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Preparing a tenancy agreement
by Tessa Shepperson
Introduction
If a property is being let, it is important, both for
you and your tenant, that a tenancy agreement is
prepared and signed before your tenant is given the
keys and moves into the property.
For example, you won’t be able to use the
accelerated possession procedure if there is no
written tenancy agreement from the start, plus you
need to have a written agreement if you are taking
a tenancy deposit which is going to have to be
protected under one of the tenancy deposit
protection schemes.
It is also important that there is a written record of
what has been agreed regarding the tenants use and
occupation of the property.
Obtaining a Tenancy
Agreement
It is quite easy to get hold of a form of tenancy
agreement to use. Quite apart from the tenancy
agreements available to Landlord Law members,
printed forms can also be obtained at any good
stationers (such as WH Smith and Staples) - for
example those printed by Law Pack Publishing and
Oyez.
However when choosing a tenancy agreement make
sure it is a recent edition. Older forms may not take
into account the guidance issued by the Office of
Fair Trading on the Unfair Terms in Consumer
Contracts 1999, and forms printed before 2007 will
not be compliant with the tenancy deposit scheme.
Note: for more information on unfair terms in
tenancy agreements see the Landlord Law article of
that name.
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www.landlordlaw.co.uk - May 2011
The Landlord-Law agreements are written in a plain
English style, making it easier for all parties to
understand and comply with them.
“Not allow or keep any pet or any kind of animal at
the Property without the Landlords prior consent
(which will not be withheld unreasonably)”
Amendments to the
agreement
On reading this, you might think “there are no
circumstances under which I will allow my tenants
to keep pets, I am going to delete the bit about
obtaining the landlords consent.”
Once you have downloaded or bought a tenancy
agreement, you should read it carefully, to make
sure you agree with its contents.
Most purchased agreements will cover the main
points and will include clauses regarding the tenants
use of the property, termination of the agreement,
and the like.
However there may be particular points you would
like covered, such as whether the tenant can keep
pets, or smoke in the property.
If, on reading the tenancy agreement, you are
unhappy about parts of it, be very careful indeed
about doing any alterations. For example a clause
prohibiting pets might say something like:
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However, that wording is there for a very important
purpose - it is there so the clause complies with the
Unfair Terms in Consumer Contracts Regulations
1999 and the OFT guidance. If you remove it you
will be making the clause void. In which case you
will effectively have no clause forbidding pets at all!
Also when drafting clauses to go into agreements, it
is easy for people inexperienced in drafting work to
use wording which is unclear or which has a double
meaning. Be very careful about this as frequently
double meanings are not spotted by those writing
them until too late.
If a court is interpreting a phase with a double
meaning the Judge will often accept the meaning
which is most favourable to the person who did not
do the drafting, i.e. the tenant.
www.landlordlaw.co.uk - May 2011
If you do decide to make any alterations to the
agreement, the landlord and the tenant should
initial the alterations at the time of signing, just to
confirm that the alteration was agreed to and is not
something that was altered afterwards without the
other parties consent.
However, for most alterations, even some that seem
straightforward, it is best to get your proposals
checked or re-drafted by a solicitor who specialises
in property work. It is very easy for someone who
does not know what they are doing to invalidate a
clause by using inappropriate wording.
The Landlord Law tenancy agreements: These are delivered via our document
generator software, which will allow you to include
your own clauses and provide for our existing
clauses to be amended.
You do need to be careful with this though. We have
some pages with pre-drafted clauses for members to
use, or if you want something which is not there you
can (if you are a member) ask me about it in the
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forum. I will usuaully try to provide some wording
for you.
Completing the Agreement
Once you are happy with the tenancy agreement,
you need to complete the information for the
tenancy as follows:
The property
Obviously this needs to be the full address of the
property to be let.
If the ‘property’ is a room in a shared house (i.e.
where the tenants all have individual agreements
for their own room and shared use of the common
parts, rather than all the tenants signing one
agreement), you should give individual rooms either
a number (e.g. Room 2) or a name (e.g. Yellow
room), or state where it is (e.g. top front bedroom).
This is important, as if you ever need to bring
proceedings for possession against your tenant, you
will need to differentiate this particular room from
the rooms let to other tenants in the house.
www.landlordlaw.co.uk - May 2011
If the rooms are given numbers or names, do not
alter these, particularly if the tenants are on
housing benefit - if the Benefit Office think that rent
is being claimed twice for the same room they will
stop the payments.
