Landlord Law Essentials

Landlord Law Essentials Part 5 - Tenancy Agreements

Contrary to what many people think, it is actually possible to create a tenancy (in England) with no written document. In fact as soon as you give the tenant the keys and let them in, a tenancy will (assuming you are charging rent) have been created.

However, it is a VERY bad idea to do it this way. Here’s why:

Five reasons why you need a tenancy agreement

(For England – we look at Wales below):

1. So, everyone can remember what was agreed.

Tests show that people often, quite genuinely, have different recollections of events. If it is written down in your tenancy agreement that the rent is £775 pm the tenant cannot argue that they only agreed to pay £725.

2. To protect the landlord’s position.

Once the tenant moves in, technically, he owns the property (or rather has a ‘legal interest’) for the duration of the tenancy. For example, under the general law, tenants are only actually forbidden to do major building work. If you don’t want them to re-decorate the rooms in different colours, you need to put that in the tenancy agreement.

3. So, you can use the special ‘accelerated’ possession procedure

Using the ‘accelerated’ procedure (only available at present for section 21 claims) to evict your tenant is a quicker procedure (although not as quick as its name implies) and cheaper if you are using solicitors. However, it cannot be used if there is no written tenancy agreement (there are a lot of other issues too, which we will be looking at later).

4. If you take a deposit it is essential to have a tenancy agreement.

Your chances of winning a disputed arbitration for deductions from the deposit are virtually zero if you do not have a tenancy agreement containing the correct clauses. We will be looking at tenancy deposits later in this course.

5. If your tenant is in receipt of any form of benefit

The authorities will not normally process the claim without proof of the tenancy. Which means a written tenancy agreement.

Not all tenancy agreements are the same

Most people talk about giving ‘a tenancy agreement’ as if there is only one. However, the contents of a tenancy agreement should vary according to the circumstances of the tenancy.

For example, in my Landlord Law service I have different versions of our tenancy agreement for the following circumstances:

A let of a whole property to one person or several people signing together
A let of a room in a shared house
Where the landlord pays the bills
Where the landlord is letting to students
Where the let is to a limited company
Where the let is made by a landlord who lives in self-contained accommodation in the same building

The agreements can also be varied depending on whether the rent is paid weekly or monthly, and where a guarantee clause is included. Users can also incorporate special clauses such as a break clause, a rent review clause or a clause incorporating the landlord’s headlease.

If you are not sure what sort of tenancy agreement is right for your property, I have a special (and free) Which Tenancy Agreement Guide which you can use to find out.

Tenancy Agreements / Occupation Contracts in Wales

On 1 December 2022 the law in Wales changed with the coming into force of the Renting Homes (Wales) Act 2016.

This had the following effect:

All tenancies and licenses which fell within the definition (this would include virtually all ASTs) were converted to ‘occupation contracts’ on 1/12/2022
The terms and conditions of those contracts were amended to include the various prescribed occupation contract terms under the Welsh legislation
All landlords of existing contracts at that time had to serve a ‘conversion contract’ on their contract holders, informing them of the new terms and conditions that would apply to them
Going forward, Welsh occupation contracts need to include all the Welsh prescribed terms (or permitted variants) based on the Welsh model contracts – which are very long.
Failure to provide a written contract, or an incomplete written contract, will entitle tenants to claim a financial penalty
There are also rules which apply when a periodic tenancy follows a fixed term, which can change the terms of your contract automatically unless you provide for this in your fixed-term contract
If the terms of the contract change (even if this is due to new regulations) you must serve a new contract on your tenants or suffer the penalty
Landlords must also provide ‘prescribed information’ in particular their address, using the proper prescribed form or be subject to a penalty.

A lot of information will be available to landlords via Rent Smart Wales (all landlords of Welsh property must be registered with them).

My Landlord Law service has a huge number of helpful FAQs and articles, and we also have compliant occupation contracts and guidance on preparing a ‘conversation contract’ (for those landlords who have still not done this).

You can see the content that is available on the Wales page.

Amending tenancy agreements and occupation contracts

Many landlords, if the form of tenancy they have does not fit their needs, will adapt it themselves. However, you need to be very careful about doing this. Particularly if your property is in Wales.

In fact, if your property is in Wales, many of the prescribed clauses cannot be changed at all or can only be changed if the change benefits your contract holders.

Then there are the special rules on unfair terms in consumer contracts which apply to tenancy agreements and occupation contracts. If a clause is unfair under the regulations, it will be invalid and unenforceable.

Generally, clauses will be unenforceable if they attempt to take away a right a tenant or contract holder would otherwise have had – but you can’t know if you are doing this unless you have a VERY clear understanding of what those rights are in the first place.

An example – the pets’ clauses

One classic example of how landlords get things wrong is with the standard pets’ clause. Here is one example of a pets’ clause:

You must not keep any pet or any kind of animal at the Property unless you have our written permission (which we will not refuse or delay without good reason).

Now, some landlords will say, “There are no circumstances under which I will allow a tenant to keep a pet” and delete the wording about asking for permission. But by doing that, they invalidate the clause! We know this because there is a legal case that says so.

However, the fact that a tenant may ask permission to keep, say, a bull terrier, does not mean that you HAVE to say yes. If you have a reasonable reason to say no (and you probably will), then you are entitled to refuse permission.

Whereas if you delete the wording in the clause, technically the clause will be unenforceable, and your tenants will be able to keep whatever pets they like. This will apply in Wales as it does in England.

This is one reason why you should not amend documents without taking advice first.