RLA Guide to Tenancy Agreements

The RLA provides six different types of tenancy agreements to meet most circumstances. Agreements are in plain English with no jargon, gobbledygook or confusing language. The agreements which are available are as follows:-

Assured Shorthold Tenancy Agreement (AST)

This is the most commonly used form. It can be used for houses and flats i.e. self contained units. It can also be used where a house or flat is rented as a whole to a group such as groups of students, young professionals etc. On the other hand, if you are renting out individual rooms then normally the Assured Shorthold Tenancy Agreement Room Only is the appropriate form. The tenancy created by this agreement is an assured shorthold tenancy within the Housing Act 1988. Any deposit paid must be protected under one of the Government approved tenancy deposit schemes. At the end of the fixed term the tenancy automatically runs on unless you take steps to end it.

You can use the Section 21 procedure to obtain possession. In the event of tenancy arrears or other tenancy breach you will need to serve a Section 8 notice (e.g. relying Ground 8 for rent arrears).

NB: Please refer to the note below which tells you if other forms of agreement may be more suitable to your needs.

If you are protecting the deposit with DepositGuard you must use the DepositGuard Compliant Assured Shorthold Tenancy Agreement.

Assured Shorthold Tenancy Agreement - Room Only

This is for use where a non resident landlord rents out an individual room to a tenant e.g. in a shared house or a bedsit. The accommodation will be non self contained so that the tenant will share facilities (e.g. a bathroom or kitchen) with other tenants in the same house/building. The tenancy is an assured shorthold tenancy governed by the Housing Act 1988. Any deposit paid must be protected under one of the Government approved tenancy deposit schemes.

You can use the Section 21 procedure to obtain possession. In the event of tenancy arrears or other tenancy breach you will need to serve a Section 8 notice (e.g. relying Ground 8 for rent arrears).

If you are protecting the deposit with DepositGuard you must use the DepositGuard Compliant Assured Shorthold Tenancy Agreement.

Note: If any of the following apply to you as landlord then the two types of assured shorthold tenancy referred to above may well not be suitable for your requirements and you should consider an alternative form of agreement as listed below.

This applies where -

  • You are renting out your own home which you have occupied in the past as your only or main home (or if there is more than one landlord at least one of the landlords has occupied the property as his/her only or main home).
  • You are resident in the same house/building and you share living accommodation (e.g. bathroom, toilet, kitchen or a living room) with the tenant.
  • You reside in the same house/building but you do not share any living accommodation with the tenant (i.e. you do not share bathroom, toilet, kitchen or living room) and your own residence in the house/building is your only or main home.
  • The rent is less than £250 per year.
  • You are certain that this will be a second home for the tenant i.e. the tenant's only or main home is somewhere else and will remain elsewhere during the currency of the tenancy.
  • The tenant to whom you let the property is a limited company, limited liability partnership (LLP) or other incorporated body i.e. the tenant or if there is more than one tenant all of the tenants are not individuals.

If any of these situations apply please consider one of the following:

Excluded Tenancy Agreement (Lodgers Agreement)

This is for use if you are a resident landlord and you share living accommodation with your tenant.

This does not create an assured shorthold tenancy or a non shorthold assured tenancy. It is outside the scope of the Protection from Eviction provisions. This means that so long as you give the proper notice as required by the agreement you can evict the tenant without a Court order. You must not actually do so when the tenant (or anyone else associated with the tenant) is present at the time. The normal four week minimum period of notice is not required either. If you take a deposit it does not need to be protected under one of the Government deposit schemes. You must not use this agreement unless you actually share the accommodation. Simply sharing an access is not enough.

NB: Please refer to the note below which tells you if other forms of agreement may be more suitable to your needs.

Company Let Agreement

This form is for use where the tenant is an incorporated body (e.g. a limited company, limited liability partnership (LLP) etc). Where there is more than one tenant none of them must be individuals. They must all be incorporated bodies. The tenancy is not an assured tenancy. If you take a deposit it does not need to be protected under one of the Government approved tenancy schemes. If it is a common law tenancy you do not need to serve a Section 21 Notice or a Section 8 Notice to obtain possession. It is a fixed term tenancy which then runs on automatically as a monthly tenancy. You will need to give a notice to quit to terminate the tenancy.

NB: Please refer to the note below which tells you if other forms of agreement may be more suitable to your needs.

Non Assured Tenancy Agreement

This is for use in three situations:-

  • Where the rent is not more than £250 per annum.
  • The tenant has his/her only or main home elsewhere. If there are joint tenants each of them must have their only or main home elsewhere. You need to be sure of this situation and as certain as you can be that it will continue for the duration of the tenancy. For example if a tenant lives with his family elsewhere at weekends and uses the property during the week returning home at weekends.
  • You are resident as landlord but do not share living accommodation with the tenant. This means that you must not share toilet, bathroom, kitchen or a living room with the tenant. However, your residence elsewhere in the same property must be your only or main home and not your second home.

