the detail of who is responsible for the property.
Start date and length of tenancy
Date that the tenancy begins and the agreed length of the agreement, if appropriate to the region (for example, in Scotland tenancies are open ended), including any break clause.
Ending the tenancy early and notice periods
Whether the tenancy can be ended early and how this can be done, including how much notice is required and if there are any costs. These costs must be transparent, and reasonable.
Rent payments and payment dates
How much rent is due, the payment frequency and payment dates, how to make payment , and any circumstances when the rent may be increased.
Details of the deposit protection
Whether the tenant is using a deposit protection scheme or a deposit replacement membership, and in what circumstances any money can be withheld from the tenant when the tenancy ends (e.g. to repair damage caused by tenants and rent arrears).
Repairs and maintenance
Who is responsible for repairs, and how and when the tenant should report any damage to you so the matter can be dealt with quickly.
Responsibility for garden maintenance including front and back gardens, trees, shrubs and borders, mowing, weeding and general upkeep. This must be reasonable and tenants should be asked to report any damage to areas that may not be their responsibility (e.g. fences, sheds).
Which bills your tenants are responsible for throughout the tenancy and which bills, if any, that you will cover. Include water and other utility bills, council tax, TV licence, broadband or details of service charges.
Inventory report outlines how the property should be returned at the end of the tenancy. The tenant is only responsible for returning the property cleaned to the same standard as when they moved in.
Include a clause on whether pets are allowed in the property or not. Most landlords prohibit pets but as consent for pets is a very topical issue. Tenants need to be given clear written reasons for refusing a pet when a request is made.
Rules on subletting and details of whether other people are allowed the use of the property and if it is agreeable; it needs to be outlined very clearly.
This is often a common cause for disputes, so it is important to include your position on smoking in the property. We would advise that smoking is not allowed.
Nuisance in the property
This will include any actions that could increase insurance costs for the property, or cause nuisance to you or the property’s neighbours, such as noise and playing loud music after certain hours.
Use of the property
Outline the use of the property for residential purposes and that the property is not to be used for business purposes, without consent, or illegal purposes.
What the tenant is to do in the event of the property being vacant for a specified number of consecutive days, which commonly includes, turning off the water or leaving the heating on a low setting during the winter months. You should specify that the property must always be locked and secure (including using any burglar alarm) when empty.
Whether the property is furnished or unfurnished, state your terms on the introduction or removal of furniture in the property and who is responsible for removal costs if excess furniture is left in the property without permission.
Set out how, and why, you may be required to legally repossess the property by using either Section 8 or Section 21 of the Housing Act 1988 (in England and Wales) or Section 33.
You can also include individually negotiated clauses at the end of the tenancy agreement. These must be legal, fair and reasonable, having been clearly communicated to, and signed by, the tenant.
While the key to a well written and quality agreement includes well defined sections for both landlord and tenant, the clauses themselves must be clear, plain and simple. Common problems adjudicators find is the poor drafting of some terms in the agreements.