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A Guide to Tenancy Agreements: What Tenants and Landlords Need to Know

A guide to Tenancy Agreements - Tenants signing an AST

The tenancy agreement is central to all landlord-tenant relationships. Although not a legal obligation, it’s the easiest way to protect rental properties and rights on both sides.


Get it right and you’ll be smoothing the way to a clearly communicated arrangement that will minimise the chance of future disputes and disagreements.


Get it wrong and both tenant and landlord are opening themselves up to the chance of conflict and financial loss.


Here we explain why tenancy agreements are so important, what should and shouldn’t be included in them and the common mistakes made during the drafting process.


Why is the tenancy agreement so important?


A tenancy agreement is a contract between landlord and tenant which sets out the legal terms and conditions of the tenancy. It establishes the rights and responsibilities of both parties, the legal elements of which still exist even in the absence of a signed agreement.


Doing this ensures everyone is aware of what they need to do during the tenancy period. This protects the property, the tenant and landlord’s rights and, by default, their bank balances.


Tenancy agreements are an essential piece of evidence if deposit disputes arise during any eviction process. Once written down and signed, the contents contribute to any legal defence against financial or reputational loss.


Some landlords may be tempted to use the same agreement for all their properties, year in, year out. This approach runs the risk of omitting a crucial clause specific to the particular tenant or overlooking updated legal requirements during this extended period of legislative change. 


In the best interests of both tenant and landlords, getting the tenancy agreement right is vital. Having an accurate, detailed and clear document in place will enable smooth communication, reassure the tenant and safeguard the landlord’s reputation.

 

How to draw up the perfect tenancy agreement

 

Search online and you’ll be bombarded with template tenancy agreements to download and fill in. Ones from reputable sources such as MakeUrMove are a helpful resource to guide landlords through what to include and allow them to easily refer to the relevant legislation. The UK government also provides a model agreement template to be used in England and Wales.

 

Instead of drafting an agreement from scratch, using one of these is the best approach to providing tenants with a professional document. But they should be treated as per their intended use: a template. Each one will have to be tailor-made to suit the specific tenancy. 


Along with the address of the property and the names of all parties, the ideal tenancy agreement should include the following sections:


  1. Interpretation


An introductory guide to how to read and interpret the agreement, including reference to acronyms and terms used, and clarification over who the contents refer to. 


  1. Grant of the tenancy


A straightforward explanation that establishes the context of the agreement. For example:


  1. The Landlord lets the Property to the Tenant for the Term.

  2. This agreement creates an assured shorthold tenancy under Part I of Chapter II of the HA 1988.


  1. Contents


An outline of the expectations related to how the contents of the property are treated with specific reference to a thorough, signed inventory including a schedule of condition.


  1. Rent


Clear details about when rent is due, how much it is, how it should be paid, the terms and conditions related to paying late, e.g. interest charges, and what happens after a prolonged period of rent arrears.


  1. Deposit


How much deposit is due and by when or confirmation that the deposit has been paid, along with information about the reasons why a part or all of this could be withheld at the end of the agreement.


  1. Tenancy deposit protection (TDP) scheme arrangements


Confirmation that the deposit will be held in a government approved TDP scheme, which one it is and how the service works.


  1. Use of property


How the property should be used and not used. This covers a wide range of issues including whether pets are allowed, being considerate to neighbours and not operating a business from the property. This section is a good opportunity for the landlord to add specifics about the particular tenancy, e.g. if they’re OK with pets provided that certain conditions are met, if they allow smoking etc.


  1. Assignment or subletting


An outline of whether the tenant can find a replacement tenant midway through the agreement, and confirmation that subletting isn’t permitted.


  1. Repairs and alterations


Detailed information about who is responsible for what regarding repairs and maintenance, e.g. clearing internal drains, the level of cleaning expected, if wall hangings are permitted etc. Along with rent arrears, this area is often the reason for deposit disputes so needs to be thorough and crystal clear. The agreement should also detail what could happen if any of these terms are breached. 


  1. Utilities and outgoings


What bills the tenant is responsible for paying, e.g. Council Tax, gas and electricity, water etc, who the current suppliers are and whether tenants are able to switch to an alternative provider. 


  1. Landlord's covenants


Another important section which details what the landlord is and isn’t responsible for. Getting these specifics right can minimise the chance of disputes at the end of the agreement. Items to include here range from insuring the property to maintaining appliances and agreeing to give the tenant the right to quiet enjoyment.


  1. Rent increases


An explanation of how and when the landlord can increase the rent.


