Drawing up a tenancy agreement is often a difficult task – here's what you need to know:
The most common form of tenancy used for residential properties is an Assured Shorthold Tenancy, most commonly referred to as an AST.
Since 1997 all new tenancies in the UK are Assured Shorthold Tenancies by default unless agreed otherwise. AST's must also meet the following criteria:
• The landlord is a private landlord or Housing Association.
• The tenancy started on or after 15 January 1989.
• The property is the tenant's primary accommodation.
• The landlord doesn't live in the property.
• The monthly rent is not less than £250 (£1,000 in London) or above £100,000 a year.
• It is not a holiday let.
The AST should contain;
• The address of the property
• Names of all adults who will be living at the property
• The length of tenancy
• The deposit amount
• The rent (plus any bills the tenant is liable for paying)
• Rent payment dates
• Rent review clause
• Any notice periods for terminating the tenancy
• The landlord and tenant obligations
• Any specific clauses such as whether the landlord will allow pets at the property, and any other terms and conditions agreed between the landlord and tenant
There is no fixed document for an AST, and whilst AST templates can be obtained free online, it is worth noting that they can be out of date, meaning that terms and conditions included may not always be enforceable by law.
An AST can last for any duration; however, tenants have a legal right to stay in the property for a minimum period of six months.
At the end of the period specified in the AST, if the contract is not renewed or terminated, then it automatically becomes a Statutory Periodic Assured Shorthold Tenancy. This means the tenancy continues to roll weekly or monthly, depending on the payment schedule.
To end an AST, landlords are required to serve a Section 21 notice (often known as a no-fault eviction) with a minimum of two months' notice.
A Section 8 notice can be served at any time during the tenancy and this is for a specific situation where there has been a breach of tenancy e.g. non-payment of rent.
In addition to the AST, the following documents should be provided to the tenant at the start of the tenancy;
• Gas Safety Certificate (if relevant)
• Compliant EPC (Band E or above)
• Confirmation of the tenant's deposit being lodged with a government approved scheme within 30 days of the deposit being received. Failure to do so will mean that a Landlord will not be able to serve a Section 21 notice. It also worth noting that the maximum deposit that a landlord can hold is the equivalent of five weeks rent.
• Copy of the Government's "How To Rent Guide". This is a document to ensure that both landlord and tenants know and understand their responsibilities.
• Although there is no legal requirement to do so, it is recommended to obtain an inventory / record of condition. This helps to prevent issues when the tenant moves out of the property and with deposit return.
If PFK can help in any way with setting up an AST, or providing advice with regard to an existing rental agreement, please do not hesitate to get in touch.
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