You can also use the property description section of
the agreement to define more precisely the
property to be let. For example after the property
address could be added (in appropriate
circumstances) the following wording:
D excluding the outbuildings marked on the
annexed plan, which are retained for the
landlords use
D excluding the garage which is retained for the
landlords use
D together with the use of parking space number 3
D excluding the use of the loft space which is
retained by the landlord for storage purposes
D but subject to the right of the landlord and the
occupiers of neighbouring properties to cross the
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garden via the path marked red on the plan
annexed
Note that if part of the inside of the property is to be
kept for the landlords use, the tenancy agreement
needs to contain a clause allowing the landlord
access, which should be subject to written notice
being given.
Be warned also that this may mean that the Local
Authority wil consider the property to be an HMO for
Council tax purposes and require you to pay this
rather than the tenants.
If the Landlord Law plain English tenancy agreement
is being used then say ‘our use’, ‘retained by us’ and
‘the right of ourselves and the occupiers of
neighbouring properties to cross...’.
The landlord
It is best to put the full name of the landlord and put
Mr/Mrs/Ms as appropriate.
You should also give a contact address for the
landlord somewhere in the agreement. This can be
c/o the landlords agents if managing agents have
been employed.
www.landlordlaw.co.uk - May 2011
It is most important that an address for the landlord
in England and Wales, is given, otherwise the
landlord will be in breach of section 48 of the
Landlord and Tenant Act 1987.
This little known section provides that unless an
address is given for the landlord ‘for the service of
documents’ rent will not become due.
Subsequent case law has ruled that this section will
be sufficiently complied with if an address in
England and Wales is given somewhere in the
tenancy agreement, even if the agreement does not
specifically mention section 48.
However I have seen many tenancy agreements
where no address is given at all.
In these
circumstances, if the landlord wants to sue for rent
arrears, a section 48 notice will have to be served
first, as otherwise the rent will not, technically,
have fallen due!
(Landlord Law members will find a suitable letter in
our landlords letters section).
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www.landlordlaw.co.uk - May 2011
If the landlord is living abroad or in Scotland, an
address for service in England and Wales must also
be provided to the tenant. This can be the address
of a friend or relative or a local letting agent.
If the landlord is a limited company, the registered
office address should be given, as well as the normal
contact address (if this is different). Landlords also
sometimes give other contact details such as a
telephone number and email address, which will be
helpful for the tenant if he needs to contact the
landlord urgently.
The tenant
Ideally you should give the full names of all the adult
people who will be occupying the property.
However in the case of a family with older children,
it is not necessary to put the children down, even if
they are over 18, as in the nature of things they will
probably leave in due course, e.g. to go to
university.
If though the child is an older adult who intends to
live permanently in the property, his or her name
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should be included as a co-tenant. Children under
18 should not be named in the agreement.
Many agreements also provide for an address for the
tenant. If the tenant is a new tenant, their former
address should go here. Otherwise put the address
of the property.
Note that when two or more tenants sign a tenancy
agreement together they will all have, what lawyers
call ‘joint and several liability’. This means that
they are all liable individually to the landlord for
everything.
For example, if the rent is £400 and the four tenants
have agreed to pay £100 each, and there is £300
due, so far as the landlord is concerned he can sue
each and every one for the full £300, including the
tenant who has paid.
Or if one person breaks a valuable vase, the other
tenants will also be liable for the replacement cost.
So in effect each of the tenants are security for the
other tenants’ liabilities. This is one reason why
joint tenancy agreements are popular with
landlords.
www.landlordlaw.co.uk - May 2011
The term
It is normal for a term to be either for six months or
for a year, but in fact a term can be for any period
of time the parties agree.
Under section 5 of the Housing Act 1988, all assured
shorthold tenancies will run on anyway after the end
of the fixed term on a week by week or month by
month basis, depending on how rent is paid.
So you want to be totally flexible you can just have
an initial term of one month (or even one week),
and them allow the tenancy to continue until either
party wants it to end. Or if the tenant just wants to
stay at the property for two or three months (or
even for something as specific as two months and
three days), the tenancy term can be for this period
only.
I would not advise tenancies to be for a very long
term. For new tenants they should not be more than
six months (unless of course the property is being let
under a special scheme, for example under a local
authority accreditation scheme, where all tenancies
need to be for a minimum term of one year).
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The reason for this is that sometimes tenants turn
out to be unsatisfactory. If the term is for six
months this is not a long time to wait to get them
out under the shorthold ground.
Irate neighbours, incensed by loud parties and
antisocial behaviour, will normally be pacified if
they are told that the tenant will be evicted after a
few months. However they will be less pleased if
they are told that they will have to wait for six
months to a year!
Even if you are letting to a tenant who you know will
be a good tenant and not cause any problems, I
would not recommend fixed terms of more than a
year.
