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Tenancy Agreements

What Is a Tenancy Agreement?

A tenancy agreement is a legal contract between a landlord—the person who is letting a property—and the tenant(s)—the person(s) who is renting it. Like other types of contracts, a tenancy agreement can be made orally or in writing; although, it is always advisable to have a written tenancy agreement so that all parties are clear on their rights and responsibilities under the terms of the agreement. Without a written tenancy agreement it might be difficult to enforce the terms that were agreed on in the event of a dispute. There is, in most cases in England and Wales, no obligation for the landlord to provide a written tenancy agreement, although it is common practice. Social housing landlords in particular should provide written tenancy agreements to tenants. Landlords in Scotland are, in the majority of cases, obliged to provide a written tenancy agreement. Provisions relating to Scotland are discussed in more detail below.

What Provisions Must Be Included in a Tenancy Agreement?

There are certain provisions that relate to the obligations of the landlord that must be included in all tenancy agreements. Even if these are not set out in a written tenancy agreement they will be ‘implied terms’ as they must, by law, be included in all tenancy agreements. These implied terms include the following:

  • The landlord’s obligation to carry out repairs to the property
  • The landlord must maintain utility supplies (such as gas, electricity and water) in good working order
  • The tenant has the right to live peacefully, without any nuisance from the landlord

There are also some implied terms that relate to the obligations of the tenant(s), including the obligation to take proper care of the property and to allow access to the property for the purposes of carrying out repairs and maintenance work.

In addition to implied terms, a tenancy agreement may also include a number of ‘express terms’. These terms relate to the nature of the agreement, the rent amount, any services that are included and the obligations of all parties. Anything that has been agreed orally should be included in the written tenancy agreement.

In a written tenancy agreement, the following information should be included at a minimum:

  • The name and address of the landlord
  • The rent amount and the frequency of payments
  • Details of who will be liable for paying utility bills and service charges
  • The length of the tenancy
  • The date of commencement

The tenancy agreement should be signed by all parties. If there is more than one tenant, each tenant should receive a copy.

Types of Tenancy Agreements

There are different types of tenancy agreements in England and Wales:

  • Assured Shorthold Tenancies – Most tenancy agreements entered into on or after 15 January, 1989 fall into this category. This is the most common form of tenancy and is discussed in more detail below.
  • Excluded tenancies or licences – This type of agreement is used in cases where the tenant is classed as an ‘excluded occupier’. An excluded occupier is a person, such as a lodger, who rents a room and shares areas such as kitchens and bathrooms. In this situation, the lodger does not have full legal protection and the tenancy agreement can be ended at any time by giving reasonable notice. It is not necessary to obtain permission from the courts to evict this type of lodger. If a lodger does not share any living spaces, then they will have greater protection from eviction (known as an ‘occupier with basic protection’), and a court order will be required.
  • Assured tenancies – An assured tenancy is one which gives long-term rights to the tenant(s). This type of tenancy is one which was made between 15 January, 1989 and 27 February, 1997, and which is made with a private landlord who does not share the same building as the tenant(s). Some tenancies that were made after 27 February, 1997 will also qualify, as long as the landlord gave written notice of the fact that the tenancy was an assured tenancy or if the tenant(s) previously had an assured tenancy with the same landlord and accommodation.
  • Regulated tenancies – A regulated tenancy is one which started before 15 January, 1989, where the rent is paid to a private landlord that does not share the same accommodation as the tenant(s). A regulated tenancy gives the tenant(s) the following certain rights under the Rent Act 1977: security of tenure, where the landlord may only evict the tenant(s) with a possession order from the court; succession, where in the event of the death of the tenant their spouse can take over the tenancy; and fair rent, where restrictions apply to the circumstances and amount of rent increases.
  • Houses in multiple occupation – Houses in multiple occupation (HMOs) are usually covered by assured shorthold tenancies (see below). The agreements may be made on either a joint or separate basis.
  • Social housing tenancies – Assured tenancies are common for tenants who are renting from a Local Authority or Housing Association, although other types of tenancy agreements can sometimes be used. New social housing tenants may initially be offered a ‘Starter Tenancy’, which runs for a 12-month trial period and can later be terminated, extended or converted into a long-term tenancy. Assured tenancies for social housing tenants may be ‘demoted’ to other forms of tenancy if the tenant(s) are found to have engaged in anti-social behaviour.