  1. Default by the Tenant


An outline of the landlord’s right to re-enter the property if the tenant reneges on their agreed responsibilities.


  1. Landlord's right to enter the property and to display signs


Confirmation that the landlord has the right to enter the property provided 24 hours’ notice is given and any exception to this, e.g. emergency access.


  1. Expiry of the tenancy


Information about what happens at the end of the tenancy and any arrangements about how to extend this.


  1. Notices


How notice needs to be served properly, by either tenant or landlord.


Additional clauses, specific to the tenancy, can be added at the end such as T&Cs connected to Housing Benefit and HMOs. And any changes to the document after it’s been signed must be agreed by tenants. 


Tenancy agreement document checklist

 

Alongside a comprehensive tenancy agreement, the following documents should also be given to the tenant:

 
  • Energy Performance Certificate

  • Gas Safety Certificate

  • Electrical Safety Certificate

  • Electrical Installation Condition Report (EICR)

  • How to rent guide (latest version)

  • Deposit scheme details (follow up with deposit certificate) and prescribed information

  • Lease details for leasehold properties

  • Copy of licence if applicable

  • Insurance documents

  • Warranties, manuals and guides

  • Special instructions for maintenance or upkeep

  • Contact details and emergency contact information

  • Privacy policy if not already provided

 

What can’t be added to a tenancy agreement


While tenancy agreements are most effective when tailor-made for each new tenancy, this doesn’t mean landlords can add whatever they want and expect their requests to be followed to the letter.


There are several common mistakes made by landlords which can land them in hot water at a later date:

 
  1. Impractical clauses

 

All landlords hope their properties will be well looked after during a tenancy but there’s a limit to how much they can control. Inserting a clause which asks for the vacuuming to be done twice a week will be a little pointless as there’ll be no way of proving the tenant didn’t do it. 

 

They need to strike the balance between requiring them to behave in a ‘tenant-like manner’ and giving them the right to ‘quiet enjoyment’ of the property. 

 

The lesson here is that if a clause is never going to be checked or enforced, it’s not worth adding.

 
  1. Legally unenforceable terms

 

Adding clauses which stand no chance of being legally backed up is also ill-advised. For example, a landlord can’t stipulate that the tenant must arrange a Gas Safety Certificate as this legally falls into the landlord’s remit.

 

Any requirements added must be seen as ‘fair and reasonable’, i.e. a landlord can’t add a clause stating they’re free to enter the property whenever they want as this would jeopardise the tenant’s right to ‘quiet enjoyment’.

 
  1. Lack of clarity/attention to detail

 

Landlords can fall foul of the law if the wording in a tenancy agreement is so complicated it’s impossible for a tenant to decipher. If it can reasonably be expected to be difficult to make sense of, whatever it’s trying to convey will be deemed unenforceable.

 

Conversely, over-simplification can cause problems. Being vague about payment terms, notice periods or repair and maintenance responsibilities could be a recipe for dispute disaster.

  

So tenancy agreements need to be detailed, specific and written with absolute clarity to avoid potential ambiguity. For example, stating that rent must be ‘paid monthly’ is vague. On what date should it be paid? Is this in advance or in arrears?

 

Attention to detail is also key. If a critical section of the agreement isn’t completed or a mistake is made, it can lead to all sorts of trouble. Omitting the tenant’s name, for example, will render the agreement pretty useless in the case of a dispute.

 

This conscientiousness extends to being up to date with the latest legislation and ensuring all laws referred to within the agreement are current and accurate.

 
  1. Discriminatory clauses

 

Landlords can’t include any clauses which discriminate against tenants on the grounds of:

 
  • age, gender or sexual orientation

  • being or becoming a transsexual person

  • being married or in a civil partnership

  • being pregnant or on maternity leave

  • disability

  • race including colour, nationality, ethnic or national origin

  • religion, belief or lack of religion or belief

 

As well as being unprofessional and personally unfair to the tenant, the landlord could be taken to court under the Equality Act 2010.

 

When drafting a tenancy agreement, keep in mind that one size doesn’t fit all. Using a template as the basis of the document is strongly advised. From there, ensure every section is carefully tailored to the tenancy in question.

 

Landlords who pay close attention to detail, are realistic and fair about responsibilities, adhere to all the relevant laws and are crystal clear with the wording will produce a tenancy agreement that will ultimately benefit both parties.

 Find out more about how to create, send and sign a comprehensive electronic tenancy agreement with MakeUrMove.


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