What Are the Different Types of Tenancy Agreement?
For new and accidental landlords there is a landslide of regulations, law, terms and nuances to the rental space to become accustom to. Thankfully whilst the intricacies that make up tenancy agreements can be an intimidating read, in truth there is only a handful of variances to understand. Here we detail the different types of tenancy agreement and everything a landlord should know before signing.
- What Is a Tenancy Agreement?
- What Are the Four Types of Tenancies?
- Assured Shorthold Tenancies
- Secure Tenancies
- Non Assured Shorthold Tenancies
- Periodic or Rolling Tenancies
- What Is the Different Between Assured and Non Assured Tenancy?
- Express Terms in a Tenancy Agreement
- Implied Terms in a Tenancy Agreement
What Is a Tenancy Agreement?
Simply put, a tenancy agreement is a legally binding contract that stipulates all the conditions and nuances of a rental agreement between the landlord and tenants. Whilst it is always recommended to have a physical copy of the tenancy agreement, allowing for referral later down the line, it is not unheard of for the conditions of the let to be outlined verbally.
As mentioned, the caveats to the tenancy being maintained for the full duration of the rental period are detailed within the agreement, however; the landlord doesn’t have complete flexibility in this arrangement and must remain within legal boundaries for the agreement to be deemed valid. The law affords both parties of the agreement basic rights and responsibilities that must be upheld in any agreement, if any of the stipulations within the document conflict with these regulations they will be difficult for the agreement to be upheld if any disputes are taken to court.
What Are the Four Types of Tenancies?
Assured Shorthold Tenancies
An assured Shorthold tenancy is the most common form of tenancy used by landlords. However, there are certain requirements that define this type of tenancy. If the landlord does not reside in the rental property, with the due rental amounts being paid to a private landlord and the property is the tenants main accommodation then it is considered to be an Assured Shorthold Tenancy or AST.
With this being said, if the amount of rent a tenant has to pay each year exceeds £100,000 or is lower than £250, or £1000 in London, annually, then this will not fall under the AST definition. Additionally if the landlord is the local authority, the property is a holiday let, or the property is a holiday rental an assured Shorthold tenancy will not apply.
The typical duration for an assured Shorthold tenancy is around 6 months, however it is not uncommon for the rental period to be longer, providing the tenant with stable living conditions and the landlord with a secure, predictable income. This type of agreement also dictates that if the landlord requests a deposit from the tenant then it must be secured in a recognised Deposit Protection Scheme.
Whilst this type of agreement has largely been overshadowed by assured Shorthold tenancies, secure tenancies are still common practice for some in the UK. Secure Tenancy agreements give far more power to the tenant in regards to remaining in the property. Also referred to as lifetime tenancies, the occupants of a rental under these terms can only be evicted from the property if certain conditions are met. These circumstances encompass the tenant falling behind on their payments and accumulating large amounts of rental arrears, the tenants are a regular cause of noise complaints and antisocial behaviour, they conduct illegal activity within the rental property, or the tenants sub-let the property to other occupants.
Non Assured Shorthold Tenancies
Non Assured Shorthold Tenancies are less common than their counterparts for good reason; they can only be implemented and upheld in the instances where a traditional assured Shorthold tenancy cannot be used. The conditions for such an agreement comprise if the annual rental charge for the property is less than £250, the rental property is not the main residence of the tenant, or if the landlord live alongside the tenants in the property. It is also worth noting that unlike in an assured Shorthold tenancy, landlords and property owners are under no obligation to enter any deposit taken from the tenants into a protected, backed scheme. Furthermore, if a landlord wished to reclaim possession of the property they are not bound to submitting a section 21 or section 8 notices to remove the residents from the rental.
Periodic or Rolling Tenancies
Sometimes referred to as statutory, rolling or periodic tenancy, these forms of tenancies come into place once the agreed rental period of an assured Shorthold tenancy comes into place. If the tenant wished to remain in the property, yet is reluctant to sign a new agreement then the tenancy will automatically become rolling. All of the terms of the original agreement remain, yet the tenancy is renewed on a month by month basis, or another pre agreed period. If either party wishes for the tenancy to come to a close then this can be achieved through a mutual agreement between both parties, notice being issued by either party, or eviction.
What Is the Different Between Assured and Non Assured Tenancy?
The most common type of tenancy agreement, the assured Shorthold tenancy allows landlords to let out their rental properties to residents for a period of six months or longer. This type of tenancy agreement is largely beneficial to landlords, making it the preferred option by many for one simple reason; at the end of the tenancy period the landlord to reclaim possession of the rental property as the rental period has come to an end. As previously mentioned, if the landlord and tenant do not wish to come to a new agreement, but are happy with the tenant remaining in the property, then a periodic tenancy will be in place.
