How to write a professional tenancy agreement: What you need to know
Bringing on a new tenant is an exciting prospect for any landlord. Good tenants bring in the income you need while being transparent about their needs so you can address issues quickly and keep the relationship nice and healthy.
But not all tenants play by the same rule book. While the vast majority are a pleasure to have around, there’s always the small risk of getting a bad apple, which could put you in debt. Even worse, it could end in a sticky eviction process with a lot of legal expenses.
However, you can limit the likelihood of any issues with a well-thought-out tenancy agreement that both parties can sign ahead of time.
This in-depth Bionic guide will explain what a tenancy agreement is, what your and your tenant’s rights are, and how to put together a tenancy agreement that works for both of you.
What is a tenancy agreement?
A tenancy agreement is usually a written document that outlines the conditions of a tenancy in rented accommodation. It outlines the landlord’s expectations of the tenant, what the landlord promises to do in return and the rights that both parties have. Once signed, the agreement is legally binding.
Tenants can read through the agreement before signing on to a tenancy. This gives them a chance to ask their new landlord or letting agent about any clauses of which they’re unsure.
Written vs oral tenancy agreements
There are two forms of tenancy agreements:
- A written tenancy agreement is the most common form of contract. It must be signed by all tenants who will be living at the address as well as the landlord. Putting the agreement in writing has advantages for both the tenant and the landlord: it clearly lays out the rules that both parties have agreed to, meaning an intermediary can use it to determine who is at fault if there’s a legal dispute — for example, if a tenant damages your property.
- An oral tenancy agreement is simply a verbal agreement between the landlord and the tenant. They’re most common when a tenant is renting directly from a landlord rather than through a letting agent, especially if the tenant knows the landlord personally. Oral tenancy agreements are still legally binding, but they’re very difficult to enforce since there are no clearly agreed-upon terms.
For landlords, getting a written agreement is especially important. Without one, regaining possession of your property is far more difficult: courts will normally require a signed document as evidence before issuing a court order that lets you evict an unruly tenant.
What are the types of written tenancy agreements?
Fixed-term tenancy agreements normally last for 6 or 12 months at a time. On a fixed-term contract, tenants can leave on the last day of the contract without providing their landlord with any notice. Staying past the date agreed on a fixed-term contract means the tenant is rolled onto a period term contract unless the landlord agrees to them leaving.
Landlords can ask a tenant to leave the property at the end of a fixed-term as long as they give the tenant at least two months’ notice in writing. To do this, you’ll need to submit a section 21 eviction notice.
Fixed-term contracts often contain a break clause. Break clauses let a tenant end the agreement early if they meet some outlined conditions first. For example, a 12-month fixed-term contract might have a break clause that states tenants can leave after the first six months of the agreement as long as they provide the landlord with at least one month’s written notice.
Unlike a fixed-term tenancy, periodic agreements don’t have a defined end date. Instead, the tenant simply agrees to give the landlord notice that they’re leaving the property when they’re ready.
Normally, period-term notice periods are about four weeks but they can be longer. This notice must be provided in writing to the landlord for it to be valid.
What are the tenant’s rights?
A tenancy agreement should always lay out a list of the tenant’s rights.
As a landlord, you should be aware that there are universal rights given to all tenants regardless of whether or not they’re detailed in your contract. Your tenant has a right to:
- Live in a safe property that’s in good condition
- Know who their landlord is
- Be protected from unfair evictions
- Challenge excessively high rent and charges
- Have their deposit returned when the tenancy ends (as long as there are no breaches in the tenancy agreement such as damage to the property)
- See a valid Energy Performance Certificate before moving into the property
For more information on tenant rights, visit the government website.
What are your rights as a landlord?
Likewise, the tenancy agreement should also outline what you can reasonably expect in return from your tenant. Typically, you have the right to:
- Expect your tenants to take proper care of the property
- Ask your tenants to take reasonable measures to maintain the property (e.g. turning off the water at the mains if they’re away from the property during winter)
- Be paid the agreed rent on time (even if there are repairs you still need to carry out or your tenant is disputing a charge)
- Ask your tenant to pay for any damage they or one of their guests caused
- Dictate that your tenant does not sublet your property (unless you agree to it)
- Pay any bills that aren’t included in the rent on time e.g. council tax or water
If your tenant violates these rights, you may be able to take legal action to evict them.
What are your responsibilities as a landlord?
There are several legal responsibilities you have as a landlord regardless of whether you outline them in the tenancy agreement. Failure to meet these obligations may result in fines or even prison time in exceptional circumstances.
