A tenancy agreement is a legally binding contract between landlord and tenant. The document states the terms of the rental agreement with both parties and provides the landlord with legal protection if the tenant breaches the agreement. The terms of the contract must be fair and must not conflict with the law.
The agreement can a verbal contract, however it is advised to have a written tenancy agreement to avoid any disputes over the terms of the contract. If an agreement is not written down, then it can be difficult to prove what was agreed.
Tenancy agreements can include express terms and also implied terms. Express terms are terms that are agreed between the parties and written in the contract. Implied terms are obligations set out in law implied into the tenancy agreement. These terms have not been agreed between the parties but are incorporated into the contract.
What should be in the tenancy agreement?
Names of all parties involved
It needs to be clear who the tenant is and who has liability under the contract. For example, the tenant could be a company rather than an individual.
Property address and permitted use
The tenancy agreement should clearly state the address of the rental property and specify its permitted uses. This allows the tenant to know what they are allowed to do in the property.
The amount of the deposit and which deposit scheme it has been protected with.
Rent and payment terms
The tenancy agreement should state the amount of rent the tenant is required to pay, the due date of the rent and where the rent is to be paid. If the landlord wants to charge any late payment fees this should be specified as a clause in the contract. Consideration needs to be given to the Tenant Fees Act to ensure that any late rent payments are charged in accordance with this legislation.
Term of the tenancy
The duration of the tenancy should be specified within the contract, for example the term should stipulate whether a year, 6 months or a month-to-month tenancy.
One of the suggestions in the white paper on the proposed rental reforms was that landlords would no longer be able to create fixed term tenancies in England and all tenancies would be periodic from their inception. The Renters Reform Bill has been on the agenda for some time; however, we are still waiting for the final details to be released.
The contract should outline both parties’ obligations so both landlord and tenant are clear on what is expected. For example, the tenant maintains the garden, pay for utilities etc. The landlord does have implied additional obligations set out in statute or derived from judicial precedent for example obligations to keep the property in repair.
The right to terminate a tenancy depends on the type of tenancy. There are statutory rules for termination and notice periods. A tenancy agreement should include provisions for early termination of the contract, such as if the tenant breaches the agreement. Landlords should also consider adding a break clause allowing the contract to be terminated before the end of the fixed term.
It is important to be aware that what an agreement states it is and what it actually is could be different. The label that is attached to the agreement is not conclusive, so if you call an agreement a licence but upon its true construction the agreement is a tenancy – it will be a tenancy regardless of what you call it. A Judge will look at the facts of each individual case when determining the nature of the tenancy.
Obtain legal advice
If you are unfamiliar with what a tenancy agreement should include or are unsure you have a correct tenancy agreement you should obtain legal advice. Solicitors can help ensure that your tenancy agreement is legally sound/compliant and includes all necessary provisions.