If you’ve found an acceptable tenant , and all references have been ‘checked The next step is to make them sign a tenancy contract. Do I have to bother with a formal contract? The short answer is no. You might be shocked to find out that you are able to give a tenancy in writing in the event that these conditions are met
It takes effect from the moment it is granted
it’s for a time not exceeding 3 years and
It is the highest rent that is able to be obtained without a charge being paid (one off capital payments for the beneficial interest in the lease)
But, I wouldn’t advocate this even to a family member or friend. This is due to the fact that the process of enforcing possession or the alteration of terms can be more costly without the documentation of a tenancy contract, because accelerated court proceedings aren’t readily available. Note that accelerated possession procedures does not necessarily mean speedy!
The advantages of a tenancy agreement
In general, a tenancy contract is beneficial to both parties, and hence they are utilized in the majority of instances. As a landlord, you will know that you have a tenant to an agreed-upon period typically 6 months, with the ASSURED Shorthold Tenancy (AST). In exchange, the tenant gets the basic guarantee of tenure, during which time they will not be ‘booted out’ in the event that they do not pay the rent. It is important to note before proceeding that under law, two or more people are referred to as tenants. Thus, even if there are many distinct tenants who reside in a house with a single lease legally, they are called”the tenant” (singular).
For a tenancy agreement template head on over to this website.
The current law is derived of the Housing Act of 1988. The act ushered in the deregulation of residential tenancy law , by the introduction of two types of tenancy, The Tenancy with Assured Tenancy (AT) in addition to the assured Shorthold Tenancy (AST). Prior to this residential lettings, residential lettings were subject to the regulations that were in place under the 1977 Rent Act. This outdated piece of legislation was another piece of the puzzle for the private rental industry. It ensnared landlords with tenants who had the security of tenure (i.e. it was virtually impossible to force these tenants back).
The change in the tenancy legislation as part of 1988’s Housing Act of 1988 was in many ways the start of the “buy-to-let” revolution. It ended the spectre of the notion of rent restraint and excessive levels of tenure security. These two aspects were responsible for the continuing decline in the private letting market. It was in 1988 that the Act was later amended with the help of the 1996 Housing Act. This revised the procedures and made it simpler for landlords to rent properties without worrying of being unable to return their property after the expiration of the lease.
The assured Tenancy
As I’ve already mentioned, there is a way to set up an tenancy without having a formal agreement. But, a tenancy agreement can be useful. It clarifies in clear language the rights and responsibilities of the tenant and landlord. If there are disagreements, the agreement can be beneficial to settle disputes, which could eventually be taken to the Courts. What kind of tenancies exist and what do I have rights and responsibilities as landlord?
There are two kinds of tenancy that pertain to the rental of residential property:
There is the assured tenancy (AT) in addition to the Assured Shorthold tenancy (AST).
Beware of the resemblance between their respective names. The two varieties of guaranteed tenancies distinct.
The AT offers tenants a lot of protection from tenure. That means, at expiration of the term agreed upon, the tenant does not need to move out, and has legally the right remain unless the landlord is able to establish reasons for the possession. ATs allow tenants to have the option of having their rent reviewed by the Rent Assessment Committee if they find it excessive. This type of tenancy designed primarily to provide tenants with greater assurance of tenure. For the majority of landlords and tenants, this isn’t a good option. The reason is that the tenant’s advantage of renting is the fact that it gives temporary, flexible housing. The thing that landlords want is the ability to charge a market rate and acquire vacant property fast and efficiently.
This is why the most tenancies in the country are assured Shortholds. Prior to the 28th February 1997 all tenancies were assured tenancies (AT) without notice was signed in order to signify the existence of an Assured Tenancy. The unquestionable popularity of the AST over the more restrictive cousins meant that on the 28th of February 1997, the situation changed as all assured leases immediately are now shortholds unless specifically stated.