Assured Shorthold Tenancy Agreements – What To Look Out For
You’ve found your perfect property and verbally agreed the key terms of the Tenancy. The next stage is for the agent to draw up the paperwork. The Tenancy agreement is a very important document – you should ensure that you fully understand every single clause before you sign it and don’t forget, the agent who’s compiled the agreement works for the Landlord, not you. Read on to learn what the document should include and what to look out for.
There are different types of tenancies. If the annual rental is less that £100K, it will be an Assured Shorthold Tenancy (AST). Most new tenancies are automatically this type.
A Tenancy cannot be an AST if any of the following apply:
- the rent is more than £100,000 a year
- it’s a business Tenancy or Tenancy of licensed premises
- it’s a holiday let
Unlike some other forms of tenancies, AST’s are protected by housing law which means that statutory rules of recovery apply – the Landlord cannot kick you out without complying with the law, no matter what is written In the agreement. Therefore they offer the best possible protection for the tenant.
It will normally be the intention of the Landlord or the potential Tenant that there will be a binding contract until the lease has been agreed and signed by both parties. A contract only becomes legally binding when the following 5 elements exist:
- Consideration (payment)
- Intention to create legal relations
- Certainty of terms
So the offer letter is a preliminary step towards a legal agreement, but it is not legally binding. In practice, you should ensure that the Offer Letter has the heading “Subject to Contract” which makes this clear.
The Offer Letter should include all agreed “wish list” items required by the Tenant and you should ensure that these items are included in the lease – normally as special clauses in a separate schedule at the end of the contract – I’ll talk more about that later.
The Tenancy agreement should start off with the address of the property, the names of the Tenants and the name and address of your Landlord. The agreement should then include the following main sections:
Main terms of the Tenancy:
- The start and end date of the Tenancy – this is the fixed term
- The Rental amount, who it should be paid to and when
- The Deposit amount, who it should be paid to and which scheme it will be protected by. It is a legal requirement for all Tenancy deposits for ASTs to be registered in one of the certified deposit protection schemes. Your Tenancy agreement should be accompanied by a document entitled “Prescribed Information” – this document will outline the details of the deposit protection scheme, how the money is held, if interest is payable to you, how the deposit will be returned and what you can do in the event of a dispute.
- Definitions and interpretations – this should clearly explain what all the terms and phrases mean throughout the document – read this thoroughly!
Obligations of the Tenant:
- Paying rent– The account name, number and sort code where the rent is to be paid and details of the interest charged on late payments.
- Further charges to be paid by the Tenant – These include
- Utilities and council tax
- To compensate the Landlord any costs he suffers in; claiming unpaid rent,
- Re-letting costs if you leave the Tenancy early
- Agents administration fee’s
- Inventory check-in or check-out fee’s
- The Condition of the Premises: Repair, Maintenance and Cleaning– this section should detail exactly what is expected of you in terms of maintaining the property, keeping it clean and the condition that you are expected to return it in. For example, if the property was professionally cleaned before you moved in, you will be expected to have it professionally cleaned whenyou move out. However, you should not be expected to return the property in a better condition than it was when the Tenancy started.
- Insurance – The Landlord will have insurance on the property and you will be expected to comply with the terms of his policy but it is only enforceable if you have been provided with the details of how you must comply. The Landlord’s insurance will not cover any of your possessions – you should get your own contents insurance cover for these.
- Access and inspection– this section details what is expected of you in terms of providing access to your Landlord, his agent or workmen. Please note that you have the right to live in your property uninterrupted – access can only be granted by you. If your Landlord requires access he must usually provide at least 24hrs notice in writing (except in the case of emergency) – if your agreement contradicts this then you can argue that the clause is unfair.
You may also be required to allow a “To Let” or “For Sale” sign outside your property and to allow viewings by prospective new Tenants or buyers during your Tenancy – most usually during the last 2 months of the Tenancy (which is usually also the notice period).
- Assignment – This is to inform you that you’ll not be allowed to sub-let the property or take in any paying guests or lodgers. This is normal.
- Use of the premises – this should list the things you can and can’t use the property for. It should also list activities which are not allowed at the property such as public meetings, hanging washing on the balcony, using the address as a business, etc.
- Utilities and council tax – You will be expected to open accounts and pay all the utility bills and council tax for the duration of your Tenancy. You’ll probably find clauses that restrict you from changing the utility suppliers or the telephone number (if you do, you’ll have to arrange and pay for the supply to be returned to the original suppliers at the end of your Tenancy). These clauses are usually negotiable.
