A rent agreement, also known as a tenancy agreement, is the contract between a landlord and tenant. The rent agreement should set out the conditions of the occupancy, including the rights and responsibilities on both sides.
Generally, a rent agreement should be written. While a verbal rent agreement may still confer legal rights to both sides, there is greater risk of disputes arising. Written agreements offer greater certainty and clarity in respect of the terms of the tenancy and direction on how disputes are to be handled.
A rent agreement should detail the express terms of the arrangement between the landlord and the tenant, such as the tenancy period and the amount of rent to be paid.
In addition to express terms, a number of implied terms will also apply and are legally enforceable even though they may not be mentioned in the rent agreement.
Implied terms of a rent agreement include:
- the landlord’s responsibility to provide a rental property that is safe and suitable for occupancy
- the landlord’s responsibility to maintain the property to a safe and suitable standard
- the tenant’s right to be treated fairly, to not be harassed and to not be discriminated against
- the tenant’s responsibility to maintain the rental property in the same condition as it was at the beginning of the tenancy
- the tenant’s responsibility to allow repairs to be made to the property
Different types of tenancy
The first factor to address when considering what will be included in a rent agreement is the type of tenancy being offered by the landlord.
Assured shorthold tenancy (AST)
This is the most commonly used form of tenancy nowadays and requires that the tenant does not share the property with the landlord. It is therefore not suitable for taking in a lodger.
Assured shorthold tenancies were introduced in 1989, so any form of tenancy that began before then cannot be termed as an AST.
ASTs can only be used by private landlords, or agencies on behalf of private landlords.
Where the amount of rent is over £100,000 annually, under £1,000 annually in London, or under £250 annually outside the London area, the tenancy cannot be termed as an AST.
ASTs may only be used to rent out residential properties, that is, a property that will serve as the main home of the tenant. They are not suitable for renting out business premises, licensed premises or holiday lets.
This is generally used where the tenant occupies a part of the landlord’s home, possibly as a lodger, and shares certain areas of the property such as the kitchen and bathroom.
A regulated tenancy covers long term rentals from private landlords and would apply to a tenancy beginning before 15 January 1989. They generally carry the same rights as an AST.
Fixed term or periodic
A rent agreement may cover a tenancy that has a fixed-term, say, one year, or it may be on a periodic basis, rolling over from one month to another.
This would have different implications for the tenancy, for instance, how the tenancy could be ended.
Sole or joint tenants
This is not down to who will occupy the property, but rather who is listed on the rent agreement. Where there is a sole tenant, they alone bear the responsibility for payment of rent and to meet the conditions of the agreement. Where there are joint tenants listed, each will bear that responsibility equally.
What to include in a rent agreement
The details of the rent agreement will vary depending on the type of tenancy, the time period of the arranged rental, and whether a sole tenant or joint tenants are listed, but any rent agreement should include the following:
- the names of the tenant(s) who are responsible for paying rent etc. and the landlord who owns the property
- how much rent will be paid, how often it will be paid, and possibly what that amount covers (for instance, just rent or to include council tax)
- rent review details – how often this will happen etc.
- details of the deposit – how much, how that deposit will be protected, how that deposit may be returned or withheld
- the address of the rental property
- when the tenancy will begin and end
- responsibilities of the tenant, for instance, to maintain the rental property in a state of good repair
- responsibilities of the landlord, for instance, to ensure that gas and electrical equipment in the property is safe and operational
- details of any bills that the tenant is responsible for over and above rent
- the address of the landlord or the letting agent working on their behalf
The rent agreement could also include:
- the method for ending the tenancy early
- whether subletting is allowed
- who is responsible for repairs to the property and who to contact
- what will happen at the end of the tenancy
- services provided by the landlord, such as maintenance of the garden
- length of notice on both sides
- what furniture and fittings are provided and included in the agreement
- what will happen should repairs to the property make it unsuitable for occupation
- whether pets are allowed
- whether guests are allowed
- whether smoking is allowed
Any rent agreement is a negotiation tool and therefore open to discussion between both sides.
Changing a rent agreement
Generally, a rent agreement may only be altered if both the tenant and the landlord agree on any changes. This agreement is then stated in writing by amending the existing rent agreement or drawing up a completely new rent agreement.
In the case of a verbal rent agreement, it is still necessary that both sides agree any alterations.
Changes cannot be made to the rent agreement that discriminate against the tenant or are in any way unfair and restrict the tenant’s rights.
Guarding against discrimination and unfair terms
A rent agreement must not include unfair terms or clauses that discriminate against tenants. Any clause which will remove the rights of a landlord or a tenant cannot be legally enforced.
A rent agreement must:
- be written in a manner that can be understood by the tenant
- not include clauses that state the landlord may alter the agreement whenever they choose
- not place responsibility on the tenant for structural repairs to the property
- not give the landlord the right to enter the property without prior notice
- not discriminate against the tenant by reason of disability, race, religion, belief system, sex, sexual orientation, gender reassignment, pregnancy or maternity, for instance, not being willing to alter the rental property to make it suitable for a disabled person to occupy
Any rent agreement that is deemed to include unfair terms or discriminatory clauses may lead to prosecution.
How legal advice can help
Drawing up a rent agreement can be a complex process for a landlord. Take specialist legal advice to ensure that all the necessary information has been included in the agreement, to help you consider the various types of tenancy and decide which is the most suitable for your property, and to inform you of your legal position as a landlord, including your rights and responsibilities, both now and in the future as changes to legislation are made.