Background Once you have identified an acceptable tenant and all the references have ?checked out?, the next stage is to get them to enter into a tenancy agreement. Do I need to bother with a formal agreement? Well the short answer is actually no. You may be surprised to discover that you can grant a tenancy verbally; providing the following conditions are met:
∑ it takes effect on the day it is granted ∑ it is for a term not exceeding 3 years, and ∑ it is at the best rent which can reasonably be obtained without a premium being taken (one off capital payment for the beneficial interest of the lease)
However, I would never recommend this, even if it is to a friend or relative. This is because the enforcement of possession or alteration of the terms is more expensive without the documentary evidence of a tenancy agreement, because accelerated proceedings are not available. Please note accelerated possession proceedings, do not mean fast!
Advantages of a tenancy agreement Generally a tenancy agreement is beneficial for both parties and therefore they are used in almost all cases. As a landlord you know that you have a tenant for a certain period of time, normally 6 months with an Assured Shorthold Tenancy (AST). In return the tenant has a basic security of tenure during which time they cannot be ?booted out?, unless they stop paying the rent. It is worth mentioning before going on, that in law two or more persons are described as ?a tenant?. Therefore, even when there are a number of separate tenants occupying a property under a single agreement, legally they are referred to as the tenant (singular).
The current legislation originates from the Housing Act of 1988. This heralded the deregulation of residential tenancy law by introducing two new types of tenancy; the Assured Tenancy (AT) and the Assured Shorthold Tenancy (AST). Prior to these, residential lettings were largely governed by the provisions of the 1977 Rent Act. This archaic bit of legislation had been yet another nail in the coffin of the private rental sector. It saddled landlords with tenants that had security of tenure (i.e. virtually impossible to get them out).
The reform of the tenancy legislation in the Housing Act of 1988 was in many ways the beginning of the ?buy-to-let? revolution. It dispelled, hopefully for ever, the spectre of rent restriction and unreasonable levels of security of tenure. These two factors were largely responsible for the continued decline of the private letting sector. The 1988 Act was subsequently amended by the 1996 Housing Act. This updated procedures and made it even easier for landlords to let property without the worry that they would be unable to get their property back at the end of the term.
The assured tenancy As I have already said it is possible to create a tenancy without a formal agreement. However, a tenancy agreement is useful. It sets out in clear terms the rights and responsibilities of both the landlord and tenant. If disagreements arise then this agreement will be useful in settling disputes which may ultimately go as far as the Courts. What types of tenancies are there and what are my rights and responsibilities as a landlord?
There are two main types of tenancy concerning the letting of residential property: The Assured Tenancy (AT) and the Assured Shorthold Tenancy (AST). Don't be fooled by the similarity in their names. The two types of assured tenancies are very different animals.
The AT gives a tenant extensive security of tenure. This means that at the end of the agreed term the tenant does not have to leave, having the legal right to stay unless the landlord can establish grounds for possession. ATs also allows tenants the right to have their rent referred to the Rent Assessment Committee if they consider it to be excessive. This type of tenancy was set up largely for tenants wanting greater security of tenure. For most landlords and tenants it is not suitable. This is because from a tenant's perspective one attraction of renting is that it offers short term flexible accommodation. Whilst what a landlord wants; is to be able to charge a market rent and obtain vacant possession quickly and easily.
For these reasons the vast majority of tenancies are Assured Shortholds. Prior to 28th February 1997 all tenancies were Assured Tenancies (AT) unless a notice was signed to indicate an AST. The undoubted popularity of the AST over its? more restrictive ?cousin? meant that from the 28th February 1997 this situation reversed and all assured tenancies automatically become shortholds unless otherwise stated.
Your Tenancy Agreement is one of the main keys to your survival as a student landlord. There are purpose built Tenancy Agreements if you decide to go it alone. If you are using a managing agent they will have a set form of agreement themselves.
Most of these are quite good, as they are born of hard experience. Whichever route you choose, make sure the items mentioned are covered in your Agreement.
First and foremost you must have a "joint and several liability" clause. This means that you fix a price for the house as a whole. All your tenants are equally responsible to you for the whole amount. You do not have to chase any individual defaulters.
Who pays how much and for what rooms need not be your concern, although you may need to enter into this game at the start, particularly if your brand new students don't know each other.
The next thing is to get all your money "up front" before your tenants have time to fritter it away on such essential items as poker and partying. Many student lets have either a full academic year in advance or a whole term.
You will be governed to some extent by the practice in your area - do what all your fellow "professional" landlords do.
You absolutely must take a hefty deposit against damage. There are deposit schemes and provisions in new legislation. You should familiarise yourself with the rules and decide which option you will choose for handling deposits. Don't let the rules about deposits deter you from taking them.
Also, as further peace of mind for you, take parental guarantees. Students can disappear - they have few ties. Their parents tend to have more permanent addresses - and more money. They usually do not like to see the family name tarnished by the antics of their offspring.
Many student websites and advice centres will tell students to expect parental guarantees. They also tell them to try to make sure the guarantee only relates to their own student's part of the rent.
However, this is of little help to them if your form of guarantee is for all or any of their son's or daughter's debt to you. Remember that "joint and several" clause?
So, you now have all students liable to you for all the rent. Each of their guarantors is liable for all their debt to you. You also have a hefty deposit from each tenant. So far, so good. Anything else?
Yes! Remember to include any restrictions on decorations. Students have bizarre tastes which are best restricted to other people's properties. Make sure it all goes in the Agreement. Many landlords and agents do not have these provisions and just rely on a full redecorate every summer between lets.
Stipulate that there can be no decorating in any colours or materials other than existing ones. Any redecoration in existing styles and colours must have your written consent. Nothing can be fixed to any walls except onto the pin boards provided.
Finally, your agreement must stipulate the number of people who can occupy the property. You should also stipulate that there are to be no sub-lets. Students have a habit of overcrowding as a means of spreading the rental burden a little thinner between them. Unfortunately it can lead to abuse of your property or problems with the authorities - or both.
You can find an Agreement that you can fill in on-line and print out at the RLA site
Both Propertyhawk & John Tym are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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