A Guide To Understanding Your Rental Contract
A tenancy agreement is a contract between you and your landlord. It may be written or verbal. The tenancy agreement gives certain rights to both you and your landlord. For example, your right to occupy the accommodation and your landlord’s right to receive rent for letting the accommodation.
You and your landlord may have made arrangements about the tenancy, and these will be part of the tenancy agreement as long as they do not conflict with law. Both you and your landlord have rights and responsibilities given by law. The tenancy agreement can give both you and your landlord more than your statutory rights but can't give you less than your statutory rights. If a term in the tenancy agreement gives either you or your landlord less than your statutory rights, that term cannot be enforced.
Our guide will help you get to grips in understanding your contract before you put your signature in it.
Types of Tenancy
· Assured Shorthold Tenancy (AST) – the most common tenancy agreement used by UK landlords to let residential properties to private tenants and rent it out in its entirety.
The only feature that differs AST from other tenancy types is that your landlord can evict you even without needing to provide any legal reason but, must give 2 months’ notice if the landlord wants to repossess the property. The initial fixed term for ASTs is 6 or 12 months.
· Excluded tenancy (lodging) – the tenancy used by landlords who live in the same property with the tenant and hare facilities. Adhering with the tenancy agreement, a landlord can evict the tenant without court order or without giving a month’s notice.
· Assured Tenancy – it doesn’t provide landlords security of tenure and equip tenants with more protection against eviction. Under assured tenancies, landlords must wait for specific circumstances that break the tenancy agreement to occur. Assured tenancies were more commonly used in the past and they give tenants long-term tenancy rights. Housing associations often rent properties on assured tenancies.
· Non-assured shorthold tenancy – this can only be used in particular situations where assured tenancy can’t be. Factors could be that the tenant might have a main home in other location, the rent might be less than £250 a year or if the landlord and the tenant is living in the same property but doesn’t share facilities. The tenant has the right to stay in the property until the end of agreed fixed term, as long as they comply with the rules and regulations of the tenancy agreement.
The Terms to Include In Your Rental Agreement
Your tenancy agreement should include:
· the names of all people involved
· the rental price and how it’s paid
· information on how and when the rent will be reviewed
· the deposit amount and how it will be protected
· when the deposit can be fully or partly withheld, for example to repair damage caused by tenants
· the property address
· the start and end date of the tenancy
· any tenant or landlord obligations
· which bills your tenants are responsible for
It can also include information on:
· whether the tenancy can be ended early and how this can be done
· who’s responsible for minor repairs (other than those that the landlord is legally responsible for)
· whether the property can be let to someone else (sublet) or have lodgers
Data Source: GOV.UK
Let’s cover each point in a little more detail -
Identify all the parties involved – you and your tenants’ name
Make sure that the name of all the parties are included to the agreement along with the contact details and full address of the property which is being let.
Terms of the Tenancy
A rental agreement should clearly state the date the tenancy starts and the length of the agreement, including the date on which the tenancy ends.
A contract should state how much the rent is due, dates and mode of payment and payment frequency – monthly, in advance or annually.
Unless your contract provides for a rent rise, the landlord cannot increase it before the end of the fixed term.
Some agreements offer your bills to be included and other perks. But with some tenancy agreements, you will agree to settle your own bills which might include:
· Energy bills - unless stated otherwise by your landlord, you’ll also have to pay for your gas and electricity. This means finding your own suppliers, and managing the monthly payments.
· Water bills - unlike gas and electricity, you cannot choose your water supplier. Water bills can be more expensive depending on where you choose to rent.
· Phone and broadband - you’ll need to find a WiFi provider, pay for the service and pay for the cost of a landline
· TV license – you’ll need to pay for this license if you intend to watch or record live TV broadcasts on any channel (costs you £159 and £1,000 for the penalty if you are watching TV without a license)
· Council tax – as a tenant, you are responsible to pay for the council tax in a BTL. The amount depends on the property’s valuation and the local authority.
· Contents insurance - this can include your furniture, electrical equipment, like an oven and fridge, gadgets, as well as personal belongings. Contents insurance covers the cost of replacing the items in your home if they are damaged by fire, flooding, and storms, or are stolen.
· Buildings Insurance - it's the landlord’s responsibility to pay for the buildings insurance as they are the owner of the property
· Service charges - tenants may be required to pay service charges for gardening or the cleaning of communal areas.
The Deposit and Fees
For any rental properties, the tenant will often be required to pay a deposit before moving in. Also indicate what can be the deductions are like damage costs, unpaid rent and bills and the cost for breach of contract.
Repairs and maintenance
Things might get broken from time to time. Your tenancy agreement will make clear who should be responsible for the repairs and general maintenance.
Some landlords will let their tenants carry out DIY repairs and some hire a property management company to arrange the repairs for them.
There might be some other rules that a landlord will include in the contract such as:
· Pet clauses
· Smoking clauses
· Nuisance/illegal activity in the property
· Entry to rental property
What happens when the tenancy agreement expires?
When your contract expires, you have two options:
1. Stay in your home without signing a new contract – your agreement becomes periodic tenancy and rolls on monthly at the same rent, depending on how you pay your rent.
2. Agree a new fixed term contract – your rent may increase. It could also decrease but this is highly unlikely and less common.