Tenancy Agreement
A tenancy agreement is considered one the most important documents when letting a property.
Tenancy Agreement
Your rental property will most likely be one of your most valued assets and therefore we strongly recommend that you only use a tenancy agreement that has been drafted by qualified Housing Lawyer. Our professional series of tenancy agreements are continuously updated and are in line with current housing law regulations. They have also been approved by a majority of the main UK lenders and building societies including:
List of UK banks that approve our tenancy agreements
- Abbey National Bank plc
- Halifax Building Society
- Lloyds Bank Plc
- Mortgage Business Plc
- Allied Irish Building Society
- Britannia Building Society
- Bank of Ireland
- Cambridge Building Society
- Cheltenham & Gloucester Building Society
- Eagle Star Life Assurance Co
- Nationwide Building Society
It is vitally important that an up-to-date tenancy agreement is used in order to avoid any disputes between the landlord and tenant which may result in financial loss.
Our Tenancy Agreement Guarantee - Because we believe that our tenancy agreements provide a comprehensive and well-drafted product for professional use, all users of our professional tenancy agreements are given the guarantee that if our standard agreement is not accepted by any bank or building society, then we will provide the necessary advice or support to ensure compliance.
Types of Tenancy Agreement
There are various types of tenancy agreements available. The right tenancy agreement for you will depend on the surrounding circumstances such as; the type of tenant, the amount of rent being charged, the letting of a whole property or just a room and even whether the landlord is living in the property.
The most commonly used agreements are:
- Assured Shorthold Tenancy Agreement
- General Tenancy Agreement
- Guarantor Agreement
Here we will explain the main differences in each of the agreements above:
Assured Shorthold Tenancy Agreement
The Assured Shorthold Tenancy Agreement is the most commonly used tenancy agreement when letting a property.
Our AST tenancy agreement offers a secure form of letting agreement between landlord and tenant. Because of the high degree of security offered to landlords by assured shorthold tenancies, this concise form of agreement is generally adequate for most letting situations and often preferred by landlords and tenants who find it easier to read and understand.
Our AST tenancy agreement makes no reference to the Landlord's Agent in the agreement which makes it particularly suitable for 'let-only' situations where an agent has no further involvement when the tenancy has been set up, and for other private letting arrangements between the landlord and tenant.
This tenancy agreement, when purchased, is accompanied by an 89 page guidance book packed with valuable tips and advice such as how to include a break clause, what frequency should the rent be paid, the amount of deposit for dilapidations and whether there are any extra charges for additional services.
General Tenancy Agreement
The General Tenancy Agreement is designed to provide a secure standard tenancy agreement for the letting of residential property other than under an assured or assured shorthold tenancy. Such a letting agreement is fundamentally different at law to an assured or assured shorthold tenancy, in that the agreement is governed essentially by contract law rather than housing law.
The essence of the general tenancy agreement is to establish the key terms and conditions of the letting of the property.
Who should use the General Tenancy Agreement?
There are certain exclusions from the Housing Act 1989 whereby the type of tenancy agreement would be classed as a General Tenancy Agreement, and these are (most common in bold):
- Letting a property to a Company
- Holiday Lettings
- The Landlord lives in the property being let
- Tenancies with a high rent (ie. Over £100,000 per annum)
- Tenancies entered into before commencement of the Act (ie. January 1989)
- Tenancies at low rent (typically less than £250 per year, or £1000 in London)
- Licensed premises
- Tenancies of agricultural land and agricultural holdings
- Lettings to students – by specified educational institutions
- Crown tenancies – where the landlord is the Crown (ie. the Queen)
- Local authority tenancies
If your circumstances meet any of the above criteria then you should use a General Tenancy Agreement
Guarantor Agreement
A contract of guarantee is often used when the tenant’s financial situation is weak, or whenever there is doubt regarding the tenant’s ability to pay the rent or comply with some of the key terms of the tenancy agreement.
The guarantee is a binding contract between the landlord and a third party (the ‘guarantor’) whereby the guarantor ( ‘surety’) promises the landlord to be responsible for the due performance by the tenant of his obligations under the tenancy agreement (payment of rent etc.) if the tenant fails to perform these obligations.
A rent guarantee is generally used whenever the tenant's ability to pay the rent is in question. Typical cases will be where the tenant is:
- A company. In this case, the director or, if the company is a subsidiary of a large and financially sound company, the parent company should be required to act as surety. Note that where the tenant is a private company a surety should always be sought.
- A student or unemployed person. Such persons have no current earnings and often little in the way of previous earnings history to rely upon. Often they generally have a poor financial status and this is a classic situation where a surety would be appropriate.
- A divorced or separated spouse. Where the separated person is solely dependent on maintenance payments for income, the 'paying' spouse or ex-spouse should be required to act as a surety.
- A self-employed person. Self-employed persons can represent a higher risk for the landlord for two main reasons. Firstly, their earnings, by definition, often fluctuate from month to month and may be difficult to verify or predict accurately. Secondly, attachment of earnings orders, which can be applied by the courts, to debts owed by persons in employment, cannot be used where a person is not employed.
- Foreign nationals. As with self-employed persons, it may be difficult to obtain satisfactory references on people who arrive from overseas.
- A bankrupt, or other situations where financial references are unsatisfactory (e.g. County court judgements - CCJ registered against them). A guarantee will avert risk where, despite previous financial problems, the landlord or agent considers the prospective tenant to be bona fide, thus allowing the tenant to be accepted.
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