If you’re a landlord, the tenancy agreement is a legal contract between you and your tenant. What your agreement includes – and what you miss out – could have a major impact on how smoothly the tenancy runs. To help you get it right, we’ve pulled together a guide to tenancy agreement essentials. Read on before anyone signs on the dotted line.
When you’re renting out property under an assured shorthold tenancy, you should draw up a tenancy agreement. While a tenancy agreement isn’t a legal requirement in England and Wales, it is a good idea to have one.
You are obliged by law to provide your tenant with certain key pieces of information. You must do this within six months of the start of the tenancy or within 28 days of a written request from the them. Having this information written down in an agreement, which both of you have signed, is most definitely good practice.
Being a landlord in London can be confusing. There are over 170 Acts & Regulations to consider, so, how do you know if you are compliant?
You will also need a written tenancy agreement to use a government-backed tenancy deposit protection scheme – which you must do if you are taking a security deposit from your tenant.
Many of your duties as a landlord are enshrined in law, regardless of what your tenancy agreement says – you can’t use the agreement to make changes to your tenants’ statutory rights. You can, however, include clauses that restrict the things that a tenant can do in the property – such as smoke, keep pets or redecorate without permission. Miss something crucial and you could have difficulty withholding part of a deposit to cover costs or evicting a problem tenant.
Here are 10 things your tenancy agreement should include:
1. The property address
2. The start and end date of the tenancy – the agreement should state the length of the tenancy and whether it is for a fixed term. You could also include information about whether the tenancy can be ended early and how this can be done.3. The names of the landlord and tenants – include anyone over 18 who will be living at the property. If it’s an HMO or joint tenancy each tenant should sign the agreement.
4. The amount of rent – clearly state how much the rent is and when it is due – if on a month by month basis, include the date each month when the rent should be paid and how you wish to receive payment – direct debit, for example.
Also say how and when the rent will be reviewed, should you need the option of increasing it in the future.
For tenants paying rent weekly, it is a legal requirement for landlords to provide a rent book, giving a record of rent paid.
5. The security deposit – include how much money you will require as a deposit and how it will be safeguarded. The law limits security deposits to the equivalent of five weeks’ rent. You must protect the deposit in one of three government-backed schemes.
6. Withholding the deposit – explain when the deposit can be fully or partly withheld – you may want to deduct costs for repairs to damage caused by the tenant, unpaid rent or if they leave the property in an unhygienic condition.
7. Tenant obligations – set out anything that you expect your tenants to do – such as maintaining the garden. If you want them to carry out minor repairs to the property, it is a good idea to say what these are, and which repairs you are happy to do for them. Remember, you are responsible for structural repairs, as well as plumbing, electrics, heating and hot water – read the full list on the gov.uk website.
8. Prohibited activity – be clear about anything you don’t want your tenants to do, such as changing the locks, subletting or smoking. You may want to add a no pets or no decorating rule or insist that written permission is obtained first.
You may also want to use the tenancy agreement to limit the property to residential use – so, no running a business from the premises. Also check for any specific rules in the property’s lease – about drying washing on balconies, for example and include these too.
9. Landlord’s obligations – set out anything you will do – how you will respond to repairs, communicate with the tenant or conduct inspections, for example. Remember, you can’t use the tenancy agreement to change anything you are obliged to do by law.
10. Bills – be clear about anything you expect the tenant to pay for, on top of the rent. This could include council tax, utility bills, parking permits and service charges for the building, if they are not included in the rent. Make sure you don’t miss anything out.
It is very important that you get the tenancy agreement right now. You will need the agreement of your tenants if you want to make changes to the terms later on.
It’s against the law to include anything in your tenancy agreement that discriminates against your tenants on grounds including age, sex, sexual orientation, race and religion. Think about the clauses of your agreement and whether they do that – a no pets clause may discriminate against someone with a guide dog. Find out more on the gov.uk website.
In summary, you must make sure that the terms of the tenancy agreement are fair and comply with the law. The gov.uk website provides a model agreement as a template. Alternatively, get advice from your letting agent.
If you’re a new landlord, we can help you through all the issues you might encounter while getting ready to rent out property, finding tenants and managing the ongoing relationship. Contact us for a chat today.
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Lee Whitelock
Director
Being a landlord in London can be confusing. How do you make sure you are compliant?