However, an assured tenancy does not provide landlords with this ability to reclaim possession of their property so easily, empowering tenants to reside in a rental property for far longer. Under this type of agreement the landlord will have to reclaim possession through evoking one of the ground fo the 1988 Housing act, such as rental arrears. However, this leaves the landlord waiting for specific circumstance and eventualities in order to have these ground upheld, making repossessing the property a difficult process.
Express Terms in a Tenancy Agreement
The express terms that are contained within a tenancy agreement are intended to provide both parties with full clarity in how things will progress. These main clauses are specifically and explicitly stated within the terms of the tenancy agreement and include the significant details of the tenancy. The express terms within the agreement will outline the start and intended closing date of the tenancy period, the address of the rental property along with details of the tenant and landlord. These stipulations also commonly include how much the tenant is required to pay in rent and the frequency at which it should be paid, alongside if and when the rent could be increased. If the landlord does not include this rent increase clause within the original agreement then they are prevented from increasing the amount of rent a tenant is legally obligated to pay unless a new agreement is signed by both parties. It is also common practice for the terms of the tenancy agreement to include details surrounding the tenancy deposit, specifically the amount taken and the scheme that it is backed by. To avoid any lengthy disputes at the end of the tenancy period, the tenancy agreement should also state the conditions under which the full tenancy deposit would not be returned, with the landlord’s legal obligations and the tenant’s responsibilities in regards to repairs and maintenance around the property.
Implied Terms in a Tenancy Agreement
As the name suggests, the implied terms of a tenancy agreement, unlike the express terms, are not explicitly stated within the text of the document. However, just because these are not outlined in the agreement is not sufficient justification for a landlord or tenant to neglect their duties during the tenancy period, these terms are applied to all tenancy agreements and are upheld by the law. The implied terms of a tenancy agreement typically include the landlord’s duty to conduct basic maintenance and repair work to the rental property, ensuring that all of the appliances throughout the accommodation have valid safety certificates and are in fully operational order, alongside basic maintenance of the structure of the rental. With this in mind, the tenant has a responsibility throughout the rental period to permit access to the landlord to conduct such repairs. However, the landlord must first give the tenant at least 24 hours’ notice of their intent to enter the property to carry out such work, with these visits also having to take place during a reasonable time of the day. If the landlord was to simply enter the rental accommodation unannounced, then this would infringe upon another of the tenancy agreements implied terms, a tenant’s right to quit enjoyment of a property. This right upholds an occupant’s natural right to live in a property without frequent and sporadic interruption and disturbances. Once a tenancy agreement has been signed by both parties, it is legally recognised that the landlord is surrounding possession of the rental to the tenants and the tenant’s right to quiet enjoyment of the property commences. This can however, be overruled through specific court orders, perhaps allowing the landlord to conduct emergency repair work, or if the occupants are consistently refusing access to the property.
Another regularly upheld implied term of a tenancy agreement is that the occupants of the rental property respect the property, using it in a “tenant like” way. With this being said, we recognise that the term is fairly vague and leave a lot of room for interpretation from individual landlords, however others would argue it simply boils down to common sense. Essentially a “tenant like” way of residing in a rental property means living up to the basic expectations of a tenant, and “to do the little jobs about the place which a reasonable tenant would do.” This means that with the tenancy agreement the tenants are responsible for the everyday housekeeping of the property including disposing of waste, general cleaning and tidying, alongside unblocking drains, ect.
At the begging of the tenancy period the landlord will take a tenancy deposit from the occupants. This amount is typically the equivalent value of a few weeks rent and is used to cover any repair or maintenance costs incurred by the landlord at the end of the tenancy. However, the landlord is not able to use these costs if the damage to the property is deemed to be what is referred to as “fair wear and tear”. To this end the tenant has an obligation to ensure that the rental property is returned to the landlord in a good condition at the close of the tenancy period, with “fear wear and tear” being taken into account. This obligation ensures that the property is in a safe and habitable condition, free from rubbish and any malicious damage upon its return to the landlord. But what damage is considered “fair wear and tear”? This would comprise the expected degradation of an item or furnishing that comes with use over time, i.e.; scuff marks on floorboards.
Through these implied tenancy agreement terms, the residents of the rental property are also not permitted to withhold any amount of due rent in order to fund repairs to the property. Tenants have an obligation from the outset of their tenancy to report any damage to the property that is in need of repair to their landlord or letting agent, of course issues cannot be addressed that are not communicated.
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