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Residential leases

Residential leases

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Contents

In this section, the advice applies equally to England and Wales, Northern Ireland and Scotland unless otherwise specified.

Tenancy agreements

A tenancy agreement is a contract between one or more parties ('tenants') who pay a sum to occupy property belonging to another (the 'landlord'). A tenancy agreement may be written or oral, but it is in the interests of both parties to enter into a written agreement so that if a dispute arises, the terms and conditions of the agreement are clear.

A tenancy agreement gives certain rights to both you and your tenant, for example, your right to receive rent for letting the property and your tenant's right to occupy the property. You and your tenant will have made specific arrangements about the tenancy, such as its duration and these will be part of the tenancy agreement as long as they do not conflict with the law.

Main clauses

A written tenancy agreement should state what kind of tenancy it is. Landlords must always give tenants their name and address, regardless whether the tenancy is written or not. A tenancy agreement may include any terms that are agreed by both the tenant and landlord so long as they do not conflict with the law. The most important terms to include in a tenancy agreement are:

  • Your full name and address
  • The full name of the tenant(s)
  • The address of the property you are renting
  • The amount of rent to be paid, when it is due, how it should be paid and what it covers (for example does it include any bills?)
  • The length of the agreement
  • The amount of the deposit
  • Whether the tenant has permission to leave before the end of the tenancy, and if so, the notice he or she has to give
  • A schedule of contents
  • Any other agreed rules, for example, about pets, guests or smoking

Implied terms

There are some terms which will apply to any tenancy agreement automatically. These are known as 'implied terms'.

Some of the most common implied terms are:

  • Landlords must carry out basic repairs
  • Landlords must keep the installations for the supply of water, gas, electricity, sanitation, space heating and heating water in good working order
  • Tenants have the right to live peacefully in the accommodation without nuisance from the landlord
  • Landlords must not treat tenants unfairly because of their race, sex, sexuality, disability or religion. There may be some exceptions, for example, if the tenant lives in the same accommodation as the landlord
  • Tenants have an obligation to take proper care of the accommodation

How to set up a tenancy

Before any tenancy is set up there will be many organisational steps that you need to take. First and foremost you need to find a suitable tenant and should conduct proper checks including at least 2 references. The references can be obtained from a previous landlord, a previous secured lender, an employer, a bank or a building society.

It is important to note that in Scotland and Northern Ireland, before you can let private rented property, you must first become registered. See below for more information. Similar laws have been introduced in Wales where landlords had until 23 November 2016 to register. Landlords who are letting and managing the property themselves must also get a licence. If they are using a letting agent, the agent must be licensed. In order to get a licence, landlords and agents must undergo training and declare themselves fit and proper persons. Landlords and agents will have to comply with a code of practice.

In England, you should also check to see whether your local authority needs landlords to register under a selective licensing scheme. For example, in the London boroughs of Newham, certain areas of Brent, and Waltham Forest, all private landlords must register and pay a fee to the local authority. Landlords who don't register will be fined and ordered to repay to the tenant up to 12 months' rent.

In addition, you should select a tenancy agreement (see 'Types of tenancy agreement' below).

For further information on how to set up a tenancy see: How to set up a tenancy

Landlord registration (Scotland and Northern Ireland only)

Scotland

You must be registered if you are a landlord of a private rented property. It is a criminal offence if you do not do this.

You can register on the Landlord Registration Scotland website. You will have to pay a fee for the local authority area in which you own the property, as well as another fee for each property. Charities will not need to pay these fees.

You will need to renew registration every 3 years.

Registration is not automatic and only those considered to be 'fit and proper' can hold a registration. If you have any convictions for violence, dishonesty, drugs or breaches of housing legislation, this will all be taken into account. If you are not considered to be fit and proper, you cannot hold a registration and rent private rent property.

Northern Ireland

All landlords of a private rented property must be registered with the Landlord Registration Scheme. However, you will not need to do this if you have already paid to register a house in multiple occupation.

You must register before you let the property.

If you do not register, or if you give false information, you will be committing a criminal offence. As a result, you can be issued with a penalty of between £500 and £2,500.

You can register online on the nidirect website. You will have to pay a fee when you register online. When you register, you will receive a unique registration number. You must include this number in any correspondence you have about your position as landlord.

You will need to renew registration every 3 years.

Types of tenancy agreement

In England and Wales, there are 3 main types of tenancy agreement:

  • Assured shorthold tenancies
  • Assured tenancies
  • Regulated tenancies

In Northern Ireland, there are only residential tenancy agreements. However, in certain circumstances, the rent payable under this tenancy can become a controlled tenancy. It should be noted that these notes only apply to tenancies created since 1 April 2007.

