Tenancy Agreements

Written Tenancy Agreements

Landlords should be aware of the benefits of written tenancy agreements and the procedures necessary for obtaining such an agreement. Although a landlord can create many short-term tenancies (three years or less) without a written agreement, it is generally not advisable for landlords to allow occupation without first having secured a signed formal tenancy agreement.

Benefits of Written Tenancy Agreements

A written agreement is required by law for fixed-term tenancies greater than three years, when the tenancy must be produced by deed, with signatures being witnessed. Even for three years or less, landlords are strongly advised to have a written tenancy agreement, which the tenants should sign before occupation. The benefits of having a written contract are:

  • it can prevent disputes later over what was agreed
  • if there is a dispute, it can help to resolve the dispute more quickly
  • a well-drafted tenancy agreement will help protect the interests of all parties.

Landlords should note:

  • after moving in, occupiers cannot be required to sign a tenancy agreement
  • it will be difficult to evict a tenant without a valid tenancy agreement
  • the accelerated procedure for recovery of possession (see Chapter 5) will not be available unless the tenancy and required notices can be evidenced by valid paperwork.

Tenant's Right to a Written Statement

A Housing Act 1988 tenant who does not have a written agreement has a right to ask for a written statement of any of the following principal terms of the tenancy:

  • the date the tenancy began
  • the amount of rent payable and the dates on which the tenant should pay it
  • any rent review arrangements
  • the length of any agreed fixed term.

The tenant must apply to the landlord for this statement in writing, and the landlord must provide it within 28 days of receiving the tenant's written request. A landlord who fails to give a statement of tenancy particulars without reasonable excuse is committing a criminal offence and could be prosecuted and fined.

Implications of Oral Agreements

In law, a tenancy can be created by oral agreement. If a person occupies the property and pays rent, a tenancy will have been made even though there has been no written agreement.

A landlord cannot allow a tenant to live in a property 'on approval' on the basis that a tenancy will be granted later. The tenancy will have been created by the initial acts of occupation and payment of rent.

A person exclusively occupying a property and paying rent will legally be regarded as a tenant and be entitled to all the statutory protections provided to tenants under the law.

Preparing a Written Agreement

Although landlords may draw up agreements, this is not advisable. Drafting tenancy agreements are highly skilled, and landlords doing this without legal advice may find that they have made their position worse in the areas where they were seeking to protect their position.

It is far better to use one of the many excellent standard tenancy agreements available from landlord associations, law stationers, the larger general stationery stores, the many online services available for landlords, and some local authority housing advice centres. Landlords wishing to alter the terms of a standard agreement should seek specialist advice.

Preparing a written agreement is a critical opportunity for both landlord and tenant to agree on the formal terms of their relationship. Both parties should have every opportunity to read and understand the tenancy terms before becoming bound by them.

Following changes to Stamp Duty in 2004, tenancy agreements no longer have to be stamped to be valid. The new Stamp Duty Land Tax may still be payable if they are of exceptionally high rent value. More details can be found in the Inland Revenue leaflet Stamp Duty on Agreements Securing Short Tenancies.

Signing a Tenancy Agreement

A tenancy with a fixed term of fewer than three years, at market rent and, will take effect in possession; the signatures will not need witnessing.

Otherwise, the tenancy must be in writing, made as a deed and the signatures would need to be witnessed.

An individual may sign a tenancy agreement, and an authorised person of a company may sign the tenancy agreement on behalf of the company without the formalities of section 44 of Companies Act 2006 (Northwood (Solihull) Ltd v Fearn & Ors [2022] EWCA Civ 40).

An agent may sign on behalf of a landlord.

Contracts can be signed electronically, and many apps are available to ensure the landlord and tenant have agreed upon the document.

The Law Society has issued a practice note acknowledging that electronic signatures are acceptable for executing documents, including deeds and witnessing. Where the tenancy is a deed, the parties may need extra care to ensure the parties independently witnessed the signatures.

An agreement should be provided as a draft initially so the tenant can read the contents at their leisure and then sign two copies of the contract with the landlord. For example, the parties could do this at a meeting, handing over the keys or signing electronically.

It is best to have two copies of the tenancy agreement signed by both parties, with each keeping their copy.

Both parties should be careful when completing the agreements. Make sure they are legible and that you can read them without difficulty in the event of a dispute. Landlords must provide a complete, valid and current address in England or Wales which could be the address of the landlord's agent or his registered business address. If a landlord does not give an address, this might cause difficulties should any dispute arise.