Circumstances change. Landlords may find after a
year that they need to realise their capital and sell
the property with vacant possession, perhaps to pay
for sudden medical expenses or finance a new
venture. Or tenants may find that they can no
longer afford the property or that they need to
move elsewhere for their job.
Both sides may have cause to regret the fact that
they signed an agreement for five years! A series of
www.landlordlaw.co.uk - May 2011
shorter agreements is far more flexible for both
landlords and tenants. Or at the very least there
should be a break clause.
Note: be warned that some letting agents will
recommend a long fixed term becuase this will entitle
them to charge a higher fee. If your agent is
recommending an initial fixed term of over one year,
you should take legal advice before you agree to this.
The rent
Rent is normally expressed to be either a monthly
figure or a weekly figure. Either are fine, but
landlords should note that a rent book needs to be
provided to the tenant if rent is payable weekly.
These can normally be purchased from the larger
stationers.
It is possible for rent to be payable for other
periods, e.g. quarterly, but this is not normal
nowadays and is not advisable.
If the property is an assured shorthold tenancy, the
tenants can challenge the initial rent by referring it
to the Rent Assessment Panel during the first six
months of the tenancy. If the panel then find that
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the rent is greater than the proper market rent for
the property, they will set a new rent, which will
then be the only rent that the landlord can charge
for the rest of the fixed term (another reason for not
having a long initial term!).
In reality few tenants do this, however landlords will
have fewer problems with their tenants if they
charge a reasonable market rent.
Sometimes landlords request that a large proportion
of the rent is paid in advance, sometimes the whole
of the rent for the fixed term. There is no legal
reason why this should not be done, and it may, for
example, be appropriate for students to pay a terms
rent in advance out of their grant or loan monies at
the start of the term.
However if you do this, make sure that the
agreement clearly states that the rent is calculated
on a monthly basis. Otherwise after the fixed term
has ended, you may find that you are stuck with a
periodic quarterly or six monthly tenancy. This is
bad news as the notice period under section 21 will
be longer.
www.landlordlaw.co.uk - May 2011
For agreements where the rent is to be paid
monthly, it is a good idea to specify that the rent
will be paid by standing order. Make sure you give
your tenants a form of standing order get them to
sign this before the keys are handed over. This can
prevent a lot of problems.
If the rent is to be paid by Housing Benefit, arrange
for your tenants to sign a letter of authority to the
Benefit Office when they sign the tenancy
agreement. Otherwise the Benefit Office will refuse
to talk to you about your tenants benefit application
because of the Data Protection Act.
Landlord Law members will find a suitable letter to
use in our letters section.
Note: you may be able to arrange for your tenants
local housing allowance to be paid to you via a Credit
Union account. Take a look at the article on this on
the site.
The deposit
It is normal for a tenant to pay a deposit to the
landlord for the landlord to use as a fund to pay for
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any repairs or replacement of broken items during
the tenancy.
This should not be more then two months rent,
otherwise it will be deemed to be a ‘premium’ or
‘fine’. Premiums are no longer illegal, as they were
under the Rent Act 1977, but they are inadvisable,
particularly for short lets, as if there is a premium
there may be problems preventing the tenant
assigning the tenancy (e.g. to someone
undesirable).
If the tenancy is an assured shorthold tenancy (as
most are) you will need to have the tenancy
protected under one of the government authorised
tenancy deposit schemes. If this is not done then
any section 21 notice served will be invalid. The
tenant may also be able to claim a penalty via the
courts.
The rules provide for you to inform the tenant about
the tenancy deposit protection scheme used (and
give other prescribed information) within 14 days of
taking the deposit. Landlord Law members will find
a form for this on the Landlord Law site or you can
use the form provided by your tenancy deposit
www.landlordlaw.co.uk - May 2011
scheme. For example you can download a form
from the Deposit Protection Service web-site.
Further information about the tenancy deposit
schemes can be found on the web-sites of the
individual schemes, and (by Landlord Law members)
linked from the deposit section on the Landlord Law
site.
The Inventory
Landlords should always have an inventory,
sometimes also known as a ‘schedule of condition’.
Even if the property is being let unfurnished, the
inventory/schedule can set out details of the
condition of the walls, doors, and windows, and
even unfurnished properties will normally be let
with carpets, curtains, and light fittings.
If there is no inventory, then you will find it very
difficult (if not impossible) to succeed in any claim
against the deposit if this is disputed by the tenants
and goes to arbitration.
clerk. This is also a good idea in the event of a
dispute, as the inventory clerk will normally be
taken to be an impartial witness.
