Can my tenant owe rent if they did not sign the tenancy agreement?

Here is a question to the blog clinic from David who is a landlord:

Hi, we have a tenant who owes £5,000 in rent arrears and we have just discovered the agreement was not signed by the tenant. (This done through friends of a family so done on trust).

Can monies owed be collected if the agreement hasn’t been signed?

Answer

They will probably owe the money.  Whether you can actually collect though it is another matter.

It is possible for a legally binding tenancy to be created even if a tenancy agreement was never signed.  This is under section 54(2) of the Law of Property Act which provides that, in most cases, so long as the tenant is in occupation and paying rent – a tenancy is created.  Whether or not a proper tenancy agreement has been signed.

If they have a tenancy they will be liable for the rent.

Assuming that is you can prove the rent that was agreed.  So if the monthly rent was, say, £500 and the tenant paid this for several months and then stopped – you should be all right.  You will be able to prove that the tenant’s rent was £500 per month – because he paid it (until he stopped).

However, if the tenant moved in and failed to pay anything – it may be more difficult to prove what the agreed rent was.  However, in this case, you may be able to claim that the tenant does not have a tenancy at all – as payment of rent is an essential element of a tenancy. So as they did not sign a document and have never paid rent, it could be argued that they just have a license to occupy, which you can end and then evict them through the courts.

Although it sounds harsh, when tenants stop paying, eviction is normally a better option than chasing the tenants through the courts for the money.

• It will focus their minds – as they are at risk of losing their home, and
• It is generally very difficult if not impossible to get payment from someone who is unable or unwilling to pay (even if you get a County Court Judgement) – so if you allow them to stay you are in effect providing them with free accommodation.

As you do not have a written agreement and as this tenancy was set up presumably by someone who is not a lettings expert, I would recommend that you consult solicitors about this.

Renting property is heavily regulated nowadays and if your friend of the family failed to get the tenancy agreement signed, it is probable that they also failed to deal with any of the other legal requirements.  Such as service of a gas safety certificate and Energy Performance Certificate.  Which would mean (for example) that you cannot use section 21 to evict the tenants.

If you go to a specialist firm such as Landlord Action they will be able to advise on the best course of action to take.