Residential Tenancies - The Rules 1

Residential Tenancies -- Know the Rules!

Letting residential properties in the UK requires that the landlord grant the tenant a legal right to reside at the property in question. In UK law this is achieved by raising a tenancy agreement - a legally binding contract between the landlord and tenant (in case of sub-letting, the tenant and sub-tenants) to outline the terms under which the tenant is permitted to occupy the property.

For the majority of private lettings there are three types of tenancy agreement in use. These are:

1) Assured Shorthold Tenancy

2) Assured Tenancy

3) Protected (Rent Act) Tenancy

Assured Short-hold Tenancy

The Assured Short-hold Tenancy (AST) was introduced as part of the 1988 Housing Act - and later, in February 1997, became the default agreement for all new tenancy creations. As its name suggests it is an agreement geared to short-term rentals of six months and more. The terms of the agreement tend to favour the landlord more than the tenant - the landlord is guaranteed the right to regain possession of the property at the expiry of the agreement, so long as 2-months notice is given and Notice is served after the first six months.

Assured Tenancy

An assured tenancy (also known as an ordinary assured tenancy) is widely used for long-term / open-ended rental agreements. Compared with ASTs it affords tenants more security of tenure. The right to remain in the property is firmly with the tenant - meaning that the landlord can only serve notice of repossession in controlled circumstances, such as if the tenant continually defaults on their rental payments, or if the landlord wishes to move back into the property and use it as their home.

But although an assured tenancy might seem to weigh more in favour of the tenant, this can be good for the landlord too. A happy and settled tenant who doesn't want to move provides the landlord with security of income - the building block of a profitable investment strategy.

Protected Rent Act Tenancy

Prior to the introduction of Assured Tenancies under the 1988 Housing Act, one of the primary vehicles for rental tenancies was the protected rent act tenancy. Introduced in 1977 it awards tenants with the right to a fair rent and long-term security of tenure through to the expiry of the agreement. Upon expiry the tenant gains a statutory right to remain in the property on the same terms, indefinitely.

This type of tenancy agreement is no longer issued. However, for landlords taking on properties with sitting tenants, any protected rent act tenancies already in place must be observed - and can be very uneconomical to run!

Know the rules

Residential tenancy agreements are rarely that easy to comprehend. To help you navigate a path through their legal minefields I have assembled below some base rules that you will need to observe, both as landlord and as tenant.

As Landlord

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  Creating a tenancy agreement is absolute. It cannot be changed for another type of agreement upon renewal.

  
  

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  Never attempt to force a tenant out of the property. If they won't leave in accordance with the tenancy agreement you have in place you will need to obtain a court possession order.

  
  

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  All occupants of legal age in the property must sign the tenancy agreement.

  
  

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  Should you be worried about the financial viability of a tenant, obtain a surety / rent guarantee from a third party, such as a parent or guardian.

  
  

As Tenant

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  Tenancy agreements protect the rights of the tenant AND the landlord. Should the landlord invoke a clause in the agreement that requires you to leave the property, then you MUST leave.

  
  

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  If your tenancy agreement is an AST, and you feel that your rent demand is too high, you may apply to a rent assessment committee to have it reduced so that it is in line with rents for similar properties in the area.

  
  

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  Should you breach the terms of your tenancy agreement - for example, if you default on rental payments for several successive months - the landlord has the right to start repossession proceedings against you. 

  
  

 

Notices

When a landlord requires a tenant to leave his property, he must serve the correct notice at the correct time in accordance with the tenancy agreement in operation. One of three formal types of notice are used - Section 21a Notice, Section 21b Notice or a Section 8 Notice.

 

Section 21a Notice: This is used to terminate a periodic tenancy that is outside of a fixed term tenancy agreement. So, for example, if a 2-year fixed term tenancy agreement expires without formal renewal, the tenant remains in the property on a periodic tenancy - the period being the gap between rental payments made to the landlord. Once a Section 21a Notice is served on the tenant a minimum of 2 months must pass before the landlord is entitled to regain possession of the property.

 

Section 21b Notice: Formally terminates a fixed term tenancy agreement when that agreement comes to the end of its life and is not to be renewed. Again, a minimum two months notice is required, so should the landlord require possession of the property on the very same day that the fixed term tenancy expires, he should serve the notice exactly 2 months from the end of the agreement - or serve the notice earlier but extend it to coincide with the final day.

 

Section 8 Notice: Should the tenant breach the terms of a fixed tenancy agreement, the landlord has the right to bring the tenancy to a premature close. This they can do by serving a Section 8 notice. Section 8 notices may be served at any time during the tenancy, but should only be served if there is proof that the tenant has breached one or more terms of the agreement. Landlords must serve a Section 8 notice before applying to the court for possession.

 

All notices are available as template forms and can be sourced over the Internet or through stationery outlets on the high street.