The fine art of crafting a solid tenancy agreement
Whatever the type of property you let, it's always advisable to have the right tenancy agreement in place. This will protect both tenant and landlord and, in many cases, it's a legal requirement to have a contract. Here are a few of the most commonly used contracts to suit most situations you'll encounter as a landlord.
Assured Shorthold Tenancy Agreement
Assured Shorthold Tenancies (AST) are the most common form of rental in the UK when the landlord doesn't live in the property - it's the default agreement if you don't specify another type when letting your property. An Assured Shorthold Tenancy Agreement allows the landlord or tenant to end the tenancy after an initial six month period, by giving notice to quit.
If you want to rent a house or flat these legally-binding documents are all you need to put it in writing. They can be used to create the standard type of letting known as an 'Assured Shorthold Tenancy'. These tenancy agreements have been endorsed by the NLA (National Landlords Association).
Scotland’s private residential tenancy
In 2017, the Scottish government introduced a new type of tenancy – the private residential tenancy. This tenancy replaced the old AST tenancy agreements, and has been used on all new tenancies created on or after 1 December 2017.
The private residential tenancy aims to give tenants more security and stability, while also providing safeguards for landlords, lenders and investors.
Other features of private residential tenancies:
They’re open-ended, so a landlord can’t ask a tenant to leave just because the fixed term has ended
These tenancies provide more predictable rents and protect tenants from excessive large rent increases
There’s the option to introduce local rent caps for rent-pressure areas
They provide comprehensive and robust grounds for repossession that allow landlords to regain possession in 18 detailed circumstances
Read more about the private residential tenancy on gov.scot.
Lodger Agreements
Taking in a lodger has fewer legal requirements than letting a whole property. However, we'd always recommend you put something in writing as it'll protect both you and your lodger and give you a basis for reference should any disagreement arise.
A Lodger Agreement is used when a landlord wants to rent a room in a furnished property where the landlord lives and shares common parts of the property (e.g. bathroom, toilet, kitchen and sitting room) with the tenant or tenants. If you want to rent a room in your flat or house, then most Lodgers Agreements can only be used in situations where the property is your principal home.
Inventories
Under the Tenancy Deposit Scheme, owners wanting to claim money from their tenants' deposits now have to prove that damage has been caused. This means every tenancy agreement should now be accompanied by a property inventory. So, if you're a landlord and you don't keep an accurate rental inventory for your property, you'll find it difficult to justify legitimate deductions to a tenant's deposit at the end of the tenancy period.
You can also find comprehensive information about letting your property out in the private rented sector in gov.uk’s “How to let” guide.
Here is some more detail on the lodger agreements that the government consults on.
Your lodger's tenancy type
The way you share your home with a lodger affects what kind of tenancy they have. This in turn, affects their rights and how you can end the tenancy.
Your lodger is an excluded occupier
Your lodger is likely to be an excluded occupier if:
they live in your home
you or a member of your family share a kitchen, bathroom or living room with them
In this case, you only have to give them ‘reasonable notice’ to end the letting - and you will not have to go to court to evict them.
Reasonable notice usually means the length of the rental payment period. For example, if rent is paid monthly, you should give one month’s notice.
Your lodger has basic protection
Your lodger is likely to be an occupier with basic protection if:
they live in your home
they do not share any living space with you or your family
If your lodger will not leave when you ask them, you must get a court order to evict them.
The charity Shelter has advice on excluded occupiers and occupiers with basic protection.
The length of the let
A tenancy or a licence can be either:
periodic - run indefinitely from 1 rent period to the next
fixed term - last a set number of weeks, months or years
If you do not agree the length of a let, it will automatically become a periodic let.
Licences can be open-ended for informal arrangements, like allowing a friend to stay on an as-and-when basis.