- Animals and pets– Unless it has been agreed with your Landlord and included in this agreement you should not keep any animal or pet at the property. There will be a standard pet clause in the agreement – this is sometimes negotiable – if you want to keep a pet at the property now is the time to ask!
- Leaving the premises empty– In order to comply with the Landlord’s insurance policy, you will be required to inform your Landlord if you intend to leave the premises empty for an extended period. Usually this period is set at 21 or 28 days. If it is any less, you should be able to negotiate an extension.
- Locks and alarms– details of any alarm system and security at the property and what is expected of you in terms of keeping the property secure. Make sure you ask for any alarm codes and subscription details.
- Garden/plants– details of what is expected of you in terms of keeping the garden and/or houseplants maintained. Please note that the Landlord is obliged to provide you with specific instructions in writing and the appropriate tools if any maintenance is required.
- Cars and Parking – If and where you can park on the property, including any restrictions.
- Refuse– you must dispose of all refuse using the appropriate receptacles and in line with the local authority regulations.
- Notices– details of what you must do with any notices addressed to the Landlord that you receive at the property.
- Inventory Check in and checkout – You should be provided with a full inventory and schedule of condition of the premises at the start of the Tenancy. It’s vital that you review these documents very carefully ensuring that every single item of damage is noted. At the end of your Tenancy the property will be checked against these documents and you will be charged for any damages or issues that have arisen (fair wear and tear excepted).
- Head lease– if the property is leasehold (most often if it is a flat) then there will be a head lease. You will be expected to comply with the obligations of the head lease provided a copy of the obligations is attached to the agreement.
- Ending the Tenancy– how to end the Tenancy, what you are expected to do in terms of cleaning, closing down utility accounts, taking meter readings, removing your possessions, returning keys, checking the inventory, etc.
Obligations of the Landlord:
- Quite Enjoyment– The Landlord must allow you to quietly hold and enjoy the premises during the Tenancy without any unlawful interruption. Once your Tenancy has begun your Landlord or his agents must not enter your property without your specific permission.
- Consents– In this section your Landlord should confirm that all necessary consents have been obtained to enable him to enter this agreement (whether from a Superior Landlord, lender, mortgagee, insurer, or others).
- Statutory repairing obligations– whether it says so or not in your agreement your Landlord is obliged to repair and keep in good order:
- The structure of the Premises and exterior (including drains, gutters and pipes);
- Certain installations for the supply of water, electricity and gas;
- Sanitary appliances including basins, sinks, baths and sanitary conveniences;
- Space heating and water heating;
- Other repairs– you should ensure that the agreement provides for the Landlord to maintain and keep in good working order all mechanical and electrical items belonging to him at the property.
- Insurance– Your Landlord should insure the premises and provide you with a copy of the certificate.
- Safety regulations– Here your Landlord should confirm that the property and its furniture fixtures and fittings comply with safety regulations, that all gas and electrical appliances are checked annually and conform to regulations and certificates should be provided.
- Inventory and check out– The Landlord should ensure that you are provided with an up to date inventory and schedule of condition. This section sets out the which costs the Landlord will pay in relation to the check in and the check out process. It is usual for these costs to be split between both parties.
Ending the Tenancy:
- Ending the Tenancy and re-entry– this clause sets out the grounds upon which the Landlord may bring the Tenancy to an end. Sometimes the list of grounds can be extensive so make sure you read and understand each one thoroughly.
- Early termination– you will remain liable to pay rent and any other monies payable under the agreement until the term expires; or the premises are re-let whichever is earlier. That is unless you have a break clause – we’ll come to those later in a separate article.
- Interruptions to the Tenancy – If the property becomes uninhabitable through no fault of your own then this clause provides for the cessation of rent payments and should allow you and the Landlord to end the Tenancy if the situation prevails after a month.
- Notices– details of how and where you should serve notice to your Landlord.
Dealing with the deposit:
- This section should clearly set out:
- Which deposit scheme is being used to hold the deposit
- Exactly what the deposit can be used for,
- How and in what order deductions can be made,
- How the remaining deposit should be returned and to whom it should be returned.
- The timescale and exact process for agreeing deductions,
- The process and your options in the case of a dispute.
You may have some special requirements which are not included in the standard Tenancy terms, for example you may want a break clause, an option to renew, brand new carpets or to have a pet at the property. The next article called “Tenancy Agreements – Special Conditions” will cover these in detail.