If no address for the landlord is given at all, apart from being bad practice, the penalty is that no rent is payable by the tenant until an address is given (and the landlord can then claim the previous rent). A failure to provide an address will cause the landlord difficulties later if there is a need to evict a tenant for arrears of rent.

Unfair Terms in Tenancy Agreements

The Consumer Rights Act 2015 ensures that standard contracts between consumers and businesses are 'fair'. The unfair terms part of the Act applies to tenancy agreements, and unfair terms are administered and enforced by the Competition and Markets Authority (CMA). The Office of Fair Trading (OFT), which used to administer the unfair terms regulations, had issued guidance on the effect of the previous regulations on tenancy agreements. This guidance can continue because the old regulations have been imported into the Act.

The legislation does not cover the core terms of a contract (e.g. the rent and property details) except in so far as they require that the contract is in plain English.

A standard term is unfair if it creates a significant imbalance between the parties' rights and obligations to the consumer's detriment and is contrary to the requirement of good faith. If a term is unfair, it will be void and not enforceable – but the rest of the contract will stand.

So far as tenancy agreements are concerned:

  • any clauses which attempt to limit or exclude rights (e.g. legal rights) that tenants would otherwise have had are likely to breach the regulations and be deemed unfair unless there is an excellent reason for them (which should be apparent from the agreement)
  • clauses that impose any penalty or charge on a tenant must provide for or state that the charge should be both reasonable in amount and reasonably incurred

Where a clause states that a tenant may only do something with the landlord's written consent, this should be followed by the words' (consent not to be unreasonably withheld)' or similar.

Any clauses which are challenging to understand, use legal terminology, or have a specific legal meaning that the ordinary person may not understand (such as 'indemnity' or 'jointly and severally liable'), will also be vulnerable to being found invalid under the legislation.

Here is an example of how this can work

Many landlords would prefer to prohibit pets from their properties and would like a clause in the agreement. However, if the clause says, "The tenant is prohibited from keeping any pets whatsoever", this clause is likely to be void (ultimately, only a court can decide what is or is not fair), and it will not stop the tenant from keeping pets if it is found unfair.

The clause will be more acceptable if it says, "The tenant is prohibited from keeping pets, except with the landlord's written permission which shall not be refused unreasonably".

A clause in this format is not saying a landlord has to give permission. There are many good reasons for refusing permission for pets - they damage the property, some people are allergic to them, or the lease with the freeholder may also prohibit pets. If the landlord gave any of these reasons, it would be difficult for the tenant to argue that the landlord was unreasonable in refusing a pet's permission. The exact words may be a fair term or an unfair term, depending on the context in which they are used.

It is easy to breach the regulations and render clauses invalid by inexpert adaptations. Professionally drafted tenancy agreements sold by reputable publishers and provided by landlord associations will generally have been prepared with these regulations in mind. Note also that from time to time, new cases may be decided or guidance issued by the CMA, which will need to be reflected in the form of tenancy agreements.

Ensure that the agreements are the most recent versions and do not use old ones.

Typical Tenancy Terms

Most agreements contain similar terms that may be worded differently but achieve the same result. Some typical terms might include:

  • pay rent in advance and on time
  • not to sub-let without consent
  • not to damage the property
  • inform the landlord of repairs
  • not to have pets without consent
  • keep the property clean
  • the notice period for the tenant

Rent in advance

The tenancy should always state that the rent is payable in advance and that the tenant should pay it on time.

Not to sub-let

The tenancy should restrict sub-letting without prior written consent. The landlord can consent in the future if they wish, but it should be prohibited from the outset.

Not to damage

Many terms will also include what will happen in the event of damage. For example, the landlord may use the tenancy deposit towards any costs.

Inform about repairs

It's essential to have a term about informing the landlord of a repair. For example, if there's a leak in the roof from rain, the landlord needs to know quickly to reduce the damage caused by rainfall.

Pets

Generally, there will be a term that pets are prohibited without prior consent from the landlord. Landlords who can be flexible and consent to limited pets (such as one cat or dog) may find their property easier to let than a strict ban. However, pets can cause damage, and after the tenant has left, there can be issues such as fleas if not careful.

If a tenant requires an assistance dog, consent would have to be given by law.

Keep clean

Most agreements will require that the property be cleaned at the end of tenancy as a minimum.

The notice period for the tenant

The amount of notice that the tenant must provide should be clearly stated in the tenancy agreement. The most common is for at least one calendar month's notice to expire the day before rent is due.

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