Landlords and tenants should both be aware that there exist a number of different types of tenancy agreements. Understanding the form of agreement is essential to ensure that the respective rights and obligations of the parties can be met. It is particularly important for landlords to know what type of agreement is in place if property is to be purchased subject to a tenancy.
Tenancy Agreements - the Fundamentals
A tenancy agreement is a contract between a landlord, the owner of a property, and the tenant, who intends to use and enjoy that property on a long run or periodic basis and is willing to pay for the right for use and enjoyment of that property. The tenancy agreement sets out the terms and conditions on which the property is to be let and also encompasses the rights and obligations of both parties.
Assured Shorthold Tenancies (AST)
The most frequently used tenancy agreement is the Assured Shorthold Tenancy (AST). Subject to certain restrictions, ASTs are applied mostly to self-contained private-dwellings that are let to individuals. They must have a minimum initial period of six months.
An AST falls within the scope of Housing Act 1988, and features such as the rent, term, deposits, arrears and possession are regulated under law. In some cases, a room-only AST can be used where landlords let out single rooms to tenants with shared facilities. ASTs require the parties to agree on a minimum rent and term of stay.
The key feature of an AST is that tenants have very limited rights over the property and landlords can easily regain possession after the end of the initial term.
Unlike an AST, an Assured Tenancy entitles tenants to continue possession beyond the original term unless certain criteria are met. Tenancies starting between 15 January 1989 and 27 February 1997 may be assured. Generally landlords need to secure court orders to regain possession of the property which must specify one of the mandatory grounds or discretionary grounds for possession.
Both the mandatory and discretionary grounds are set out in the Housing Act; courts must grant possession if a mandatory ground is met such as the house being the landlord’s principal home. Under the discretionary grounds the court does not have to do so.
Tenancies that started before 15 January 1989 may be regulated. Regulated tenancies give tenants significant protection from eviction and tenants can apply for a ‘fair rent’ which is fixed by a rent officer.
Shared Property and Lodgers Agreements
Shared property is generally let under an AST with the tenants all signing the agreement jointly and severally. That means all of the tenants will be individually liable for the whole rent and other obligations in the agreement.
If the landlord intends to remain in the property, the parties can use a lodger’s agreement. Lodgers’ agreements are less regulated than other forms of tenancy agreement and operate akin to a license. Tenants occupying property under a lodger’s agreement have very limited rights over the property and can be evicted on notice. Landlords renting on this basis are not required to have deposits placed in the government’s deposit scheme.
If you are looking to rent residential property as a landlord or a tenant, or you are purchasing property subject to existing tenancies, the advice of an experienced solicitor is essential, contact firstname.lastname@example.org or email@example.com or by telephone on 0207 583 3434.
In most cases, we can arrange a free initial consultation.