Tenancy Agreements | Guide for Buy-to-Let Landlords & Tenants
Renting private property has always been popular in the UK. With increasing numbers of people struggling to get on to the housing ladder and finding it difficult to get a mortgage, more and more are looking at renting as an option - as it is sometimes the only solution left open to them.
From a buy-to-let landlord’s perspective, it is extremely easy to get involved in the private rental sector - but only if you are familiar with the law relating to tenancy agreements, your legal obligations, the correct procedures to be followed; and you understand the ins and outs of the private rental market.
If you are an investor thinking of becoming a buy-to-let landlord, or you are new to the whole private renting process, it may help you to research the area thoroughly first to ensure you do everything by the book.
There are plenty of reference sources available that can help including many local and national landlords associations.
If you already own a portfolio of properties and you need to improve your landlord processes and procedures, you should firstly learn how to draw up a good tenancy agreement.
This will help protect both your interests and those of your tenants.
It is vital that there is a written document in place so that, should there be any landlord-tenant disputes further down the line, both parties have some kind of formal documentation to refer to.
Information in the tenancy agreement
As a basic guideline, you should always ensure that the following key information is included in and private rental tenancy agreement:
- Personal details, including names of people involved in the tenancy.
- Deposit amount required.
- Rental amount, and when and how often the rent should be paid.
- Methods for paying the rent.
- Start date and term of the tenancy.
A tenancy agreement will also include such things as tenant and landlord commitments and obligations; who is responsible for repairs; and whether sub-letting is permitted.
There will also be other things detailed to make it personal to both the landlord and the tenant.
Agreeing the terms and conditions of the tenancy
It is important that both parties are present to sign the tenancy document once it has been drawn up so that if there are any discrepancies, or if there is something that cannot be agreed upon, it can be sorted before the start of the tenancy period.
Both the tenant and the landlord should always keep a copy of the agreement as it could be used as evidence at a later date should you wish to clarify the original understanding of the tenancy terms and conditions.
Legal advice and specialist property solicitors
Even though, as a landlord, you are able to draw up features to be included in the agreement, it is important that you are professional and above board.
Always be fair and make sure that the document is legal and to current standards.
Also make sure it covers the points made above and clearly highlights rent payments and deposits required.
If you talk to many established landlords they may tell you that they did not draw up any agreements themselves; instead they got a qualified legal professional, a solicitor to help draw up the agreement on their behalf. You could do this if you so wish.
Finally, as a tenant, if you do not like, or agree with, any of the features laid out in the contract by the landlord, you are well within your rights to postpone signing until you get legal advice.
If this is the case our recommendation is not to delay and seek professional legal as soon you can.
Rental deposits – how much will be required?
After an agreement has been drawn up and signed off, the landlord and a tenant must then decide on how and when the deposit will be paid.
A deposit is required by nearly all landlords as it protects them should a tenant drop out at the last minute; damages the property; doesn't pay bills; or ups and leaves the property without paying the final rental instalment or informing the property owner.
However, if a tenant decides simply to leave the property for a new residence and the original property is left in a good condition and all payments are up to date, a landlord will offer the deposit back in full.
The size of rental deposit amounts vary depending on landlords and the type of property the tenants will be renting.
As a general rule though, a tenant can expect to pay one month's worth of rent (sometimes one and a half) as a deposit.
Rental deposit schemes
Bear in mind, though, that as a landlord, once you have taken the deposit you must then protect that money with one of the government-approved tenancy deposit schemes.
This is to protect both the cash and protect the interests of the tenant.
You are also obliged to let your tenant know that this has been done.
From that point on, both the tenant and the landlord should be sorted in terms of paperwork.
Changing the terms of a tenancy agreement
But, you may ask, what if a tenancy agreement needs changing?
There are many reasons why the agreement may need changing.
From a tenant's point of view, you may wish to ease the rental payments by getting someone to live with you.
You will firstly have to clear this with the landlord, and if given permission, you will need to change arrange for the tenancy document to reflect this change in circumstances.
And from a landlord's point of view, you may wish to make certain alterations to who should be living there etc.
From a peace of mind point of view, however, an agreement cannot be changed without the consent of all parties.
So there is nothing to fear with regards to someone making alterations that you may not know about.
How to end a tenancy
Finally, what if you want to end a tenancy agreement?
Whether you are a tenant or a landlord, there are a number of reasons why you would want to end a tenancy agreement.
In order to end an agreement correctly, however, you must know about and follow the correct procedures that are in place to safeguard both landlords and tenants.
For instance, there are certain criteria that must be met when giving notice.
It is also vital that you understand your own legal rights so that you can play everything by the book.
As a tenant
We'll start by looking at ending a tenancy agreement from a tenant's point of view.
If you wish to move out of the property you have been renting, it is only fair that you give your landlord plenty of notice so that he/she can look to advertise the property to other would-be renters.
As soon as you know that you plan to leave the property, you should inform the landlord. This can either be face to face or in a written document.
If you do let your landlord know face to face, however, you are still advised to put it in writing as evidence for both you and the landlord.
This written confirmation helps to clarify what has been said and also forms an excellent reference document if required at a later date.
Always check your tenancy policy before you decide you are leaving the property as it will probably include the notice period that you are legally obliged to give the landlord.
If you do not have a fixed term tenancy and are instead on a rolling tenancy you may be able to give notice at the end of the rent period.
You should also know that you may be expected to pay the landlord compensation should you end the tenancy early and there is nothing in the contract that covers this event.
As a landlord
Finally, what if you are a landlord?
Again, just like the tenant, you should inform your tenants of your intentions as soon as possible.
The type of notice period, however, will depend on the kind of tenancy that is in place.
Also like tenants, a landlord must notify relevant persons in writing that they wish to end the rental agreement.
The written letter must detail when the property is due for handing back and the very latest day that a tenant can live in the house.
Every tenancy agreement is different, but the “done thing” is for a landlord to give around two months prior notice for a tenant to leave the property.
Of course, should you be trying to end a tenancy agreement early, because of a breach of the agreement including a tenant's missed rent payments or because they are not meeting the terms of the agreement, different rules will apply because they will have broken the terms set out in the agreement.
Instances where you, as a landlord may legally be entitled to end the lease term more prematurely than stated in the agreement, would be in the event of several weeks' rent arrears; the tenants persistent in breaching of terms and conditions previously agreed; and using the property for illegal or immoral purposes - to name just a few.
Under such circumstances it is often prudent for a landlord to seek specialist legal advice as to the correct procedures to be followed and the various stages the lease termination process will follow.
If you are a prospective property investor or an established buy-to-let landlord please contact us to discuss how Investment Property Partners can add value to what you do.Google+