Note: you will find a number of inventory clerk
companies in the suppliers section of the Landlord
Law site.
Ideally the inventory should be checked and signed
by your tenant before he goes into occupation of the
property, and it is usual to have a meeting at the
property with the landlord/letting agent/inventory
clerk for this purpose. This can be several days
before the tenant goes into occupation or on the
same day.
Executing the agreement
Once the tenancy agreement has been prepared,
the tenant should be given an opportunity to read it
and check that he is happy with its contents. If
necessary he should be allowed to take a draft away
so he can get legal advice on any terms he is
unhappy with.
If you do not have time to prepare a detailed
inventory yourself, you can always use an inventory
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www.landlordlaw.co.uk - May 2011
Note that if any terms in the tenancy agreement are
altered at the tenants request, these will no longer
be subject to the provisions of the Unfair Terms in
Consumer Contracts Regulations 1999 as they will no
longer be a ‘standard term’ being imposed on the
tenant.
Two forms of tenancy agreement need to be
prepared. One should be signed by the landlord and
given to the tenant, and the other should be signed
by the tenant and retained by the landlord. Or you
can both sign both agreements. The important thing
is that each of you has a copy of the agreement with
the other parties signature.
You should not hand over the keys and/or allow the
tenants into occupation until this has been done and
you hold a copy of the tenancy agreement with the
tenants original signature (i.e. not a taxed or
scanned copy).
The agreement should not be dated until all parties
have signed it.
Most tenancies nowadays do not need to be
witnessed. The significance of having the signatures
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witnessed is that documents signed as a ‘deed’ need
witnesses.
Most documents transferring property rights need to
be signed as a deed, but section 54(2) of the Law of
Property Act 1925 provides that this is not necessary
for
D short leases (i.e. those for less than 3 years)
D at a market rent (‘the best rent which can be
reasonably obtained’)
D without a premium
D which take effect immediately (i.e. are not
signed in advance of the tenant moving in).
There are a host of other documents which will need
to be dealt with as well as the tenancy agreement,
at the start of the tenancy. For example
D the standing order form for rent payments,
D a letter of authority to the Housing Benefit
office if your tenant is on housing benefit,
D the gas certificate which you need to give to the
tenant, if the property contains any gas
appliances, and
D the notice which needs to be served under the
tenancy deposit regulations.
www.landlordlaw.co.uk - May 2011
Renewals
Guarantees
If you have requested that the tenant have a
guarantor, this should be sorted out and the
documentation signed before the tenant goes into
occupation, preferably before he signs the tenancy
agreement.
The guarantor can either sign the tenancy
agreement itself as guarantor (in which case the
tenancy should have a special section regarding the
guarantee), or a separate form of guarantee can be
used (there is one available on the Landlord Law
site).
Guarantees should be signed as a deed and the
signatures of guarantors witnessed. Do not allow
tenants to take the document away to get the
guarantors signature as it is not unknown for them
to forge it!
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Although a tenancy will continue after the end of
the fixed term, under the same terms and
conditions as the preceding written agreement,
many people prefer to renew the tenancy by way of
a written document.
The most common reason for this is if you want to
increase the rent. Including this into a new
agreement is the best method of increasing rent.
Tenants will also often prefer the security of a
further fixed term.
However if these are the only reasons why a new
agreement is being given, it is not strictly necessary
to provide a whole new tenancy agreement (which
may be quite a long document).
A shorter ‘renewal’ form can be used, which just
sets out any new rent and the new fixed term, and
incorporates the terms and conditions of the
preceding agreement. There is a renewal form
available for Landlord Law members on the Landlord
Law site.
www.landlordlaw.co.uk - May 2011
However if the original tenancy agreement is fairly
old or is not well drafted, you might want to take
this opportunity of getting your tenant to sign a
new, properly drafted, tenancy agreement.
However with a well drafted tenancy agreement and
respect on both sides, hopefully there will be no
problems and the tenancy will run smoothly for its
duration.
© Tessa Shepperson, May 2011
Conclusion
Hopefully after following the advice in this article,
you will have drafted the tenancy agreement
properly, agreed its terms with the tenant, and it
will be duly signed and a copy with the other parties
signature will be in your possession.
The final advice is do not lose it! Make sure
(particularly if it is the first tenancy agreement
given to this tenant) that it is kept safely.
The agreement should be kept at least for the
duration of the tenancy. Ideally it should also be
kept for up to six years after the tenant leaves. The
reason for this is that if the tenant later brings any
claim against you relating to the tenancy, he will
have a six year period in which to do this before his
claim is ‘statute barred’.
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www.landlordlaw.co.uk - May 2011