Tenancy agreements for landlords in England: what to include in your rental agreement
A robust tenancy agreement is the cornerstone of a successful tenancy. It protects both the landlord and the tenant, so although it is not a legal requirement, everyone benefits from having one in place.
This guide aims to help landlords in England to understand the importance of the tenancy agreement – why you need one, what should be included in a rental agreement, and what to do when it comes to ending a tenancy agreement. The rules on rental agreements are different in Wales and Scotland, so we will signpost you to the relevant resources.
What is a tenancy agreement?
A tenancy agreement is a binding contract between the tenant and the landlord. It sets out the legal terms and conditions of the tenancy – and any other expectations – clearly and without room for misinterpretation. It also explains what either party can do if the other doesn’t keep to their side of the agreement. Without having a tenancy agreement in place, there is no written record of the contract for either party, which can cause misunderstandings and put a strain on the landlord-tenant relationship, especially if expectations aren’t met.
Why do you need a residential tenancy agreement?
As we’ve already mentioned, although they are not legally required to be in writing, tenancy agreements are important as they are about protecting the legal rights of both parties. This sets everyone up for a good landlord-tenant relationship from the beginning as everything is clear. Here are some of the key reasons why you need a residential tenancy agreement:
- Most insurers insist on a rental agreement being in place before offering landlord insurance
- The tenancy agreement details all the terms of the tenancy, which can include more but not less than the statutory/legal rights and responsibilities
- Disputes are more likely where an arrangement is only informal
- Accelerated eviction procedures can only be used where there is a written agreement
- Tenants on benefits will need a tenancy agreement for any claim
The Assured Shorthold Tenancy (AST)
The majority of private rented sector landlords in England will use an Assured Shorthold Tenancy (AST) as most meet the conditions below. This has recently changed in Wales, while Scotland uses Private Residential Tenancy agreements (see more on both below).
An agreement will be an AST where the following conditions are met:
- The rent is between £250 and £100,000 per year
- The tenants are people rather than an organisation such as a company
- The property will be the tenant’s main home
- The landlord does not live in the property
- The length of the tenancy is between six months and three years
GOV.UK has more detailed guidance on the criteria for ASTs. There are other types of tenancies, including excluded tenancies or licences, assured tenancies and regulated tenancies, but these are far less common than ASTs. Shelter provides information on the different types of private tenancies.
Currently, a tenancy in England can either be:
- fixed-term (running for a set period of time)
- periodic (running on a week-by-week or month-by-month basis)
Under the Renters’ Reform Bill there are proposals to move to a system of periodic tenancies – rather than fixed term – in England. Both landlords and agents should make sure they are prepared for the changes when they come and we will keep you updated.
Types of tenancy agreements
The Government has created a generic model tenancy agreement for ASTs, for use when a landlord and tenant are entering into an AST agreement in the private rented sector. There is no legal requirement to use it and landlords who do plan to use the model agreement are encouraged to also see the Government’s how to rent guide.
There are other tenancy agreement templates available, but if you do choose to use one, make sure it is from a trusted source, or you may prefer to take legal advice to be on the safe side – AST agreements can be written to reflect the varying and more specific circumstances of tenants, providing more flexibility for landlords and agents although statutory rights cannot be overridden.
Examples of tenancy agreements:
Tenancy agreements for certain kinds of properties, for example houses in multiple occupation (HMOs), may have different requirements. In these cases, the agreement can be adjusted for things like how many people are going to be renting the property, and the relationships between them. Here are some examples of tenancy agreements.
- AST for a family or two people who are unrelated: This is for use when renting out the entire property to a family or a couple of friends on one joint tenancy. In this type of tenancy agreement every adult is equally responsible for meeting the terms of the agreement including paying the rent. It is designed to be used with or without a security deposit.
- Joint AST for a group of sharers: This agreement is for use with houses in multiple occupation (HMOs) – when renting a property to three or more people where at least two of them are unrelated to each other. These types of arrangements have their own specific requirements which the tenancy agreement covers. There is a separate ‘sharer agreement’ for four or more sharers who are not related to each other.
What should you include in your residential tenancy agreement?
Whatever type of tenancy agreement you have, there are a number of clauses that should be included. These should be written in plain and simple language.
We advise that any rental agreement should be as specific as possible and include the following clauses:
Name and contact details of the property owner and the tenant
Names and contact details of any person party to the agreement, along with the full address of the property which is being let. This confirms the detail of who is responsible for the property.
Rent payments and payment dates
How much the rent will be, how frequently it will be due and payment dates, how it will be paid and how and when the rent will be reviewed.
Deposit protection details
The deposit amount and how it will be protected, or if the tenant has been offered and is using a deposit replacement membership, and in what circumstances any money can be withheld from the tenant when the tenancy ends, such as to repair damage caused by tenants and rent arrears.
Start date and end date of the tenancy
Date that the tenancy begins and the agreed length of the rental agreement, if relevant to the region (for example, in Scotland tenancies are open ended), including any break clause.
Ending the tenancy early, break clauses and notice periods
Whether the tenancy can be ended early and how this can be done, including how much notice is required and if there are any costs (these must be transparent, and reasonable). A ‘break clause’ allows the landlord or tenant to end the tenancy early, provided that sufficient written notice has been served beyond a given date, for example for a 12 month contract, a break clause of six months may be included. The exact notice period, the terms of the break clause and how it can be activated must all be included in the tenancy agreement.
