Tenancy agreements – Essential information

by Tessa Shepperson

14:46 PM, 13th June 2013
About 7 years ago

Tenancy agreements – Essential information

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Tenancy agreements – Essential information

Tenancy AgreementSo you have sourced your ideal tenancy agreement and have found a suitable tenant.  Lets take a look at the information you need to put in your tenancy agreement.

The property

It sounds obvious, but you need to correctly describe the property being let.  This is particularly important if you are renting a room in a shared house as the tenancy agreement needs to make it clear which room is being rented.

Sometimes the rooms are numbered, sometimes given names, or sometimes described with reference to their location in the building (eg  the first floor back bedroom).  Which one does not matter so long as you do something.

You may also, for shared houses, want to set out in your agreement, the shared rooms the tenant has access to.

Then for ‘normal’ tenancies, I think it is good practice to include any relevant  additional information such as whether a garage or parking place is included and mention any rights of way there may be (for example in some areas back gardens are bisected by rights of ways).

The parties

This is the landlord and the tenant, and in some cases the guarantor(s).

People often ask whether adult children should be included – my view is that it depends.  If they are likely to go off to college then probably no.  However if they are going to remain living in the property and contribute to the rent, then almost certainly yes.

Note by the way that it is important to give an address for the landlord in England or Wales, in order to comply with >> s48 of the Landlord & Tenant Act 1987.

Finally – if you are renting to a limited company – check that the company does actually exist.  You can do a free check on the Companies House website.

The term

It is normal for this to be six months or a year.  My preference would be for a shorter fixed term, especially with new tenants.

In particular be wary of very long fixed terms, ie over a year.  Circumstances change and you never know when you will need to evict your tenant .

This will be considerably easier if you are able to use the section 21 notice only ground – however this is not available to you until after the fixed term has ended.

The rent

One thing which has become clear in recent years is that you need to be very careful about charging long periods of rent (eg six months) in advance – for example if the tenant fails referencing.

You need to make it absolutely clear in your tenancy agreement that there is no way this could be deemed to be a deposit (for example).  As the landlord in the case of Johnson v. Old found out to his cost.

You also need to make sure that the taking of the lump sum does not create a six month periodic tenancy after the fixed term ends.  Otherwise your section 21 notices will need to give up to six months notice.

The deposit

The critical thing about deposits (apart from protecting them in a scheme and serving the prescribed information of course) – so far as tenancy agreements is concerned, is that you need to have a clause somewhere setting out what you are entitled to deduct from the deposit money.

Otherwise you won’t be entitled to deduct anything!

Those are the probably the most important things you need to watch out for.

However they are not the ONLY important things – but it would make this article impossibly long if I were to write about them all!

If you want to read more, note that I have written a Tenancy Agreements 101 which you can get for free on my Tenancy Agreements Manual site which you may find useful.



Comments

Mark Crampton Smith

12:32 PM, 14th June 2013
About 7 years ago

Good advice Tessa......... we see two or three clients a year who come to us having let privately for some time, and now want an agent, who have been using tenancy agreements that would not offer any protection in a court of law. The most common flaws are around unfair terms; for example a break clause in favour of one party and not the other, or a clause stating "No Pets" Another common error is non-compliant prescribed information. We get our tenancy agreements checked once a year by a specialist property lawyer to ensure they are right up to date; legislation is moving so fast that it is very easy for a lay person to miss a significant change that may render the whole document undermined.

Peter Harris

17:53 PM, 14th June 2013
About 7 years ago

Tessa Shepperson is certainly right on Tenancy agreements...I never felt comfortable with taking 6 months rent in advance as its the 7th month I would be then worried about. On there 2nd month they can forget they are paying rent and will spend their money and not worry about the end of 6 months. All my tenancy agreements are for a minimum of 6 months. in this case I take 2 months deposit and the normal month in advance. I don't try and make extra on the new agreements either with landlords or tenants. I have been doing this for over 20 years.
I also have late payment clauses ..ie if rent not received by 6th of month £20 is incurred , 9th a further £20, 12th £20 just like mastercard or visa .All payments are paid from the first of a month(easer for accounts and chasing debts) Debts can be the killer of a business..All this is in the agreement and they read and sign etc.. Its pointed out at the beginning as in dealing with other agents it amazes me the amount of little thought they give to the tenants future if they dont pay the rent and the tenant feels the agent is just wishy washy about the collection of rent.. A county court summons will destroy their future...
Like Tessa I could go on and on.. Being a good professional agent or Landlord is hard...


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