Things have changed slightly since I initially wrote this post in 2010.
The situation is now different in Wales. It may also differ in England when the Renters Reform Bill comes into law. If it comes into law.
But let’s first take a look at the law as it was in 2010 with oral tenancies.
Oral tenancies
An oral tenancy is where the tenant just goes in on a verbal agreement and a handshake (and sometimes not even a handshake). In fact, you may not have to say anything at all. If you move into someone’s property and start paying rent, which is accepted by the landlord, you will probably have a tenancy.
But this is not really a very good idea – for either party:
- Memories fade, and you may have disagreements about the terms – disagreements that a written agreement would have easily resolved
- You will not (at the moment while it still exists) be able to use the special accelerated possession procedure (if you are the landlord) or
- You will have difficulties claiming benefit (if you are a tenant)
So whether you are a landlord or a tenant, you will be better off with a proper well-drafted agreement.
However, that is really just the situation in England. In Wales, things are now different.
Written statements of contract in Wales
As discussed elsewhere on this blog, new legislation has been passed in Wales which has made tenancy agreements, known now as ‘occupation contracts, ‘ mandatory.
They must now be provided within 14 days of the occupation date and contain all the prescribed terms required under the various regulations – which can only be amended as permitted by the legislation.
If you don’t do this
- Your contract holder (i.e. tenant or licensee) can apply to the Court for a declaration of the terms of their contract.
- You are liable to pay compensation under section 87 of the Act, and
- You cannot use the no-fault procedures for possession orders.
In fact, landlords are strongly advised to get contract holders to sign written agreements BEFORE they move in (despite the Welsh government telling them that they can serve it 14 days afterwards).
Otherwise, they may find that they have lost their chance to introduce their own clauses, as the statutory Welsh prescribed terms (as set out in their model written statements) will then apply to the contract without amendment.
Which will be very much to the landlord’s disadvantage.
Contracts in Wales are now impossibly long as there are so many terms prescribed by the Welsh Government. Landlord Law members will find the Landlord Law Contracts linked from our Wales page.
Written statements of terms in England
Under the current law, section 20A of the Housing Act 1988 says that landlords must give tenants a written statement of the terms of their tenancy upon request. However, this is rarely used. After all, tenants will worry that the landlord will state terms which they never agreed to.
It is, though, quite rare for tenancies to be granted without a tenancy agreement, as it would be very much to the landlord’s disadvantage to do so. For example:
- The rent will automatically be payable in arrears
- If they have taken a deposit, there will be no authority for them to make deductions (which renders the taking of the deposit a waste of time), and
- Tenants will be able to keep a pet. It is only the pet prohibition clauses in tenancy agreements which prevent this.
So although, at present, a valid tenancy can be created without a tenancy agreement, it is unusual for this to happen.
Insofar as the Renters Reform Bill is concerned, which at the time of writing has only recently been published, section 9 of the current draft bill, imposes a duty on landlords to give a statement of terms and other information to their tenants.
However, we don’t know more as the clause simply refers to ‘such terms of the tenancy as are specified in regulations made by the Secretary of State’. So we will have to wait and see what these regulations end up saying.
Protected tenants
Neither the new Welsh legislation nor, we assume, the forthcoming new English legislation is likely to change the situation relating to protected tenancies under the Rent Act 1977.
Protected tenants have long-term security of tenure, which means that they cannot normally be evicted. Often any agreement they signed will have been lost in the mists of time, or they may never have signed an agreement in the first place. However, the landlord cannot force them to sign anything now (as he has no power to evict them if they refuse). Signing a new tenancy agreement is unlikely to improve their position, so these tenants are generally advised not to sign anything.
Note that where new agreements have been signed, this will not affect their status as a protected tenant, whatever it may say on the document that they signed.
And finally
Tenancies or (in Wales) occupation contracts CAN be created without formal written agreements, but this is uncommon and is to the disadvantage of both landlords and tenants.
In Wales, written statements of contract are a legal requirement, and if this is not signed before the contract starts, all the prescribed terms will apply to the contract, and landlords may find it hard to get contract holders to sign any new agreement (as it would be to their disadvantage).
In England, it looks as if new rules are going to be introduced with the Renters Reform Bill, but at the moment, we don’t know what they are.
You can read the rest of my urban myth series >> here. Find out more about the Landlord Law tenancy agreement service here.