Why use a tenancy agreement?
Contrary to what many might think, it is not actually necessary (at the moment) to have a written tenancy agreement to create a tenancy. (This is because of s54(2) of the Law of Property Act 1925 explained here.) Why have one then? There are a number of very good reasons.
So you can prove what was agreed. When a landlord rents out a property to a tenant, this is a legal contract, and as with all contracts, has terms and conditions. It makes sense to write these terms and conditions down, so that they will not be forgotten.
It is all too easy for people, often quite genuinely, to have different recollections about matters discussed and agreed. However, if things are set out clearly in the form of a legal agreement which both parties sign, then there can be no argument.
All tenancy agreements will set out such things as the rent, the names of the parties, the address of the property, and the length of the fixed term (or period if it is a periodic tenancy) together with what is generally a standard set of terms and conditions, setting out such matters as what the tenant should or should not do while in the property, arrangements for the payment of bills, and rules for ending the agreement.
This is perhaps the most important reason for having a written document. However, there are others, for example:
- A written tenancy agreement will often be a requirement under buy to let mortgages and insurance policies
- Under the ‘common law’ rent is payable in arrears. If you want it payable in advance you need to say this in your tenancy agreement
- You are not legally entitled to make any deductions from deposits unless there is a clause authorising you to do this
- If the tenant wishes to apply for housing benefit, the benefit office will want to see one
- If the landlord ever wishes to evict the tenant, the Judge will want to see a tenancy signed agreement, and if one is not available a landlord will not be able to use the special ‘accelerated’ possession procedure used for section 21 claims.
It is now generally accepted that good landlord practice requires a tenancy agreement. Indeed in Wales, it will be a legal requirement when the Renting Homes (Wales) Act comes into force.
Landlords are advised therefore to always use a written agreement. Do not hand the keys of your property over until you hold one which has been signed by the tenants. Because once they are in occupation the tenants may refuse (and are quite within their rights to refuse) to do so.
Next week I will be looking at the differences between tenancies and licenses