Assured Shorthold Tenancies (ASTs)

Assured shorthold tenancies (ASTs) are defined by the Housing Act 1988 (as amended). The law states that:

  • all tenancies started on or after 28 February, 1997 will be ASTs; and
  • there is no minimum term for an AST (although in practice it is common for a minimum term of at least six months to be set).

A tenancy cannot be an AST if:

  • the landlord is a ‘resident landlord’, sharing facilities or communal spaces;
  • the rent is more than £100,000 per annum;
  • the rent is less than £250 per annum (£1,000 in London); and
  • it is a specified type of let, including business and holiday lets.

Provisions of an assured shorthold tenancy agreement include the length of the tenancy and the amount of rent. Under an AST, the landlord is responsible for most repairs, such as work to the roof, structure, windows and doors, wiring and plumbing. For smaller work such as garden maintenance and external cleaning, the tenancy agreement should specify who is responsible. All day-to-day cleaning and maintenance will be the responsibility of the tenant, who undertakes to take reasonable care of the property. Most private landlords will request a deposit against any potential damage caused or unpaid rent. The deposit will be paid at the beginning of the tenancy and the funds must be held in a government-approved deposit protection scheme, which is the responsibility of the landlord. Only ‘reasonable deductions’ may be taken from the deposit at the end of the tenancy.

How Long Does an AST Last?

An AST usually starts as a fixed-term agreement agreed between the landlord and tenant(s). Terms usually last between 6 and 18 months, but can last longer. At the completion of the fixed-term period, the AST can be renewed or, alternatively, it will convert to a ‘periodic tenancy’. A periodic tenancy is one which continues on a month-by-month basis, without a specified end date. There is no statutory requirement to start an AST as a fixed-term agreement, and it is possible to commence the tenancy on a periodic basis. Unless specified in the tenancy agreement, the rent of a fixed-term tenancy cannot be increased.

Ending the Tenancy Agreement

In the event that a tenant wishes to end a fixed-term agreement early, this may be possible by way of negotiation, but the landlord is not obliged to agree and can seek to enforce the agreement through the courts. Some fixed-term agreements include a ‘break clause’, which takes effect at a certain point in the tenancy, allowing for early termination.

At the end of a fixed-term AST, the tenant(s) can leave the property without notice on or before the last day of the agreed term. Some tenancy agreements may specify that explicit notice must be given.

In a periodic tenancy, the tenant must give notice in writing to the landlord that they wish to end the tenancy. The notice period will depend on how frequently the rent is paid, as this dictates the length of the tenancy periods. Where rent is paid monthly, a notice period of one month must be given. Where rent is paid weekly, a notice period of 28 days must be given.

Landlords have only limited rights to seek possession of the property during the period of the fixed-term tenancy and a strict legal process must be followed. Sections 8 and 21 of the Housing Act 1988 set out the procedures for eviction of an AST tenant.

A Section 8 Notice can be served on a tenant at any point during the tenancy if the tenant is in rent arrears or has engaged in anti-social and/or criminal behaviour, or if there has been a breach of the tenancy agreement (for example, causing damage to the property). The landlord must serve notice of seeking possession in line with the statutory periods (these will vary depending on the nature of the eviction). If the tenant has not vacated the property within the notice period, the landlord may apply to the courts for a possession order. The landlord will serve evidence on the tenant to support the application and the tenant will have the opportunity to file a defence. If the tenant wishes to contest the application, they may appear at a hearing before a judge who will make a decision either granting or refusing the possession order (or in some cases postponing or suspending the order). If the tenant fails to leave after the period set out in the possession order, court enforcement officers (‘bailiffs’) can be ordered to proceed with eviction.

