Whilst you are not legally required to have a tenancy agreement in place when renting a property, it is recommended. Having the terms and conditions laid out clearly for each party can save you a lot of hassle if disputes arise further down the line!
Perhaps a common misconception however is that there is just one type of tenancy agreement in the UK, and it is this type of thinking that leads some to get caught out when it comes to knowing their rights. Here we'll take a look at the most common types of tenancy agreements used in the UK along with key information you need to know to ensure you know where you stand, whether you are a landlord or tenant.
What is a Tenancy Agreement?
Put simply, a tenancy agreement is a legal contract between the tenant and landlord. It can be either written or verbal, and essentially sets out the terms and rights for both parties. A tenancy agreement will contain vital information such as the period of let, amount of rent payable and any specific conditions or arrangements that have been agreed.
Tenancy agreements are put in place to protect the rights of both landlords and tenants. It outlines each individual's legal rights and responsibilities and it is expected that both parties uphold these. Whilst a tenancy agreement can offer both landlords and tenants more than just their statutory rights, crucially it cannot offer anything less than this — to do so would essentially make it void.
What is included in a Tenancy Agreement?
Each tenancy agreement can differ depending on your letting agent or landlord, so be sure to read your terms and conditions carefully to ensure you understand what you are legally agreeing to. There are some key points that a good tenancy agreement will have though, and these consist of:
- Your landlords name and the address of the property being let
- Your name and details of any/all other individuals who have agreed to enter into the agreement
- The duration, start and end dates of the tenancy
- Amount of rent payable by the tenant(s), including details on when and how it should be paid
- Details of what is and isn’t included in your rental payments: e.g. council tax, water rates
- The notice period that applied to both the landlord and tenant(s) if either party wishes to end the tenancy, as well as details on any break clauses that must be adhered to in order to facilitate this
Having these outlined clearly within your tenancy agreement ensures there is a mutual understanding of what is expected from each party, minimizing the chances of disputes arising later on.
Are there different types of Tenancy Agreement?
Yes, and it’s important to be aware of how each type of tenancy agreement differs. The most common type used in England and Wales is an Assured Shorthold Tenancy (AST), but there are a few others worth knowing about. We’ve listed some of the most common types of tenancy agreement below:
- Assured Shorthold Tenancy (AST)
- Assured Tenancy
- Excluded Tenancy (Lodging)
- Non Assured Tenancy
- Verbal Agreement
Let’s take a look at each of these in more detail...
Assured Shorthold Tenancy (AST)
This is the most common type of tenancy agreement in England and Wales, and you will find that most tenancies automatically rely on this type of contract.
There are some fundamental criteria that must be fulfilled in order for a tenancy agreement to be an AST, these include:
- Your tenancy started on or after 15th January 1989
- The property is your main accommodation
- Your landlord does not live in the property with you
- The property you rent is private
It’s also important to be aware of how a contract cannot be classified as an AST, in case there are disputes later down the line.
A tenancy agreement is not an AST if it fulfills one or more of the following criteria:
- The tenancy was agreed on, or began before 15th January 1989
- The rent is less than £250 a year (note: in London this figure rises to £1,000)
- The rent is more than £100,000 a year
- The tenancy is for a business or licensed premises (e.g. a corner shop)
- The property is a holiday let
- Your landlord is a local council
AST’s are typically given for a fixed period of time, most commonly 6 or 12 months, although this is very much dependent on the landlord and can be shorter or longer.
Under a fixed term AST tenants are granted the right to occupy the property for the duration of time agreed upon (e.g. 12 months), and a landlord cannot evict them before this unless their is a breach of contract. What sets AST’s apart from other types of tenancy agreement, however, is the fact that once this fixed period of time is over a landlord is able to evict their tenant(s) without a legal reason in order to regain possession of their property, so long as they give reasonable notice. Because of this, AST’s offer tenants less security of tenure compared to other agreements, such as an assured tenancy where a landlord does not have this automatic right.
In an AST, there are certain things that a landlord must do and provide for their tenants. It is good to be aware of what these are, as you will likely find yourself under this type of agreement if you're a tenant in the private rental sector!
Under an AST, a landlord must do the following before you move in:
- Provide you with both a gas safety and energy performance certificate
- If your tenancy began after 11th October 2015, they must provide you with the 'How to rent' guide
- Protect your deposit in a government protected scheme
- Carry out any repairs they are responsible for, as outlined in your tenancy agreement
- Arrange a yearly gas safety check for all relevant appliances
You can find templates of an AST online, so we'd recommend checking these out. Now we understand AST’s, let’s now take a look at assured tenancies to see how they differ.
Unlike an AST, an Assured Tenancy ultimately offers more security and stability for the tenant(s), owing to the fact a landlord cannot evict them without a legal reason. Essentially, they grant the tenant right to live in the property indefinitely so long as the terms of the agreement are met. For this reason, Assured Tenancies are most commonly issued by housing associations and trusts.
If any of the below applies to you, it is likely you are an assured tenant:
- Your tenancy started between 15th January 1989 and 27th February and your landlord did not explicitly state this was an AST
- You have written confirmation that your agreement constituted an assured tenancy prior to the start of your tenancy
- Your landlord does not live in the same building as you
- The assured tenancy was passed on to you when the previous regulated tenant passed away
As with AST’s, there are certain circumstances in which an Assured Tenancy would not be eligible. These include:
- Tenancies applying to business or licensed premises
- Tenancies applying to agricultural land or holdings
- If the property is a holiday let
- The rent is less than £250 a year (note: in London this figure rises to £1,000)
- The rent is more than £100,000 per year
As we mentioned previously, the key difference between an AST and an Assured Tenancy is that in an Assured Tenancy the landlord cannot evict their tenant without legal reason.
