Tenancy Agreements – A-Z of Terms
Tenancy agreements can be a minefield if you don’t know what certain terms mean. Learn the lingo with our simple A-Z:
Break clause: If you’re not sure how long you will be living at the property, a break clause can be useful. You can take a 2 year tenancy for example and ask for a 6 month tenant only break clause – this means you will be able to break the contract and vacate the property at any time after 6 months without being liable to pay rent for the whole 2 years. It is normal to include a 2 month (or 60 day) notice period in order to exercise a break clause
Check-in/out: An inventory check is carried out at the start of a tenancy and again at the end involves an inventory clerk inspecting the property in conjunction with the inventory list to produce a checkin/out report
Check-in/out report: This details the condition of the property, fixtures, fittings and contents. If there is a stain on one of the carpets when you move in/out, it should be noted on here. You will be expected to agree to the check-in report usually within 14 days of moving in. The check-out report will be used at the end of the tenancy to decide if there should be any deductions from your deposit
Dilapidations: The term “dilapidations” refers to a state of disrepair in a property where there is a legal liability for the condition of disrepair.
Dilapidations deposit: This is money held either by the Agent in a stakeholder capacity during the Tenancy, or in a deposit scheme (depending on the type of tenancy) in case the Tenant fails to comply with the terms of this Agreement and to protect the landlord against any damage to his property whilst it is tenanted. It is released (minus any deductions) at the end of the tenancy.
Fair wear and tear (FWT): You will be entitled to live at the property without having to compensate the landlord at the end of the tenancy for normal usage. FWT excludes any damage – accidental or otherwise – caused by you (or anyone associated with you), throughout the tenancy. Spilling red wine on the carpet would NOT be FWT!
Gas safety certificate (GSC): A record, that is required by law to be held for all rental accommodation in the UK where there are gas appliances present. You should have a valid certificate before your tenancy commences, and regular updates – check the expiry date so that you know when it should be renewed
Head/Superior lease: The paperwork governing the building and common or communal areas at the block. This should detail everything which you can and cannot do if you live within the block. It can often prohibit things like hanging laundry outside, making a noise or being a nuisance outside certain times or keeping pets. Before you sign a tenancy agreement on a flat, make sure you are provided with a copy of the head lease, are familiar with the
terms and there are no show stoppers for you.
Holding deposit: Sometimes this is required in order to remove the property from the market. It will usually be 1 or 2 week’s rental and should be refundable from the initial monies paid at the start of the tenancy
Initial monies: These are payable before you move in and will include: Dilapidations deposit (it is normal for this to be 6 weeks or 1 and a half month’s rent), sent in advance (the initial one month’s rent), referencing/admin fees (these are completely dependent on the agent (some charge a set fee, others charge a percentage of the rental figure. Agents are competitive though, so if you’re keen on a specific area, it is likely that there will be a standard fee structure across all agents in that area).
Inventory and Schedule of Condition: This is the document drawn up prior to the commencement of the Tenancy by the Landlord, the Agent, or Inventory Clerk. It includes the Fixtures and Fittings and everything at the property which belongs to the landlord. If the property is furnished, it should include every last teaspoon and coat hanger. It is given to the Tenant at the start of the Tenancy.
Joint and several: This term is used when more than one person comprise ‘the Tenant’, they will each be responsible for complying with the Tenant’s obligations under the Agreement both individually and together. The Landlord may seek to enforce these obligations and claim damages against any one or more of those individuals.
Landlord: This can be a company or individual(s) and is the owner of the property you are renting.
Managing agent: The person or company responsible for dealing with issues at the property throughout the tenancy term. The landlord is completely entitled to manage the property himself, but whoever is managing, make sure you get their contact details (including emergency ones) before you move in – you‘ll kick yourself if you’re stuck without electricity for the weekend otherwise!
Notice: The process by which either the landlord or tenant can make the other party aware of their intention to break the contract
Notice Period: means the amount of notice that the Landlord and Tenant must give to each other.
Option to renew: If you don’t know when you might leave the property, an option to renew provides you with the right to extend the agreement on an annual basis. It is normal to include a 2 month (or 60 day) notice period in order to exercise an option to renew. A an increase to the rental figure is also usual
Permitted occupier(s): If the tenancy is in a company or any other name, the person(s) actually living at the property will be the permitted occupier(s)
Pet clause: If you have a furry friend moving in with you, you will need to ensure your landlord is happy about it – and also check it is allowed in any superior lease. If you have a pet, it is usual for a specific pet clause to be included in the tenancy agreement covering the interests of the landlord for things like flea infestation, etc. You could also be requested to pay an increased dilapidations deposit to cover any damages caused by the animal.
References: Be expected to provide these before a landlord accepts you as a tenant. Processes for gathering references can differ between agents, some use online agencies, others request letters, but no matter the process, the aim is for the landlord to ensure a) you can cover the rent and b) you are a decent person, not looking to trash his property. Employers and character references, bank statements, and letters from past landlords are all standard requirements.
Stakeholder: Either the agent or landlord can be stakeholder – it means that deductions can only be made by the Agent/landlord from the Deposit at the end of the Tenancy with the written consent of both parties.
Stamp Duty Land Tax: the tax payable (if applicable) to the Stamp Office, if the Rent after discount exceeds the threshold. Further information on this can be obtained from the Inland Revenue website on www.hmrc.gov.uk/so.
Sub-letting: Letting a room(s) in a property you are renting from someone else. Most tenancy agreements will state that this is not allowed without the landlord’s prior consent (if at all).
Superior Landlord: If the property is a flat, there may also be a superior landlord – this is the person or company who owns the freehold and has responsibility for the building and any common or communal areas at the block.
Tenancy agreement: This is a contract between the tenant and landlord. It can be lengthy and it can take many forms. We have a blog post specifically dealing with this topic in further detail.
Tenant: The party or parties who pay(s) rent in order to occupy a property
Term: This is the length of time that the tenancy is for.
There may be other things that crop up in the document that you don’t understand but NEVER be afraid to ask the person who wants you to sign it, to explain further. Chances are if you don’t understand something, you are possibly not alone.