The tenancy agreement may be called upon in the event of a dispute, so it’s essential that it’s comprehensive and accurate. The NLA Advice Line fills us in on five potential problems to watch out for.
- Using the wrong type of tenancy agreement
The most widespread agreement is an assured shorthold tenancy (AST), which is made with a tenant who intends to reside in the property as their main or only home. There are cases, however, when an AST is unsuitable. One classic example is when a landlord lets their property to a company, and in this case a company-let agreement is needed. Another example is lodgers; if you decide to take in a lodger for security or additional income, you need a lodger agreement.
- Entering into a rent-to-rent scheme without a legal contract
Not all rent-to-rent schemes are problematic. Many local authorities offer to lease properties from private landlords in an effort to solve housing shortages, and there are certain circumstances where these schemes are attractive for a landlord: at the end of the three- or five-year period, the property is given back to the landlord in the same condition; the rent-to-rent company tends to be responsible for any maintenance work; and the landlord doesn’t need to pay for any void periods. However, we do hear stories of companies renting rooms individually to maximise the income from a property and not disclosing their full intentions to the landlord. So it’s crucial with rent-to-rent schemes to thoroughly research the company or individual, do your due diligence, be mindful of all the pitfalls, and have a legal contract drawn up by your solicitor. It’s also worth bearing in mind that you can only regain possession of the property if there is a breach of contract.
- Not naming all individuals living in the property in the agreement
It is recommended that all adults be included in the tenancy agreement. So, if a husband, wife and their 18-year-old son are going to reside in your property, ensure they are all named in the agreement and each of them is referenced. Subletting is another issue related to this. Recently, an assured tenant who had been given a council property was sent to prison for 12 months for subletting the property while living elsewhere. No such legal protection exists for private landlords. If a tenant in a private rented property sublets, they have breached their tenancy agreement. Breaching the agreement is a condition for seeking possession in court, but the decision is discretionary, and most applications for possession on discretionary grounds result in, at best, a suspended order. Preventing this comes back to due diligence. For example, if only one person wants to rent a two-bedroom flat, or a couple wants to rent a three-bedroom house, you need to ask why.
- Not complying with regulations at the beginning of a tenancy
You must comply with certain rules at the beginning of a tenancy, otherwise there will be problems if you try to seek possession of the property:
- The deposit must be protected within 30 days of it being paid. You can use a deposit protection scheme, such as mydeposits, the Tenancy Deposit Scheme (TDS) or the Deposit Protection Service (DPS).
- Deposit prescribed information must also be supplied.
- Tenants must be given a copy of the EPC, the current gas certificate (very important) and the ‘How to rent’ booklet.
- The final issue to bear in mind is licensing. If your property is in a council area that requires a licence, you must have this before you are able to regain possession of the property.
If you want to email the EPC or any other documents to your tenant, there needs to be a clause in the tenancy agreement that stipulates the tenant is happy to accept information via email.
And of course remember to register with the Information Commissioner’s Office (new General Data Protection Regulation rights apply to your tenants; you can do a self-assessment questionnaire with the ICO to see if you need to register).
- Contravening rules set by the Competition and Markets Authority
The NLA updates its tenancy agreements in accordance with new regulations. Letting agents quite often devise their own tenancy agreements, and some add in clauses and certain conditions, believing that they are favourable to landlords; however, some actually contravene the Competition and Markets Authority rules. One example is a clause stating that the landlord will give two months’ notice if they require possession of the property at the end of the fixed term, and that the tenant will give two months’ notice if they want to end the tenancy. However, the law says that the tenant only has to give one month’s (rental period) of notice. It is not a fair term under the Competition and Markets Authority rules and can’t be enforced. If an NLA member is using an NLA tenant agreement, they can be reassured that we will revise it continually and there aren’t any unfair clauses.
Did you know? Using an NLA-approved tenancy agreement ensures that you are providing your tenants with an up-to-date and robust agreement drawn from best practice.
A printed AST is included in every new membership pack, with more available to download for free. Find out more at landlords.org.uk/services/nla-lettings-and-property-management/forms