What an assured shorthand tenancy agreement means
In almost all lets you’ll have an assured shorthold tenancy agreement, or AST, by law. That gives you and your tenant certain rights and duties that you can’t wriggle out of, even if you scribble ‘this is not a tenancy’ in big red letters all over your contract or you don’t have a contract at all.
Any unfair clauses that break the law, like saying you can visit without warning, will be invalid. Likewise, any legal obligations that are left out in the contract will still apply, but it’s best to have it all in writing for clarity (gov.uk/private-renting-tenancy-agreements).
Ten points to add to your tenancy agreement
So, what does the law say and what should you add to your contract? Here are the 10 most important points:
- Tenancy length. By law, you can’t end an AST before six months, so there is no point in having an initial fixed term that’s any shorter than that. You can make it longer, but some lenders won’t allow terms of more than a year. This is because you then cannot get rid of the tenants before the period is up unless there is a serious breach like rent arrears. Tenancies beyond three years have to be executed as a deed. In practice, very few tenants would want to commit for that long; 12-month tenancies tend to strike the best balance between freedom and security.
- Rent. State the rent and how it’s paid (monthly, in advance and to a specific account). Say when the rent will be reviewed; we’d suggest annually. Unless your contract provides for a rent rise, you cannot increase it before the end of the fixed term.
- Basics. Include all landlord and tenant names, the property’s address and the start date. State if any part of the property is excluded, such as a garage. If there is more than one tenant, each person is ‘jointly and severally liable’ for the full rent. That means if one leaves or stops paying, the others still have to pay the full amount (not just their portion) for the rest of the term. Explain this to sharers – it’s quite a commitment.
- Obligations. The law lays out landlords’ and tenants’ duties. However, you can add clauses on minor repairs. From bitter experience, Swift’s contract spells out that tenants have to pay for appliances blocked by ‘hair clips, coins or collar stiffeners’ (which has prompted one new tenant to ask, ‘Hey, man, are there problems with the drains in this place?’). It allows picture hooks as long as tenants make good when they leave, but bans ‘Blu-Tack, sticky tape or glue’ on the walls.
- Notice period and break conditions. State that both parties have to give two months’ notice to end the tenancy at or after the end of the fixed term (or your tenant could be entitled to leave with less or no notice). For longer terms, say if the tenancy can be ended early and how this can be done. The courts will deem a break clause unfair if it only applies to the landlord.
- Termination reasons. Say that you can end the tenancy if certain grounds listed in the Housing Act 1988 apply, including rent arrears, late payments, property damage and – crucially for accidental landlords – that you used to live in the property and need to return.
- Deposit. Name the amount, how it will be protected and that no interest will be paid. Also, say what can be deducted from the deposit: damage, costs if the tenant breaches the contract, unpaid rent and unpaid bills. Specify any admin fees, otherwise, they could legally be deemed part of the deposit that has to be protected and refunded.
- Bills. State who pays the utilities and council tax. It’s normally the tenants, but you might do it for a student let or HMO.
- Pets. If you’ve agreed to animals, add a pet clause. (See anecdote below)
- Guarantor. If there is one, they confirm that they will pay if the tenant defaults or commits a breach that costs the landlord. By default, a guarantor will be jointly and severally liable for the full rent in a shared house.
The government has a free model AST contract (download it at tinyurl.com/ast-contract). If that doesn’t suit you, you can buy contracts for a few pounds from the legal stationer Oyez (oyezstore.co.uk).
You can’t use ASTs for lets shorter than six months, where the tenant is a company, the rent exceeds £100,000 a year, or for lodgers.
» Winnie the Pooch gets her name in print
James’s previous tenants had asked consent to have a dog, which then turned into two cats without his knowledge. So when his new tenants asked to keep a small, well-behaved dog, he agreed – provided they paid a bigger deposit and gave a pet reference from their former landlord. It was the picture they sent of the golden-haired Dandie Dinmot Terrier, ball in mouth, that had swayed James – ‘I don’t think they could have sent a cuter dog photo to get me to say yes!’ – but this time there was no ambiguity in his contract: ‘The Landlord grants permission for the Tenant(s) to keep a pet (one dog) named Winnie (“The Pet”).’ Children often don’t get named in contracts, but this pooch did.
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