A Section 21(a) Notice or Section 21(b) Notice can also be used at any time during the tenancy and without any requirement for the landlord to provide reasons for wishing to end the tenancy. At least two months' notice must be given in writing to the tenant, and it is only valid if certain requirements have been fulfilled by the landlord, including placing the deposit in an approved protection scheme and providing documents such as gas and energy certificates. If the tenant fails to vacate the property by the date specified in the notice, the landlord may follow the court procedure set out above.

For ASTs that were made on or since 1 October, 2015, landlords wishing to seek possession under Section 21(1) or (4) of the Housing Act 1988 must use the new Form 6a (the form can also be used for earlier ASTs). The form cannot be used in the first four months of the tenancy and will only be valid if the landlord has complied with his or her statutory duties, such as providing gas and energy certificates and using an approved deposit protection scheme. Form 6a states that a landlord may not use Section 21 evictions where:

  • the tenant has lived in the property for less than four months;
  • the landlord is prevented from retaliatory eviction under Section 33 of the Deregulation Act 2015;
  • the landlord has failed to comply with his or her statutory duties, including deposit protection; and
  • the property requires a licence and one is not in place.

A landlord may use either a Section 8 Notice or a Section 21 Notice, or may use both simultaneously depending on the circumstances of the case.

If the landlord wishes to end the tenancy at the end of the fixed term of the AST, they must give two months’ notice. To end an AST that has converted to a periodic tenancy, the landlord must give notice in line with the equivalent periods for tenants (one month where rent is paid monthly; 28 days where rent is paid weekly).

Tenancy Agreements in Scotland

All tenancy agreements in Scotland made on or after 1 December, 2017 are ‘Private Residential Tenancies’, as long as the following criteria are met:

  • The property is let as a separate dwelling
  • It is the tenant’s only or main home
  • No statutory exclusions apply

These tenancies replace assured tenancies and assured shorthold tenancies in Scotland. Some key components of Private Residential Tenancies include the following:

  • An end to fixed-term tenancy agreements—all tenancy agreements made on or after 1 December, 2017 are open ended in an effort to provide greater security of tenure for tenants
  • Provide protections against rent increases and place restrictions on how rent can be increased
  • Sets out 18 specific circumstances which allow landlords to seek possession of the property
  • The landlord is obliged to provide the tenant(s) with a written copy of all of the terms of the tenancy agreement, along with explanatory notes
  • The landlord must provide written documents explaining any changes to the terms of the agreement within 28 days of the term coming into effect
  • Landlords must be registered
  • Landlords must give three months’ notice of any rent increases, and increases are regulated

Under Private Residential Tenancies, the tenant is obliged to allow access for repairs, maintenance, valuations and inspections.

Private Residential Tenancies can be ended by the tenant at any time by giving 28 days' notice in writing. The landlord may end the tenancy by citing one of the 18 statutory reasons. The relevant notice period will vary depending on the reason, but it will be a minimum of 28 days (or 84 days if the tenant has lived in the property for more than six months and the landlord is relying on a relevant reason). Where tenants refuse to vacate the property at the end of the notice period, the landlord may apply to a First Tier Tribunal for an eviction order.

Any existing tenancies made in Scotland before 1 December, 2017 will continue until they are ended by either the landlord or the tenant.

The Importance of Tenancy Agreements

Even in cases where written tenancy agreements are not a legal requirement, it is always advisable to use a carefully prepared agreement in order to ensure that all parties have clarity on their obligations and responsibilities and are aware of the requirements related to ending the agreement. Well-drafted tenancy agreements can help to avoid disputes during the course of the tenancy and they provide documentary proof of the terms of the agreement that was entered into, helping both landlords and tenants avoid costly and time-consuming problems.