As a landlord, you must:
- Provide a tenancy agreement that complies with the law
- Provide tenants with a copy of the ‘How to rent’ guide if your property is in England (or a tenant information pack if you live in Scotland)
- Give tenants at least 24 hours' notice before carrying out any inspections of the property (unless it’s an emergency)
- Make sure gas equipment is safely installed and maintained by an engineer on the Gas Safe register
- Arrange for a qualified engineer to do an annual gas safety inspection
- Provide your tenant with a copy of the gas safety check record when they move in
- Ensure all electrical appliances, sockets and light fittings are safe
- Follow all current health and safety regulations for private housing
- Provide smoke alarms on each floor
- Provide carbon monoxide alarms in any room with a coal fire or wood-burning stove
- Ensure your tenants have easy access to a fire escape route on each floor
- Provide fire extinguishers in large properties like houses in multiple occupation (HMOs)
- Resolve any repairs as quickly as possible
Visit the government website for more information about your responsibilities to tenants.
How to write a tenancy agreement
Tenancy agreements can vary depending on the type of property you’re letting, for how long, and to whom you’re letting it.
There are a few things you should always include in your tenancy agreement though. These are:
- Property address — Make it clear which property the agreement refers to by writing out the full address at the beginning of the agreement.
- Contact details — Make sure your tenancy agreement has the contact details of both parties. If you don’t provide at least your name and address, you could be fined.
- The time frame — Outline how long the tenancy will last if you’ve chosen a fixed-term contract. If you’re instead opting for a period-term tenancy, clearly state this in the agreement, and detail the date of each month that the next period starts.
- The agreed rent and payment date — The agreed rental amount should be clearly displayed in the tenancy agreement in pounds and pence. You should be clear about the period the payment covers: if you expect quarterly payments, clearly state this on the agreement. You should also make clear when you expect to receive payment (e.g. “The 1st of each calendar month”).
- The deposit amount — Most tenancy agreements require a deposit, often equivalent to about one month’s rent. Clearly state the deposit amount in the agreement and the measures you’ll take to protect the deposit; for example, via the Deposit Protection Service (DPS).
- The rights of each party — It’s always helpful to detail the rights of both the tenant and the landlord to minimise the risk of an accidental breach.
- What happens if the agreement is terminated — This includes things like how much notice you require if a tenant wants to end the agreement early, and how much notice you’ll provide them before an eviction. It’ll also detail what will happen with the tenant’s deposit.
Looking for a tenancy agreement example? LawDepot provides this free template you can use to get started.
Can I write my own tenancy agreement?
You don’t necessarily need a solicitor to produce a legal document like a tenancy agreement. You can do it yourself, just make sure to include all the relevant information. Ensure it is up to date with the law and in particular does not contain any illegal clauses. For example, requiring the tenant to pay unreasonable costs is illegal so you cannot request anything like this.
What needs to be included in a tenancy agreement?
Although you can produce a tenancy agreement yourself without the assistance of a lawyer, you must include the correct information before both parties sign. It’s sensible to include the following details:
- The landlord’s name and address
- The tenant’s name and address
- The address of the property which is being let
- The date the tenancy began (or will begin)
- Who else is allowed to use the property
- If you allow pets or animals
Any other rules the tenant must abide by (e.g. what state the property must be left in when they move out, if they can decorate and hang items on the wall or if they are allowed overnight visitors).
How legally binding is a tenancy agreement?
A tenancy agreement is a legally binding contract and must be respected by both parties as soon as you have both signed it.
As a landlord, your signature acts as your agreement to carry out all the duties outlined in the contract. Similarly, as a tenant, you must abide by any rules in the agreement once you have signed.
What happens if there is no rental agreement?
If there is no tenancy agreement that means there is no legal agreement in place.
For example, if you are a landlord and your tenant leaves your property in a bad condition, you have no legal authority to deduct money from their deposit if you don’t have a rental agreement.
If there was an agreement in place that stated they should not leave the premises in an unacceptable state, then you’d be able to keep their deposit. Make sure you always chalk up a legal contract as a landlord, this will protect you from issues with tenants in the future.
How to protect your property
Having a written tenancy agreement in place is vital if you want to ensure a long and successful tenancy. It protects both you and the tenant, keeping your income protected and your reputation intact.
At Bionic, we find things like property maintenance insurance and commercial property insurance for landlords like you to keep you protected should the worst happen. You can get a quote today or learn more by visiting our business insurance page.