When renting domestic property in the private sector there are two main forms of tenancy agreement: the assured shorthold tenancy and the assured tenancy. Below we look at these different types of tenancy agreement and what they mean for landlords’ rights and responsibilities.
The two main types of tenancy agreement
The assured shorthold and the assured tenancy agreement are the commonest forms of arrangement for the letting of residential property, such as houses, flats or bedsits, by private landlords in England and Wales.
These types of tenancy agreement, in their current form, were introduced by the Housing Act 1988 which came into force on 15 January 1989, although important changes were made by the Housing Act 1996 with effect from 28 February 1997.
Under the legislation, the term ‘assured tenancy’ covers both assured tenancy agreements and assured shorthold tenancy agreements. This is because a
shorthold tenancy is a type of assured tenancy.
An assured or shorthold tenancy is the usual form of letting if you are a private landlord and your tenant is a private tenant, the tenancy began on or after 15 January 1989, and the property is let as separate accommodation and is the tenant’s main home.
A tenancy will not be an assured or shorthold tenancy if the tenancy agreement began before 15 January 1989, it is a business or holiday let, no rent or a very low or very high rent is charged, or you are a resident landlord.
The assured shorthold tenancy agreement
The assured shorthold is the most popular form of tenancy agreement used by private landlords. This is because any property let under an assured shorthold constitutes a short-term arrangement, allowing you, as the landlord, to regain possession of your property following expiry of the fixed term.
An assured shorthold tenancy will typically run for between six to twelve months, although under the legislation the term can be for longer or even less. In fact, it is possible for a shorthold tenancy to run on a contractual periodic basis from the outset, ie; weekly or monthly, although the landlord would still need to wait six months before being able to gain possession.
In circumstances where the term of the tenancy agreement is fixed, provided you are happy to retain your existing tenant(s) upon expiry of the initial term, you can simply allow their occupancy to continue on what’s known as a statutory periodic basis, on the same rent and terms.
In this way, neither you nor your tenant(s) need suffer the inconvenience and/or any cost of renewing the tenancy agreement for a further fixed term. It also means that, having provided notice, you can regain possession at any time.
Rights under an assured shorthold tenancy agreement
Under an assured shorthold tenancy agreement, provided any fixed term has come to an end and you have given your tenant(s) notice, you can gain possession of your property without needing to prove one of the grounds for possession at set out under the Housing Act 1988.
In other words, you do not need a reason to gain possession, for example, rent arrears or illegal use of the property, nor do you need to prove any breach of the tenancy agreement.
The assured shorthold tenancy agreement therefore offers both flexibility and protection in the event that the tenant(s) prove to be unsuitable or you simply want to recover the property for your own use.
Under an assured shorthold tenancy agreement you also have the right to gain access to your property upon reasonable notice, typically 24 hours, to inspect the property, to carry out any necessary repairs, or to undertake any gas and appliance safety checks.
Responsibilities under an assured shorthold tenancy agreement
Under section 21 of the Housing Act 1988, where you are seeking to regain possession of your property at the end of a fixed term, you are required to serve your tenant(s) with a minimum of two months’ written notice.
Moreover, upon expiry of that notice, you must still obtain an order of the court if the tenant, or tenants, refuse to leave.
It is a criminal offence under the Protection from Eviction Act 1977 to evict a tenant without an order of the court. Although an assured shorthold tenant is afforded virtually no security of tenure under the Housing Act 1988, they do still have the basic legal right not be unlawfully evicted.
That said, as previously stated, you will not need to prove any ground for possession, rather simply that you have served the correct notice and the fixed term has come to end.
In many cases, as soon as the notice requiring possession expires, you can also utilise what’s known as accelerated possession proceedings. This is a relatively simple and inexpensive procedure for getting possession of your property without the need for a court hearing.
The court will make its decision by looking at the documents that you and the tenant provide, unless it considers that a hearing is required. However, you can only use this procedure if you have a written tenancy agreement, or where the tenancy has lapsed into a statutory periodic tenancy, there was a written agreement for the original tenancy. You must also have given the tenant(s) the required notice in writing that you are seeking possession.
During the term of the tenancy agreement itself, you also have other responsibilities to your tenant(s). These include carrying out necessary repairs to the property pursuant to section 11 of the Landlord and Tenant Act 1985.
Under the 1985 Act, you are responsible for repairs to the structure and exterior of the property, as well as any repairs to baths, sinks, basins and other sanitary, and heating or hot water installations. You are also responsible for the safety of gas and electrical appliances, requiring annual checks.
The assured tenancy agreement
In stark contrast to the assured shorthold tenancy, the assured tenancy provides the tenant with far greater security of tenure in the long-term, whereby they are able to stay in a property either until they choose to leave or you gain possession on one of the grounds listed under the Housing Act 1988.
As with a shorthold tenancy, an assured tenancy may either be for a fixed term, or it can run indefinitely from one rent period to the next, for example, weekly or monthly. However, where a fixed term assured tenancy comes to an end, you will not have the automatic right to regain possession.
You can choose either to agree a further fixed term with your tenant(s), agree with the tenant that the agreement is to proceed on a contractual periodic basis, or do nothing, thereby allowing the tenancy to continue as a statutory periodic tenancy.
Rights under an assured tenancy agreement
Under an assured tenancy, as with a shorthold agreement, you have the right to gain access to your property, upon reasonable notice, for the purposes of inspecting the property and carrying out any necessary repairs or checks.
However, you do not have the right to regain possession of your property unless you can prove a ground for possession.
That said, the 1988 Act provides multiple grounds for possession, including but not limited to anti-social behaviour, using the property for illegal purposes, rent arrears, property damage or other breach of tenancy.
In particular, where you previously lived in the property as your main or only home, and you have served a notice on your tenant(s) prior to the start of the tenancy that you may need to recover possession early, the court must make an order for possession. As such, this is a mandatory ground for possession.
In other cases, the court may have the power to exercise its discretion. By way of example, where the tenant has persistently delayed in paying the rent but the arrears do not exceed at least eight weeks or two months arrears at the date of the hearing, the court will only grant a possession order if it thinks it reasonable to do so, based on all the facts of the case.
Accordingly, whilst an assured tenancy will not offer you the same flexibility and protection as an assured shorthold tenancy agreement, it can offer greater certainty on rental income, minimise periods when the property is vacant and avoid the costs associated with finding new tenants.
Further, in the event that your tenant(s) prove to be unsuitable and are in breach of the tenancy agreement, you will, at least in theory, be able to regain possession of your property.
Responsibilities under an assured tenancy agreement
Under section 8 of the Housing Act 1988, where you are seeking to regain possession of your property on the basis of one of the grounds for possession set out under that Act, you are required to serve your tenant(s) with written notice in the prescribed form.
You can give between 2 weeks’ and 2 months’ notice depending on which terms they’ve broken. You must also set out in the notice the terms that you say they have broken.
As with an assured shorthold tenancy agreement, you must also seek an order for possession from the court if the tenant(s) do not leave by the date specified in the notice. As with any form of protected tenancy, you run the risk of being prosecuted for unlawful eviction if you fail to first obtain an order from the court.
Again, as with a shorthold tenancy, during the term of the assured tenancy agreement itself, you will be responsible for carrying out an annual gas safety check and electrical appliance checks, and undertaking any necessary structural and exterior repairs to the property, together with any repairs to sanitary, heat and water installations.
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.