Types of Tenancy Agreements
Buy-to-let landlords need to understand the different types of tenancy agreements to effectively manage your rental property.
A tenancy agreement is a legally binding contract that outlines the rights and responsibilities of both landlord(s) and tenant(s). Whether it's a formal written document or a verbal agreement, the type and terms are essential.
Tenancies in the UK can be either fixed-term, running for a specific period, or periodic, renewing automatically on a weekly or monthly basis. Each type has its own rules and regulations, so it's important to know which one applies to your situation.
What is an assured shorthold tenancy agreement?
Assured shorthold tenancies (ASTs) are the most common type of tenancy agreement in England and Wales. They are typically fixed-term agreements, lasting between six months and three years. If neither the landlord nor the tenant gives notice to end the tenancy at the end of the fixed term, it will automatically roll over periodically, usually monthly or weekly.
Key features of ASTs
- Can be either fixed-term or periodic.
- The notice period to end an assured tenancy depends on the length of the tenancy. For example, the notice period is typically two months if the tenancy has lasted between six and twelve months.
- Landlords can generally increase the rent at the end of the fixed term, but there are restrictions in place to prevent excessive rent increases.
- Landlords can generally evict tenants at the end of the fixed term without needing a reason. However, there are certain grounds on which landlords can seek possession during the fixed term, such as rent arrears or breach of tenancy terms.
Rights and responsibilities
Landlords: Must ensure the property is fit to live in, carry out repairs, and return the tenant's deposit within 21 days of the tenancy ending. The tenant's deposit must also be kept in a DPS (Deposit Protection Scheme).
Tenants: Have the right to quiet enjoyment of the property, request repairs, and be protected from unlawful eviction.
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What is a regulated tenancy?
A regulated tenancy typically only applies to tenancies which started before the 15th of January 1989, so the number of regulated tenancy agreements has been steadily declining with less than 75,000 remaining. They were created to protect tenants who lived in certain properties for a long time to prevent the threat of eviction or excessive rent increases. These properties were primarily those that were rent-controlled or rent-restricted under previous legislation.
Landlords cannot use a standard Section 21 eviction notice as they would with an assured shorthold tenancy. Instead, landlords must obtain a possession order from the court. This requires them to prove specific grounds for eviction, such as rent arrears or breach of tenancy terms.
Rent-controlled properties:
These were properties that were subject to rent-control legislation before 1977. Rent control limited the amount by which landlords could increase the rent.Rent-restricted properties:
These were properties that were subject to rent restrictions, which often involved limiting the rent to a certain percentage of the property's rateable value.
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Lodging and subletting
Lodging
Lodging involves renting a single room within a property where the landlord also lives. This is often a more informal arrangement than a full tenancy.
- Legal Status: Lodging arrangements can sometimes be considered a form of shared accommodation, rather than a full tenancy. This can affect the rights and responsibilities of both landlord and lodger. For example, lodgers may have restrictions on certain use of common areas such as the kitchen, bathroom, or living room.
- Rent and Bills: Rent for lodging is often lower than for a full tenancy. Lodgers may also be expected to contribute towards utility bills and other shared expenses.
- Notice Periods: Notice periods for lodging can vary, but they are often shorter than for full tenancies.
- Rights and Responsibilities: Lodgers typically have fewer rights and responsibilities than tenants. However, they still have the right to live in the property without undue disturbance.
Subletting
Subletting occurs when a tenant rents out part or all of their rented property to someone else. This requires the landlord's permission, and there may be additional regulations and restrictions in place.
- Landlord's Consent: Landlords generally have the right to refuse consent to subletting. If the landlord gives consent, they may impose conditions or charge additional fees.
- Original Tenancy: The original tenant remains responsible for the property and for ensuring that the subtenant complies with the terms of the tenancy agreement.
- Subtenant's Rights: Subtenants generally have fewer rights than original tenants. They may not have the same rights to request repairs or challenge rent increases.
HMO (House of Multiple Occupancy)
In England and Wales, a property is considered an HMO if it's occupied by at least three people who are not related to each other.
Landlords who own an HMO need to meet the following obligations to ensure their property is safe, habitable, and managed properly:
- Landlords must obtain a license from the local council to operate an HMO. The specific requirements for licensing may vary depending on the size and location of the HMO.
- HMOs must meet certain safety standards, including having adequate fire safety measures, smoke alarms, and carbon monoxide detectors.
What is an excluded occupier?
While an excluded occupier can sometimes be someone living in a property without a tenancy agreement such as a friend or family member, the term "excluded occupier" specifically refers to someone legally excluded from the property by a court order. This typically occurs in situations like:
- Divorce or separation: When a court order grants sole occupancy to one party and excludes the other.
- Criminal activity: If someone has been convicted of a crime related to the property, such as domestic violence or harassment.
- Other legal reasons: There may be other legal grounds for excluding someone from a property, such as anti-social behaviour or breach of a court order.
So, while a family member or friend might be living in a property without a tenancy agreement, they would only be considered an "excluded occupier" if they have been specifically excluded by a court.
If a landlord allows an excluded occupier to remain in the property, they could face legal consequences, such as fines or eviction. Excluded occupiers have no legal right to remain in the property, even if they were previously living there with the landlord's permission.
Employment tenancies
Employment tenancies are a less common type of tenancy, often provided by employers as part of employment benefits. They typically offer shorter terms and may have specific conditions related to the employment.
