If you are a non-resident landlord looking to rent out property, the following guide looks at frequently asked questions in relation to assured shorthold tenancy agreements – from what they mean to what this type of agreement should contain.
What is an assured shorthold tenancy agreement?
An assured shorthold tenancy agreement is a legally binding contract between the landlord and tenant, setting out the terms and conditions of the tenant’s occupancy of the property in question.
Regulated by the Housing Act 1988, to qualify as an assured shorthold, the tenancy must be of a dwelling-house let as a separate dwelling to an individual, who is a single or joint tenant, where the tenant, or at least one of the joint tenants, occupies the house as his/her only or principal home.
Accordingly, if you are thinking about renting a room to a lodger within your own home, you will need a different type of agreement other than an assured shorthold tenancy agreement.
Further, the following types of arrangement cannot constitute assured shorthold tenancies, although this list is not exhaustive:
- tenancies with very high or very low rents
- a business tenancy or tenancy of licensed premises
- tenancies of agricultural land or holdings, and
How long is an assured shorthold tenancy agreement?
There is no minimum length to an assured shorthold tenancy agreement, although typically these types of agreement will be between 6 months to 3 years.
An assured shorthold tenancy can either run for a fixed term, although it can also be agreed on a contractual periodic basis, running weekly, monthly or quarterly. Further, where a fixed term has been agreed and that term has expired, the agreement will automatically continue on a statutory periodic basis.
In this way, the assured shorthold tenancy agreement will continue indefinitely, until either the tenant or the landlord serves a valid notice to quit.
How can I terminate an assured shorthold tenancy agreement?
Under an assured shorthold tenancy agreement, by virtue of section 21 of the Housing Act 1988, you can take back your property without providing any reason. However, to be able to do this, all of the following conditions must apply:
- You have protected your tenants’ deposit in a deposit protection scheme
- You have given your tenants at least 2 months’ written notice that you want the property back and the date they must leave
- the date they must leave is at least 6 months after the original tenancy began
- they have a periodic tenancy, or they have a fixed-term tenancy and you are not asking them to leave before the end of the fixed term.
If the assured shorthold tenancy agreement remains within its’ fixed term, you can only ask your tenant(s) to leave if you have a ground for possession as set out under Schedule 2 of the Housing Act 1988. Here, you will need to serve a prescribed notice under section 8 of that Act.
In either case, in the event that the tenant refuses to move out having received their notice, you will still need to apply to the court to obtain an order for possession. A landlord who seeks to forcibly evict a tenant without an order of the court will run the risk of being sued for unlawful eviction.
What is the difference between an assured tenancy and an assured shorthold tenancy agreement?
An assured shorthold tenancy is a type of assured tenancy, albeit with virtually no security of tenure. In other words, under an assured shorthold tenancy agreement the landlord can regain possession at any point following the expiry of the fixed term, provided they give two months’ notice.
In stark contrast, under an assured tenancy, the landlord must prove one of the statutory grounds for possession as set out under the Housing Act 1988, for example, rent arrears or anti-social behaviour. In other words, the landlord must prove that the tenant has broken the terms of the tenancy agreement.
What are break clauses in assured shorthold tenancy agreements?
A break clause is a term in an assured shorthold tenancy agreement that gives the landlord and/or tenant the right to end a fixed term tenancy before the expiry of the fixed period.
Typically, a tenant is responsible for paying rent for the entire length of the tenancy agreement. However, they can move out early without being liable for any further rent if either the landlord agrees to ending the tenancy early, or there is a break clause within the agreement.
A break clause will usually specify the form and length of the notice required to end the tenancy, by either party, typically by serving written notice.
How do I create an assured shorthold tenancy agreement?
An assured shorthold tenancy agreement can be oral or written. Further, most residential tenancies will be an assured shorthold tenancy, unless the tenancy agreement or a notice served by the landlord specifically states otherwise.
Most residential tenancies will automatically become an assured shorthold tenancy under the following conditions:
- the tenancy was granted after 28 February 1997
- rent is paid to a private landlord, and
- the landlord does not live in the same building as the tenant.
On 28 February 1997 the relevant provisions under the Housing Act 1996 came into force, amending the notice requirements contained within the Housing Act 1988 in favour of the landlord. In other words, in the absence of any exclusionary provision or notice served by the landlord, any assured tenancy will automatically be treated as an assured shorthold tenancy.
Can I mistakenly create an assured tenancy instead of an assured shorthold tenancy agreement?
Given that a landlord must serve a notice, or include a written provision within the tenancy agreement itself, stating that the agreement is not to be treated as an assured shorthold tenancy, under current legislation it is not possible for an assured tenancy, with its greater protection for tenants, to be granted by mistake.
Pre-1997, under the statutory provisions existing at that time, a landlord was required to serve a notice positively stating that the tenancy was to be an assured shorthold tenancy. Under the existing provisions the notice requirement have been reversed, such that the majority of assured tenancies granted are now classed as assured shorthold tenancies by default.
What should an assured shorthold tenancy agreement contain?
An assured shorthold tenancy agreement should set out the rights and responsibilities of each party, ie; both the landlord and tenant, not least that the landlord must allow the tenant peaceful enjoyment of the property, and in return, the tenant must pay rent on time and not cause damage to the property.
An assured shorthold tenancy agreement should also contain the following:
- the names of the landlord and tenant
- the type of property being let
- the property address
- the term of the tenancy, together with a start and end date
- the amount of rent payable, how often and when
- information on how and when the rent will be reviewed
- the deposit amount and how it will be protected
- which utilities and bills your tenants are responsible for
- any tenant or landlord obligations, including repairing obligations
- whether the tenant can assign or sublet the property
- notice provisions for termination of the tenancy
- whether the tenancy can be ended early and how this can be done.
The terms of the tenancy must be statutory compliant, so it is always best to either use a model agreement as a template, or to seek expert legal advice.
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law and should not be treated as such.
Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission.
Before acting on any of the information contained herein, expert legal advice should be sought.