In Scotland, there are 3 main types of tenancy agreement:

  • Short Assured Tenancies
  • Assured Tenancies
  • Regulated Tenancies (for tenancies created pre 2 January 1989)

The type of tenancy that may best suit your needs depends on your individual circumstances. To read more about the different types of tenancy agreement see: Types of tenancy agreement

Taking on a lodger

When you take on a lodger you are strongly advised to get a legal agreement in place to protect your rights. If you are letting (or thinking of letting) part of your home it is important to understand your obligations. Lodgers are not seen as tenants in the eyes of the law. To find out more about taking on lodgers see: Taking on a lodger

Obligations of a landlord

The law protects tenants and it is vital that landlords are aware of their legal obligations to tenants. In particular, there are special laws and procedures that protect rental deposits and govern health and safety.

In addition, when a tenant fails to pay rent on time or at all, certain steps and procedures should be followed. Landlords should not take the law into their own hands, irrespective of the circumstances; otherwise they may risk a fine or criminal conviction.

Deposits

In England and Wales, for shorthold tenancies valued up to £100,000 per year, you must register any deposit you receive with a government-authorised tenancy deposit scheme. You must keep the deposit protected in the scheme for as long as you keep it.

In Northern Ireland, you must do the same for all residential property tenancies.

There are 2 types of scheme: custodial and insurance-based schemes.

A deposit scheme is also in place for all private residential tenancy agreements in Scotland. The provisions came into force on 2 July 2012 and have fixed deadlines, depending on when the tenancy began, for deposits to be placed with one of the three authorised scheme providers.

For more information on a landlord's obligation in relation to deposits see: Tenancy deposits

Tenant Information Packs (Scotland only)

Before the start of any new assured or short assured tenancy, landlords must give tenants a Tenant Information Pack, which is a standard document that has been prepared by the Scottish Government. The pack informs tenants about the Tenancy Deposit Scheme and the obligations on both sides during the tenancy. It confirms how a tenancy can be brought to an end and in what circumstances the tenant may be evicted. The pack must be provided to the tenant free of charge and does not form part of the tenancy agreement.

The landlord should complete the Acknowledgement Form on the first page of the pack, which confirms the landlord's details, the property address and the type of tenancy being created. The form should also be signed by the tenant, unless the pack is sent or acknowledged by email. If there are multiple tenants, then the landlord need only provide them with one pack.

It's the landlord's responsibility to ensure the tenant receives a pack even if the landlord has instructed a letting agent. Failure to provide a pack is a criminal offence and a landlord can be fined up to £500.

Health and safety

Landlords are generally responsible for the maintenance of and major repairs to a property. This includes repairs to the structure and exterior of the property. The structure and exterior of a building does not include paths or passageways leading to the flat.

A property must be 'fit for habitation' (in Scotland, a landlord must ensure a property meets the repairing standard, see our Repair obligations and housing standards article for more information), so a landlord is obliged to make sure that water, electricity, gas supplies and sanitation (for example, drains, basins, sinks, baths and WCs) are in working order and that the property is free from any damp that could damage the health of the occupier. There are also further structural obligations upon a landlord.

If the property you let out does not satisfy these criteria and there is a health risk to your tenant, then he or she may be able to take legal action against you.

Gas safety

Gas appliances and installations that are supplied with your property should be maintained in good order and should receive an annual safety check by a professional registered with GasSafe. When a new tenancy starts, the tenant should be given a copy of the last annual check. During the tenancy, a copy of each safety certificate should be issued to the occupier within 28 days of each annual check. Landlords should retain their gas safety records for at least 2 years.

For further information on gas safety see: Gas safety

Fire safety

If you supply furniture or furnishings with the property, you must ensure that they meet the fire resistance requirements sometimes known as the 'match test' in the Furniture and Furnishings (Fire) (Safety) Regulations 1988.

Fire safety for any home is important, but if a property has multiple occupants, there are further precautions that should be taken since the risk of fire is greater. For example, considerations will need to be made in relation to the use of fire extinguishers, fire blankets, multiple fire alarms and multiple escape routes.

In England, smoke alarms should be installed on every storey of the premises in which there is a room used wholly or partly as living accommodation. A carbon monoxide alarm should be installed in any room with a solid fuel burning combustion appliance (e.g. one burning coal) if that room is wholly or partly used as living accommodation. Smoke alarms and carbon monoxide alarms must be in proper working order at the start of tenancies starting on or after 1 October 2015 (unless these tenancies replace or continue immediately after another tenancy for the same property between the same landlord and tenant).

In Scotland there must be at least one working smoke alarm on each floor of a property. Smoke alarms must be mains wired, including replacement alarms.

For more information on a landlord's obligation to take fire precautions see: Fire safety

Electrical safety

Electric appliances and installations that are supplied should be maintained in a good order and should be safe. There is no legal requirement on a landlord to obtain a safety certificate. For further information on electrical safety see: Electrical safety

Rent

If the tenant falls into rent arrears and has not paid, you must act immediately, otherwise the situation will get out of control. In most cases, initial non-legal action will be sufficient. You should make contact with the tenant by sending a letter demanding that the rent be paid. Most tenants will respond when reminded and remedy the situation.