Ending a tenancy early and the costs involved is a common basis for a dispute.
Frequency of inspections to the property
How often mid-term inspections to the property will take place, when appliances such as the boiler will be serviced and the minimum amount of notice that will be provided.
Repairs and maintenance
Tenant and landlord responsibilities, for things such as repairs including:
- how and when the tenant should report any damage to you so it can be dealt with promptly
- the landlord’s statutory responsibilities for, amongst other things, structural repairs such as the gas, electricity and water installations which must be kept to the required standard. This can also include how to manage damp, mould and condensation which is such a common problem.
Garden maintenance
If there is a garden, responsibility for garden maintenance should be clear. For example, who is responsible for front and back gardens, trees, shrubs and borders, mowing, weeding and general upkeep. This must be reasonable and it should be clear that tenants must report any damage to areas that may not be their responsibility (e.g. fences, sheds). Rules in HMO properties can vary.
Bills
Which bills your tenants are responsible for and which you will cover. Include water and other utility bills, council tax, TV licence, broadband or details of service charges.
Cleaning detail
How the property should be returned at the end of the tenancy. The tenant is only responsible for returning the property cleaned to the same standard as when they moved in.
Pet clauses
Include a clause on whether pets are allowed in the property or not. Most landlords prohibit pets but the Government’s model tenancy agreement has been updated to prevent a ‘no pets’ blanket ban, and you need to offer clear written reasons for refusing a pet when a request is made so it’s a good idea to include a pet clause in the tenancy agreement.
Subletting
Rules on subletting and details of whether other people are allowed the use of the property, and if so, which rooms and for how long. Most standard tenancy agreements do not permit sub-letting.
Smoking clauses
We would advise against permitting smoking in a rental property, but as it is often a common cause for disputes, it is important to include your position on smoking in the property in the tenancy agreement.
Nuisance in the property
Include any actions that might increase insurance costs or cause a disturbance to you or the neighbours, for example playing loud music after certain hours.
Use of the property
Outline the use of the property for residential purposes and that the property is not to be used for illegal purposes, or for business purposes without consent which cannot be unreasonably withheld.
Vacant periods
Include details on what the tenant should do if the property is going to be empty for a specified number of consecutive days. This usually includes turning off the water or leaving the heating on a low setting during the winter months. Specify that the property must always be locked and secure (including using any burglar alarm) when empty, and make sure that you include any measures required by your landlord insurance.
Furniture
Whether the property is furnished or unfurnished, and terms around the introduction or removal of furniture in the property, including who is responsible for removal costs if excess furniture is left in the property without permission.
Taking possession
Set out how, and why, you may be required to legally repossess the property by using either Section 8 or Section 21 of the Housing Act 1988 (in England and Wales) or Section 33.
Additional clauses in a rental agreement
You can also include individually negotiated clauses at the end of the tenancy agreement, for example relating to decorating a property or when and how the landlord can access the property. These must be fair, reasonable, clearly communicated and signed by the tenant, otherwise they could be seen as unfair and will be difficult to enforce. Any unfair, unreasonable or illegal clauses will be invalid and any court or adjudicator will simply disregard them. For this reason, a solicitor may be needed to draft additional clauses.
It is quite common for landlords and tenants to identify changes after the tenancy has started, and in this scenario an addendum can be created and signed, which is then simply an addition to the overall AST tenancy agreement.
If there is a dispute between you and the tenant at any stage of the tenancy, the tenancy agreement is one of the most important pieces of evidence you will need to provide to an adjudicator, as it outlines both your and the tenant’s responsibilities. This is a contract which should be robust and comprehensive, containing anything you may need to rely on at a later date.
Ending a tenancy agreement early
One way you can end a tenancy early without including a ‘break clause’, is if the tenant has broken the terms of the tenancy agreement. Typical examples of a breach of the tenancy agreement include falling behind on monthly rent payments, malicious damage to the property or inappropriate behaviour towards other residents. The other way is by mutual agreement where you come to an arrangement that suits all parties, even if there is no break clause.
What is a break clause in a tenancy agreement?
As mentioned earlier, the break clause allows either the tenant or the landlord to end the tenancy early, provided that sufficient written notice has been served. There is no standard format for a break clause, but usually it can only be used on or after a specified date. For example a break clause might say the tenant can end the tenancy six months after it starts if they give one month’s notice. It is important that the break clause is clear – the exact notice period, the terms of the break clause and how it can be activated must all be included in the tenancy agreement.
What happens when the tenancy agreement ends?
Even if the tenancy has run its course and is ending in line with the dates in the tenancy agreement, it is still a good idea that the landlord and the tenant communicate with one another to confirm that the tenancy is ending, to avoid any misunderstandings.
If the tenancy ends, with no new fixed term having been agreed and the tenant is still in the property, then a ‘periodic tenancy’ comes into effect. This is a rolling tenancy with no fixed end date, which usually runs from month to month – in line with the terms in the original agreement. The statutory notice for ending a periodic tenancy remains unchanged and the terms and conditions of the periodic tenancy remain the same and can continue indefinitely. However, the landlord can now repossess the property once the correct written notice has been provided.
The proposals put forward by the Government in the Renters’ Reform Bill, aim to move all tenants on ASTs to a ‘single system of periodic tenancies’, which means that tenants will need to give two months’ notice if they wish to leave. Under the Bill, Section 21 will also be abolished but landlords wishing to repossess their property will be able to use the strengthened Section 8 grounds instead.