In fact, if the landlord wishes to gain repossession of their property, they may do so only on the specific grounds set out in Section 2 of the Housing Act 1988. To do this, they must serve a Section 8 notice to the tenant which clearly outlines the grounds on which they wish to evict them, followed by an application to the court filing for repossession.
It sounds like a lengthy process, and it can be! But it is for this reason that Assured Tenancies offer a higher degree of stability for tenants. This doesn’t just apply to eviction proceedings, either. If a landlord wishes to increase your monthly rental payments they must seek your approval to do so. If they were to increase your rent without prior agreement from you, you could potentially challenge them and take your case to the Rent Assessment Committee for review.
Excluded Tenancy (Lodgers)
This particular type of tenancy agreement is designed for situations involving Lodgers. That is, where you are living in the same property as the individual you have the agreement with. Typically, you will share use of communal areas, such as the kitchen, living room and bathrooms.
Here are some examples where you will likely be classed as an Excluded Tenant or Lodger:
- You are living with family or friends rent free
- You share a home with a resident landlord
- You share a home with your landlords family member(s), but your landlord also lives in the same property
- You are in a hostel run by either the council or housing association
- You you been placed in emergency housing after a homeless application
Unlike AST’s and Assured Tenancies, tenants under this contract are not protected in the same way, for example in cases of repossession of the property (i.e. eviction). In the case of Excluded Tenancies, a landlord can peacefully evict the tenant with reasonable notice but is not required to gain a court order.
Also, landlords are not required to protect a tenant's deposit in a government scheme (although the same rules exist where the deposit is returned at the end of the tenancy, minus any reasonable deductions!).
Non—Assured Tenancies can only be used under very specific circumstances, and tend to be in place when it is not possible to offer an AST. An AST might not be possible due to a variety of different reasons; however, we’ve listed the main ones below:
- The rent is less than £250 per year
- The tenants main accommodation is elsewhere
- The landlord lives in the same property as the tenant, but does not share of its facilities
Similarly to Excluded Tenancies, landlords with a Non—Assured Tenancy in place do not have to protect the tenants deposit in a government protected scheme, and also do not need a court order to evict them. Instead, the tenant maintains their right to stay in the property until the end of the tenancy so long as they have adhered to all conditions set out within the agreement.
Despite the popular belief that a tenancy agreement is only valid if it is written form, verbal agreements can and do happen! Any oral agreement between a landlord and tenant in which both parties accept certain terms (e.g. amount of rent payable, and how often) is still a legally binding contract, with both landlord and tenant maintaining certain core rights.
The issue with verbal tenancy agreements arises when disputes occur. Due to the fact the terms and conditions of the contract are not written down, it is very difficult to enforce these and even more difficult if any dispute results in court proceedings. It essentially becomes a ‘he said, she said’ scenario if both parties fail to provide concrete evidence regarding the specific terms agreed upon!
Generally speaking, it is in both the landlord and tenants best interests to have a written tenancy agreement in place to ensure there is clear understanding and evidence of what has been agreed.
Do I need a Tenancy Agreement?
Whilst it is not a legal requirement for a landlord to issue a tenancy agreement, it is recommended as it provides an extra layer of clarity and protection for both parties. Not having a tenancy agreement in place can cause unexpected issues further down the line for both landlord and tenant.
In the case of landlords for example, if you wish to seek possession of your property and evict a tenant you cannot do so by the accelerated court process which is often the quickest and easiest route.
This is because this process and that of evicting a tenant under Section 21 is dependent on you having a proper tenancy agreement in place! Instead, a landlord would have to attend a court hearing and explain firstly the reasons for requesting eviction and secondly, why no such contract is in place to begin with. This is ultimately a timely and potentially very costly process — which could all be avoided by having the proper paperwork in place!
Similarly, a landlord cannot make deductions from a tenant's deposit if no formal tenancy agreement exists, for example, to cover costs of repair or redecorating. If they do try, the tenant can challenge this and will likely succeed when it reaches the adjudication stage. Again, these sorts of costly issues can easily be avoided!
It is important to note though, if you find yourself in a position where you do not have a tenancy agreement in place, that both landlord and tenants retain a number of rights.
For example, landlords must still adhere to:
- Gas safety regulations
- Furniture and furnishings regulations
- Health and safety regulations
Similarly, tenants have a number of obligations including:
- Allowing landlords inspection rights as outlined in the Landlord and Tenant Act 1985
- They are not able to assign or sublet the property without the landlord’s prior consent
- They are not authorized to carry out any improvements or alterations to the property without the landlord’s written consent
- Acting in a ‘tenant like manner’, meaning respecting the landlord, property and surroundings
So, regardless of whether a tenancy agreement is in place landlords and tenants still retain their rights and obligations that would exist if there was a formal contract. However, this situation is far from ideal, and having an agreement ultimately offers security and peace of mind for both parties.
Ensuring a tenancy agreement is in place is also beneficial in other ways, too. For example, if a landlord wishes to take out landlord insurance for their rental property then not having this in place might lead to increased prices or worse, they may find they are unable to take out the insurance at all!
You can check out how to become a landlord here, as well as landlord responsibilities to ensure you have all the necessary protections in place should the unexpected happen. Although the idea of writing up a tenancy agreement sounds daunting, especially to a first-time landlord, there are plenty of resources and templates online to make the process as easy and seamless as possible.