When you, as a landlord, first rent out your property, it’s important that you protect yourself, and your financial position, by drawing up the correct terms in a tenancy agreement when the tenancy starts.
The tenancy terms set out the landlord’s and tenant’s obligations to each other and, as a result, prevent disputes between you and the tenant in future. The rental agreement sets out when the tenancy starts, the amount of rent and the length of the tenancy.
Here is an outline of what terms a tenancy agreement should include:
Date of agreement
The agreement can be dated at any time after you and the tenant have signed it. This date should be the same as the date on which the term is to begin.
When you’re completing the tenancy terms of the rental agreement, it’s useful to include details of any garages or additional parking spaces which may go with the property.
This tenancy term should only be included if your tenancy is for individual rooms.
For assured shorthold tenancy agreements it’s important that the rental agreement gives an address for you in England or Wales. This is because section 48 of the Landlord and Tenant Act 1987 states that rent doesn’t have to be paid until an address in England and Wales for the service of notices and documents has been provided to the tenant.
If you live abroad or live in Scotland, there should always be a contact address given in England or Wales. If this isn’t possible, you should consider using a letting agency. Although it’s not a legal requirement for letting properties in Scotland, it’s normal practice and prudent to provide a contact address in Scotland.
Make sure that all the tenants are listed on the rental agreement and that they all sign it.
In England and Wales, this can be for any period of time (but bear in mind that an order for possession under the shorthold ground will not be granted by a court until six months from the beginning of the term). Note that in Scotland, the initial term must be at least six months.
It’s advisable that you don’t make the term too long, particularly if you’re letting to a new tenant; remember that you will only be able to get the property back during the fixed term if you can demonstrate that the tenant is in serious breach of the rental agreement. It may prove difficult to get your property back during the fixed term if you have an unsatisfactory tenant who is not breaching major terms of the tenancy agreement, which could cause you difficulties if you have an unsatisfactory tenant.
In England and Wales, it’s normal for the term to be six months. The tenancy will, unless a notice requiring possession is served, continue after the end of the fixed term. It’s not strictly necessary to give the tenant a new fixed-term agreement.
When a tenancy continues after the end of a fixed term, it’s generally referred to as a ‘periodic tenancy’, the period being monthly or weekly, depending on how rent is paid.
In Scotland, at the end of the fixed term, if no new rental agreement is entered into and no notices requiring possession have been served, the tenancy continues automatically for the same term as the original term of the tenancy (e.g. if the tenancy was for seven months, it continues for a further seven months by procedure known as ‘tacit relocation’).
If the rent is too high, it may be subject to challenge during the first six months of the tenancy agreement in England and Wales. In Scotland, you can seek a rent determination from The Private Rented Housing Panel at any time during the tenancy. If rent is payable weekly, you will have to provide your tenant with a rent book (failure to so is a criminal offence).