Robyn Seymour - Tenancy Agreement � A Brief Article

Tenancy agreement is very important for Land lord and tenants. It can efficiently set out the privileges and responsibilities of them. The Terms are generally contains a more series of headings. Landlords should be clear that the law acts in such a way as to allow the tenant to do what they like with the property. It’s important therefore that if any activity is to be prohibited, that this is written into the tenancy agreement. However, your scope to act is limited by the European Union directive on Unfair Terms in Consumer Contracts Regulations. This states that whilst the rest of the tenancy agreement remains valid, the terms which are ‘unfair’ to the tenant will be void. Therefore, if there is anything specific that is not covered by a standard tenancy agreement you should seek legal advice, or refer to the “Guidance on Unfair Terms in Tenancy Agreements” which should assist in phrasing any alterations to standard terms. It can be obtained from:

The following are the main headings of a standard Assured Shorthold Tenancy Agreement (AST), together with notes on what should be included within them and how these terms may and should not be altered. It is worth noting that most landlords do not and are not required to get into this level of detail on the tenancy agreement. This is because they simply buy or acquire a standard Assured Shorthold Tenancy Agreement (AST), most of which have a set of ‘standard’ terms and clauses which make them suitable for most lets. However, it is always worth being aware of what makes up the ‘bare bones’ of a tenancy agreement should problems a rise or where you may want to enter into a non ‘standard’ letting. If you do need to modify a tenancy agreement you are always best advised to seek suitable legal opinion first.

Description of the property Obviously, a legal agreement will need to clearly identify the property that the tenancy agreement refers to. The full address of the property should therefore be included. Particular care is needed when letting part of a building, where the exact extent of the accommodation being let should be specified e.g. front bed sitting room No.7, with shared kitchen and bathroom – these are often referred to as the ‘common parts’.

Payment of rent The tenancy agreement should specify that payment of rent is made in advance. If not the ‘Common Law’ implication is that rent is payable in arrears. This is unacceptable as it puts you at a greater risk of not receiving rent whilst still having to potentially meet your mortgage payments. The intervals for payment must also be stated. Rent should be paid on a monthly basis although other intervals are allowable such as weekly or four weekly. Where rent is paid weekly the landlord is obliged to provide the tenant with a rent book. This and the fact that you will have an increased volume of payments along with the associated petty administration, is why you should avoid if possible this frequency of payment. If other intervals are chosen (for example six monthly), the assured tenancy mandatory ground 8 for repossession may not be available to the landlord.

Interest on arrears Ensure that a term is included in the tenancy agreement that allows the landlord to add interest to any arrears. It should be charged on a daily rate, say Bank of England base rate plus 5% is considered reasonable. The levying of this charge should act as a disincentive for late payment and also compensate the landlord for the loss of interest on monies they should have received. I once took legal action to reclaim outstanding rent. The interest on this came to £42. Not huge; but it compensated me in part for the time and effort involved in taking proceedings. Unfortunately, it is not possible to reclaim these costs. It is nevertheless acceptable to make an administration charge for each late payment. A provision for this should also be included.

Council tax The liability for the Council Tax will generally fall on your tenant. However in sharing arrangements such as a House in Multiple Occupation (HMO), the landlord is responsible. The rental figure charged should reflect this and a provision should be inserted allowing the landlord to increase the rent to take into account any increase during the tenancy.

In other cases, the tenancy agreement should contain provisions stating that the rent is exclusive of Council Tax and require the tenant either to pay it to the local authority, or to reimburse the landlord should he / she become responsible.

Water chargesUtility It is assumed that the tenant pays for these charges. If this is not the case an express term should be included stating the required arrangement within the tenancy agreement.

Repairs and decoration It is very likely that Section 11 of the Landlord and Tenant Act 1985 (see Appendix Box) will apply to the letting. This imposes an obligation on the landlord (where the tenancy is for a term of less than seven years) to repair the structure and exterior of the property. If the property includes a garden, it is wise to include an obligation on the tenant to maintain the garden. In practice whether they adhere to it will depend on the amount of work involved and whether they have ‘green fingers’.

Alterations Thankfully tenants are prohibited from deliberately damaging your property! Again it is always advisable to have an express clause stating this.

Use The law allows the tenant to use the property for what ever purpose they choose, unless the tenancy agreement states otherwise. It’s therefore wise to restrict the property’s use to that of a single private dwelling. Also impose an obligation on the tenant not to: cause nuisance or annoyance to neighboring occupiers, damage the house or contents in any way and carry out illegal activities.

Insurance In a short tenancy (such as Assured Tenancies), the landlord will normally insure the premises as he/she has the most valuable interest in the property. However, there should also be a clause that obliges the tenant not to do or, omit to do anything that might affect the landlord’s insurance.

Assignment Under common law, a tenant can freely transfer the tenancy to whomsoever they wish. For this reason an express provision should be included in the tenancy prohibiting transfer. You don’t want to let to one person and then find that they have assigned the tenancy to their drug addicted cousin!

Subletting In the case of a shorthold tenancy, there is a danger that where the tenant is allowed to sublet, they could grant an assured tenancy agreement to their tenant. The problem for you as landlord is that this tenancy agreement would be with your tenant not you. This would give this sub-tenant full security of tenure. The statutorily implied prohibition to this applies only to periodic tenancies and so an express provision is needed within the tenancy agreement which prevents this, unless the landlord gives their express consent.

Address for service Under Section 48 of the Landlord and Tenant Act 1987 no rent is lawfully due from a tenant unless and until the landlord has given the tenant notice of an address in England or Wales at which notices can be served. Therefore, make sure you include the appropriate notice in the tenancy agreement stating a Welsh or English correspondence address.

Rent increasing

It goes without saying that you will want a provision within the tenancy agreement allowing you to increase the rent during the tenancy. However, the prescriptive nature of an ‘escalator’ clause, such as the one that specifies that the rent rises 5% per annum; it means in practice it is probably simple to rely on the statutory provisions. In law, the section 13 of the 1988 Housing Act gives a mechanism by which rents can be increased to what ever you want the tenant can afford.

Tenancy Agreement � A Brief Article

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