In all of these cases as the tenancy is not an assured tenancy you can take a deposit without having to pay it into the Government's tenancy deposit scheme.

To end this tenancy you do not need to give a Section 21 or Section 8 Notice. This is because it is a common law tenancy. The tenancy starts as a fixed term tenancy. This means that the tenant can stay there until the end of the fixed term so long as he pays the rent/complies with the tenancy terms. You will then need to give a notice to quit to end the tenancy. This has to be on a prescribed form.

NB: Previously, this agreement could also be used where the rent exceeded £25,000 per annum. However, the maximum rent level for an assured tenancy is raised to £100,000 effective from 1st October 2010. After that date all tenancies where the rent is between £25,001 and £100,000 automatically becomes assured tenancies whenever they were created. The provision is retrospective. They become assured shorthold tenancies automatically so long as the tenancy first commenced after the 28th February 1997. The RLA therefore no longer provide an agreement for this situation.

IMPORTANT

All the RLA forms of agreement create a fixed term tenancy (e.g. for 6 months or one year depending on what you agreed with the tenant) and thereafter continue automatically as statutory periodic tenancies. The periods of the tenancy depend on how the rent is paid, whether weekly, fortnightly, four weekly or monthly. The tenant must give at least 4 weeks notice or a months notice if the tenancy is a monthly periodic tenancy after the fixed term has ended. You will have to give two months notice using Section 21 if it is an assured shorthold tenancy (or Section 8 Notice relying on Ground 1 if it is an owner occupier agreement). Otherwise, you will need to give one months notice to quit to end the tenancy to prevent automatic continuation. Notices must run out on the last day of a period of a tenancy whether given by the landlord or the tenant.

WARNING - this note only gives general guidance. If you require more specific advice regarding your own situation you should take your own independent advice or contact the RLA helpline.

When completing the RLA tenancy agreement please follow the guidance instructions applicable to the particular agreement which you are using.

When giving any notice to end the tenancy please carefully check and follow the applicable clause which gives details regarding how the tenancy is to end but always remember that legal requirements such as those which apply under the Housing Act 1988 also apply and may override the terms of the agreement itself. If in doubt take advice.

Addendum Agreement - Additional Terms

We know that some landlords like to add their own provisions to tenancy agreements and we therefore have an addendum agreement for this purpose. Make sure that if you use the Addendum Agreement this is signed, as well as the tenancy agreement itself.

Please read the notes on the Addendum Agreement carefully. In particular, you need to be careful about altering standard clauses which are already in the tenancy agreement. You could fall foul of the Unfair Contract Terms Regulations, for example. For instance, the standard RLA agreement says that if pets are to be brought on to the property this can be done with the landlord's consent but this consent must not be unreasonably withheld. A clause banning pets altogether may fall foul of the Unfair Contract Terms Regulations e.g. because it unreasonably bans a tenant from having a small goldfish in a small bowl in the property.

The RLA cannot accept any responsibility for the consequences of the variations.

Addendum Agreement - DepositGuard

We also have a separate Addendum Agreement where you protect the deposit with DepositGuard. This is for use where the Tenancy Agreement used is NOT the DepositGuard version of an RLA Assured Shorthold Tenancy agreement (AST).

This Addendum Agreement contains the required clauses which must be used if you protect the deposit with DepositGuard. You can use it alongside your own tenancy agreement if you do not use the RLA Assured Shorthold Tenancy - Deposit Guard version.

WARNING

Are you entering a Tenancy Agreement with a new tenant for a property for which a Green Deal charge is payable?

If so - the Tenancy Agreement must contain a prescribed form of acknowledgement under which the tenant agrees to pay off the Green Deal charge.

If you fail to comply you may well have to repay the full Green Deal charge.

The Green Deal has only recently been introduced so it will take time before there are many properties where energy efficiency improvements have been carried out giving Green Deal Finance. Green Deal Finance is repaid via a charge on the electricity meter.

Where a new tenant becomes the bill payer, they must be given a copy of the Energy Performance Certificate (EPC) giving details of the Green Deal before they view the property or at the first viewing and then sign the required acknowledgement in the Tenancy Agreement itself to say that they agree to pay the ongoing Green Deal charges.

The RLA can provide you with the required documentation so if you are in this situation please contact the RLA office immediately for further guidance.

February 2013

Landlord & Investment Show
Martin Co
Envirovent
Property Six Pack (Gas Elec)

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