Types of Tenancy Agreements for Tenants

Overview

An agreement between the property owner (landlord) and a tenant is referred to as Tenancy agreement. A Tenancy Agreement is also referred to as Assured Shorthold Tenancy Agreement (ASTA), Residential Tenancy Agreement (RTA) or Short Assured Tenancy (SAT) and it defines the expectations and responsibilities of a tenant during tenancy. The agreement lets an individual stay in a rental property for as long as he/she follows rules and pays regular rent.

A tenancy can either be:

1. Periodic tenancy (i.e. it runs on a weekly or monthly basis).
2. Fixed-term (i.e. it runs for a specific time period as defined in the agreement).

Apart from renting a room there are certain other options which a landlord can look forward to like renting it through Airbnb or avail rent a room relief by the UK government/HMRC.

Rights and responsibilities of a tenant and landlord

A tenant has certain rights in case he/she is residing in a privately rented property. Below mentioned are certain rights of a tenant:

• To be safe-guarded from biased eviction and partial rent.
• To challenge any disproportionately applied high charges.
• To have a written agreement if he/she has a defined tenancy in excess of 3 years.
• To get back the deposit post the end of the tenancy period.
• Have information about the landlord.
• To reside in a property which is secure and in a decent state of repair.
• To reside in the property uninterrupted.
• To check the Energy Performance Certificate for the property.

A tenancy agreement must be fair to both the tenant and the landlord. In case an individual is unaware of who the landlord is he/she can write a letter to the individual or company to whom the rent is being paid. As per the rules, fine can be imposed on the landlord if he/she doesn’t provide information within 21 days of receiving the letter from the tenant. When an individual begins a new short assured or assured tenancy, a landlord must provide the following:

• A copy of ‘How to rent guide’ if an individual stays in England.
• A tenant facts and figures pack if an individual stays in Scotland.

Additionally, a tenant has certain responsibilities towards the landlord. A tenant must provide access to the landlord to inspect the property or carry out repair work at the property. A landlord must give a notice of atleast 24 hours’ before visiting the property and the visit should be at a rational time of day, except if it is a case of an emergency and immediate access is required. A tenant must also abide by the following (a landlord has the legal right to take action against the tenant if he/she does not meet their responsibilities):

• A tenant can sublet a property only if the landlord or tenancy agreement permits it.
• Pay additional charges, such as Utility bills or Council Tax, decided with the landlord
• The agreed rent amount must be paid even if the property requires repairs or if the tenant is in dispute with the landlord.
• Repair or pay for any destruction caused by the tenant himself or his family members or friends.
• Take good care of the property such as keep the walls clean, maintain the garden etc.

Type of tenancy agreements

• Assured Shorthold tenancies (ASTs): This is the most common tenancy agreement and most rental contracts automatically fall under this category. A tenancy falls under the AST category if all the below mentioned points apply:
• the property an individual takes on rent must be private.
• the tenancy term should have begun on or after 15 January 1989.
• the property is an individual’s main place to stay.
• the landlord shouldn’t stay in the property.

On the other hand, a tenancy cannot be an assured shorthold tenancy if:

• the tenancy started or began before 15 January 1989.
• It’s a tenancy of licensed premises or business tenancy.
• The property is a used as a holiday let.
• The rent of the property is a smaller amount than £250 per year (if the property is in London, the amount less than £1,000 will not qualify for AST).
• The rent of the property is in excess of £100,000 per annum.
• The property owner or landlord is a local council.
• Assured tenancies: Tenancies which began between 15-Jan-1989 and 27-Feb-1997 might be considered as assured. Also, assured tenancies have enhanced protection from dislodgment.
• Excluded licences or tenancies: An individual might have an excluded tenancy if he/she lodge with the landlord and part rooms (kitchen or bathroom) with them. An individual will typically have less security from dislodgment under this agreement.
• Regulated tenancies: Tenancies which began before 15-Jan-1989 may be regulated and under this agreement an individual has enhanced protection from dislodgment and can also apply for a ‘fair rent’.

Components of a Tenancy agreement

A tenancy agreement includes the following:

• An outline of bills an individual will be responsible for.
• Any landlord or tenant obligations.
• Address of the property.
• Terms and conditions stating the guidelines when the security deposit can be completely or partially suspended (this may happen if an individual has caused any damage to the property.
• Names and details of the people involved in the agreement.
• Information on when and how the rent amount should be paid.
• Details of the deposit amount and how it will be protected.
• The beginning date and end date i.e. tenure of the tenancy.

The agreement can also encompass information on the following:

• Conditions basis which the tenancy can be quashed early and how this can be ended.
• Details on who will be held responsible for petty repairs (these repairs are other than the ones the landlord is lawfully accountable for).
• Whether the tenant has the authority to sublet the property to someone else or have other tenants staying there.

Also Read : Property Tax caveats for every landlord needs to know

In case of any amendments to the agreement, both tenant and landlord must come to an understanding in order to alter the terms and conditions of the tenancy agreement. Additionally, a landlord cannot discriminate a tenant on the basis of any of the following:

• Age of an individual.
• If the tenant is a transgender person.
• If the tenant is having a baby or is pregnant.
• If the tenant is differently abled or has some disability.
• Gender of an individual.
• Race of an individual.
• Belief or religion of an individual.
• Sexual orientation of an individual.

Also Read : BUY-TO-LET-TAX-&-CHANGES

End a tenancy

A tenancy agreement must provide information on the notice period an individual has to give before leaving the property. An individual is responsible for paying rent for the complete fixed-term tenancy. A tenant can move out of the rental property early without paying the entire amount corresponding to full tenancy if:

• The landlord agrees to end the tenancy early.
• The tenancy agreement has a break clause.

On the other hand, if a landlord is ending the tenancy they must give the tenant proper notice, encompassing certain warnings and information. The information will depend on the terms and conditions of the tenancy agreement. Also, the rules are different basis the type of tenancy.

Assured shorthold tenancies (ASTs)

In certain conditions, a landlord can void the agreement without providing any reason. In order to cancel the agreement, all of the following must apply:

• The date when a tenant is asked to leave must be at least 6 months after the new tenancy began – this one which was signed before an individual moved in.
• The landlord must give at least 2 months’ written notice along with the date on which an individual has to leave.
• Assurance that the deposit is protected under the deposit protection scheme.
• A tenant has a periodic tenancy or has a fixed-term tenancy and a landlord isn’t asking the tenant to vacate before the end of the fixed term.

Assured tenancies

The landlord will be required to use one of the reasons stated in the Housing Act 1988.

Excluded tenancies or licences

Here, the landlord is only required to give ‘reasonable notice’ to quit. The notice doesn’t have to be in writing.

Non-excluded tenancy or licence

Landlord can end the agreement by serving a written ‘notice to quit’ and time period is often at least 4 weeks.

However, if the tenant does not leave the property, the landlord cannot force the tenant to leave. In case the notice period expires and still an individual does not leave the property, the landlord has the right to begin the process of dislodgment through the courts.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.