An employment tenancy might last for the duration of the employment contract and might require the tenant to continue working for the employer to ensure they have accommodation.
The employer may be responsible for maintaining the property, or the employee may be required to contribute to maintenance costs. Employees may have a right to notice if their employment is terminated, which could also affect their right to remain on the property.
Live-In Caregiver:
A family may hire a live-in caregiver to provide care for an elderly or disabled relative. The caregiver might be provided with room and board in exchange for their services. This could be considered an employment tenancy.On-Site Accommodation:
A site controller or caretaker at a school may be provided with on-site accommodation as part of their employment package. This could be considered an employment tenancy, especially if the accommodation is essential for performing the job.
Council tenancies
Council tenancies are tenancies granted by local councils. They are typically offered to people who meet certain eligibility criteria. Each council will have their own allocation policies, likely accounting for housing needs, income, and family size.
This type of tenancy often comes with lower rents than private sector tenancies; tenants of council properties generally have stronger security of tenure than tenants of private sector properties.
Social Housing:
A family who is struggling to afford private-sector rent may apply for social housing through their local council. If they meet the eligibility criteria, they may be allocated a council property at a subsidised rent.Housing Association:
A young couple who recently graduated from university as international students may apply for a housing association property. Housing associations are non-profit organisations that work with local councils to provide affordable housing.
Can you buy your council house?
You can buy your council house and utilise the Right to Buy scheme if you've had a public sector landlord for 3 years and as long as you're a secure tenant, it's a self-contained property, and it's your main or only home.
Read more in our article 'Can I Buy My Council House?'
Holiday lettings
Holiday lettings are short-term tenancies typically offered for periods of a week or two. They are often located in popular tourist destinations.
For example, a homeowner in Cornwall can rent out their cottage for short-term stays during the summer months. The property is fully furnished and equipped with amenities like a kitchen, bathroom, and outdoor space. Guests can book the cottage for a week or two and enjoy the beautiful coastal scenery.
Landlords who offer holiday lettings should be aware of the specific regulations and requirements that apply to their property. This may include registering the property with a local authority or limiting the number of nights per year the property can be let out. Licensing requirements can vary depending on the location and type of property.
If your property is part of a property management scheme, there may be restrictions on how often you can let it out or who you can rent it to.
Key features of holiday lettings
- Lasts for a short period, such as a week or two.
- Often located in popular tourist areas.
- Typically fully furnished and equipped with amenities for short-term stays.
- May be subject to different regulations than long-term residential tenancies, such as planning regulations or licensing requirements.
Student tenancies
Student tenancies are specialised tenancy agreements designed for students. They often have shorter lease terms and may include provisions for early termination if the student needs to leave the property for academic reasons.
For example, a group of students can come together to rent a house near their university. The house is divided into individual bedrooms, and the students share common areas like the kitchen, living room, and bathroom. The landlord provides a tenancy agreement outlining the terms of the tenancy, including the rent, deposit, and notice period.
Key features of student tenancies
- Typically have shorter lease terms than traditional residential tenancies.
- May include provisions for early termination.
- Student tenancies often involve shared accommodation, such as flat shares or halls of residence.
- May include amenities such as Wi-Fi, laundry facilities, and common areas.
What is included in a tenancy agreement?
Details | Always Included? | Sometimes Included? |
|---|---|---|
Details The names and addresses of the landlord and tenant. A detailed description of the rented property. The amount of rent, when it is due, and how it should be paid. The amount of the deposit, how it will be held, and the conditions for its return. Whether the tenancy is fixed-term or periodic. A detailed list of all items included in the property at the start of the tenancy. The responsibilities of the landlord and tenant for repairs. The responsibilities of the landlord and tenant for repairs. The length of notice required to end the tenancy. Whether pets are allowed and any restrictions. Who is responsible for paying utility bills. The tenant's right to peaceful enjoyment of the property. Whether the tenant can sublet the property. Whether the tenant can assign their tenancy to someone else. Requirements for landlord and tenant insurance. Whether smoking is allowed in the property. Provisions regarding anti-social behaviour. | Always Included? Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Sometimes Sometimes Sometimes Sometimes Sometimes | Sometimes Included? Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Always Included Sometimes Included Sometimes Included Sometimes Included Sometimes Included Sometimes Included |
How long will a tenancy agreement last?
Fixed-term
- Duration: Typically lasts for a set period, such as six months, one year, or two years etc.
- Renewal: At the end of the fixed term, the tenancy will automatically renew periodically (usually weekly or monthly) unless either party gives notice to end it.
- Notice Periods: The notice period required to end a fixed-term tenancy depends on the length of the tenancy. For example, the notice period may be two months for a six-month tenancy or six months for a two-year tenancy.
Periodic
- Duration: Continues indefinitely until either the landlord or the tenant gives notice to end them.
- Notice Periods: The notice period for a periodic tenancy is typically shorter than for a fixed-term tenancy. For example, the notice period may be four weeks for a weekly tenancy or two months for a monthly tenancy.
- Flexibility: Periodic tenancies offer more flexibility than fixed-term tenancies, as they can be ended at any time with the required notice.
To end a tenancy agreement, either the landlord or the tenant must give the other party the required notice. The notice period depends on the type of tenancy and how long the tenancy has been ongoing.
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