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POSTED 09 March 2016 Lettings

How to Create an Effective Tenancy Agreement

tenancy agreement

As a landlord, tenancy agreements are essential documents to get right when renting out one or more of your properties to private tenants. These are what ensure both the tenant and landlord have legal proof of the agreement made regarding all aspects of the tenancy, from its duration to upkeep and other expectations.

It is important that you draw up a tenancy agreement which covers everything to keep you as a landlord in a safe position should you encounter problems with a tenant.

At House Network we have lettings services that offer contract advice and other aspects of creating tenancy agreements. Here are the key steps towards creating an effective tenancy agreement.

Include These Important Factors

There are various things that must be included in all tenancy agreements to ensure they are legally binding. These include:

  • The names of the landlord and tenant(s)
  • Rental price, method and dates of payment
  • Deposit amount, method of protection and when it can be fully or partially withheld
  • Property address
  • Start and end date of the tenancy
  • Bills the tenant and landlord are responsible for

Tenant and landlord obligations should also be outlined, such as the renter having to keep the property in a good condition, who is responsible for paying for repairs and more.

Include whether the tenancy can be cut short and how much notice is required, if lodgers or subletting is allowed and anything else you feel is necessary.

Make Amendments Where Necessary

For landlords that have a large portfolio they may already have a set tenancy agreement which is used for all their properties. In certain cases this will need to be adapted based on the tenant, or after drawing up an initial contract the renter may not be happy with it and ask for amendments to be made.

For example, if you specify no pets but a tenant has a guide dog then it will need to be amended as landlords cannot discriminate against potential tenants.

It is advisable to use professional legal advice when making amendments, as doing it yourself could result in invalidating another aspect of the contract.

Decide Between Fixed Term and Rolling Contracts

The two main types of contracts that can be used for renting out a property will be a fixed term tenancy agreement or a rolling tenancy agreement. Which you choose to have will depend on your circumstances and the requirements of potential tenants.

  • Fixed term tenancy agreement is one where the rent is agreed at a set rate for a particular amount of time, usually six months or a year for new renters. This is good for landlords as it ensures the property will be filled for that amount of time.
  • Rolling contract tenancy is an agreement set up usually on a monthly basis whereby the tenant will only be contracted month to month. For this reason it is important to specify a notice period so the landlord can get in a new tenant as soon as possible.

Prepare an Inventory

Having an inventory which is factored into the tenancy agreement is a good idea to safeguard against any potential damage tenants may cause. Make sure it is detailed regarding the contents of the property and its condition.

Give a copy to the new tenants and allow them to check it over before signing a fixed term tenancy agreement or rolling tenancy agreement. Otherwise you may find it difficult to deduct from their deposit for damages when the tenancy ends.  

Negotiate Renewals

Include a clause for renewal when a tenancy is coming to an end. If you have good tenants then they may want to stay on for another few months or a year, and having the option to do this without a huge increase in rent can be tempting.

Be clear in tenancy agreements about when the tenancy ends and that a month or more’s warning needs to be provided if they want to stay or vacate the property.

By following these few steps you should end up with an agreeable tenancy agreement for both the landlord and tenant.

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