It is possible to create a tenancy without a written tenancy agreement. But it is not a good idea.
Written tenancy agreements – the Law
A tenancy is a type of ownership of (or strictly speaking ‘interest in’) land and the Law of Property Act 1925 says that all interests in land need to be created by deed.
However it then goes on, in s54(2), to say that in some circumstances a tenancy can be created without a deed:
Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases taking effect in possession
- in possession
- for a term not exceeding three years (whether or not the lessee is given
power to extend the term) - at the best rent which can be reasonably obtained
- without taking a fine.
(My formatting)
Which translated into ordinary language means that a tenancy will be created without a written tenancy agreement
- when they move in
- if the term is three years or less
- if there is a market rent
- and there is no premium or ‘key money’
What this means is that if you allow Fred to move into your flat on a handshake and an agreement that he will pay you £450 pcm, that will create a valid assured shorthold tenancy.
Things included if there is no written tenancy agreement
Some things will be included in a tenancy agreement whether they are written down or not. For example:
- The ‘covenant for quiet enjoyment
- The landlord’s statutory repairing obligations
- The tenant’s right to be evicted by a court order (as set out in the Protection from Eviction Act 1977)
- The tenant’s duty to use the property in a ‘tenant like manner’
- S81 of the Housing Act 1980 which provides that tenants should not carry out improvements or alterations to a property without the landlord’s written consent
- S15 of the Landlord & Tenant Act 1988 which provides that the tenancy cannot be assigned or sublet without the landlord’s agreement
Tenancies without a written tenancy agreement – the problems
The trouble is – not having any agreed written terms will bring in problems. For example:
- Rent for tenancy is by default (ie if there is no agreement to the contrary) payable in arrears. So Fred will legally be able to pay you at the end of the month rather than at the start.
- If he then claims that actually you agreed to let him live there for £400, not £450, it will be difficult for you to prove otherwise – as there is nothing written down.
- If you took a deposit, and Fred disagrees with your deductions at the end of the tenancy, you will not succeed at adjudication as you are only entitled to make deductions from the deposit (which is the tenant’s money) if there is a tenancy agreement term saying what things you can deduct.
And so on.
Always have an agreement
Because of the problems that can arise if you do not have a written tenancy agreement, landlords are strongly advised to make sure that ALL tenants have signed a proper tenancy agreement BEFORE they are given the keys.
DON”T trust them to come to your office and sign it later. They may say they will, but if they change their minds, there is nothing you can do about it.
You can’t force them to sign. And the only way you can get them out is by evicting them through the courts. But as there is no written tenancy agreement you will not be able to use the quicker ‘accelerated procedure’ if you want to use section 21.
So although a tenancy without a tenancy agreement is possible, it is something you should avoid at all costs.
NB Tenancy agreements can be obtained via my Landlord Law service.
You know… it’s not only about tenancy agreements. Every deal you make must be documented to prevent later confusions, scams etc… My advice is: whomever you make business deals and agreements with, always document it. Even if that person is a friend of yours.
That is VERY true. Some of the most bitter arguments can be between friends (or by that stage, former friends) and family members.
The Housing Act 2004, and all the deposit schemes’ T&Cs, define a tenancy deposit as “money held as security for the performance of any obligations of the tenant, or the discharge of any liability of his”.
As such, what is the legal authority to refuse to allow deductions to the deposit when the above is proven?
If a deposit is demanded and paid, it is reasonable to conclude that both parties have an understanding as to its purpose.
If that is indeed the way schemes operate the landlord should refuse ADR and the release of the deposit, go to court, and request that any money order direct the deposit scheme to release the amount awarded from the deposit.
Lastly, I don’t think that the absence of the tenant’s signature on the tenancy agreement always means that there is no written agreement.
Can someone please explain to me? If you have an Assured Shorthold Tenancy (on a fixed date). If the Landlord or agent does not (in written form) renew the tenancy, do the tenants automatically go onto a Statutory Assured Periodic Tenancy (even if they had always been on a fixed term one previously?).
And if so, do all the terms of the previous tenancy agreement stand?
Yes it does and yes they do . See here http://www.landlordlawblog.co.uk/2011/08/11/what-is-a-periodic-tenancy/
The deposit is the tenant’s money and the received wisdom is that you need to have a tenancy agreement clause to authorise how it is dealt with. If there is no tenancy agreement the tenancy deposit schemes adjudicator will almost certainly refuse to make any award for the landlord.
You certainly have the right to reject adjudication and go to court. However, the Judge will not be happy about this – the whole point of adjudication was to take pressure off the courts which are overstretched just now. I would be surprised if the Judge allowed your claim if there was no tenancy agreement clause to support it. But by all means give it a go and let us know how you got on.
If the tenant has not signed the tenancy agreement there may be problems enforcing it as you will not have proof that he agreed to its terms. The fact that he failed to sign is in itself evidence to the contrary.
You hit the nail of the head, Tessa: You mention “received wisdom” where there should be a clear legal basis!
I think using the courts to ensure decisions are derived from law is a rather good reason to use them.
(I am not saying that there is no legal basis in this case, there may be one: that’s why I was asking the question).
Isn’t this a bit of a fictional problem? I can’t imagine somebody wouldn’t have a tenancy agreement in place but would protect the deposit
Cracking post Tessa.
At the gutter end of tenancies where I have always plied my trade, written tenancy agreements v verbal are about 50/50, as the worst types of landlords try to bury any paper trail that might lead HMRC to their door.
What I always say to them is this “The minute you tap the side of your nose and stuff the cash in your pocket you are, legally speaking, in the same boat as a council with 10,000 properties”.
Whilst pointing this out to one of those landlords he said to me in an incredulous tone “You’re not trying to tell me that there are laws that tell a man what he can and cant do with his own property? They’ll laugh you out of court”.
And I did see him in court……and I did laugh!
As Head of Adjudication for The Deposit Protection Service, I would comment that the adjudicator’s powers would be extremely limited, as without a signed agreement we are likely only to be able to award deposit funds to landlords when we can infer that a specified obligation existed, as Tessa has helpfully set out in her post.
In practice, a claim may succeed if it is based on non-payment of rent, and a clear rent statement is shown by which we can conclude that an implied term exists in respect of the arrangement, evidenced by the actions of the parties in the pattern of paying and receiving rent. However, we would be in considerable difficulty in establishing that the Tenant was in breach of any other “obligations under the tenancy agreement”, since we could not establish with clarity what those obligations were. The terms and conditions of The DPS state that if the Landlord does not provide a copy of the tenancy agreement that has been signed by the Tenant the claim is “likely to fail”.
Thanks for commenting.
This makes more sense, indeed: Obligations are to be inferred on the balance of probability for each specific case rather than proven beyond doubt with a signed document.
There are more obligations than paying rent that can will always exist, though: to behave in a tenant-like manner and to return the property in the same condition minus wear and tear (but would a landlord have a good schedule of condition in such scenario?)
Because of the above, I still think it is over the top to state that a claim will likely fail unless there is a tenancy agreement _signed_ by the tenant.