After you have found the right tenant and references have been ‘checked The next step is to convince them to sign a tenancy agreement. Do I have to bother with a formal contract? In the end, the answer is no. You might be shocked to find out that you are able to offer a tenancy on a verbal basis provided that you meet the following requirements: fulfilled:
It takes effect on the date it is granted
it’s for a time not exceeding 3 years and
it is the most affordable rent that is able to be obtained without the need for a premium being charged (one off capital payment to cover the beneficial interest in the lease)
But I would not advocate this even to a relative or friend. This is due to the fact that the process of enforcing possession or modification of conditions is more costly without the evidence of a UK tenancy agreement since accelerated proceedings aren’t readily available. Be aware that accelerated possession proceedings are not fast!
Benefits of a tenancy contract
In general, a tenancy contract is advantageous for both parties and hence they are utilized in the majority of cases. As a landlord, you will know that you are renting to a tenant for an agreed-upon period usually 6 months in the ASSURED Shorthold Tenancy (AST). In exchange, the tenant gets the basic security of tenure for the time they will not be removed from the property as long as they pay the rent. It is worth noting before proceeding that under law, two or more people are referred to as tenants. Thus, even if there are several different tenants living in the same property in a single contract legally, they are called”the tenant” (singular).
The current law is derived in the Housing Act of 1988. The act ushered in the deregulation of the law of residential tenancy by the introduction of two types of tenancy, an Tenancy with Assured Tenancy (AT) in addition to the assured Shorthold Tenancy (AST). Before these residential lettings, residential lettings were subject to the regulations that were in place under the 1977 Rent Act. This outdated piece of legislation was another piece of the puzzle for the private rental industry. It ensnared landlords with tenants who had the security of tenure (i.e. it was virtually impossible to force these tenants back).
The overhaul of the tenancy law as part of 1988’s Housing Act of 1988 was in many ways the first step of the “buy-tolet” revolution. It ended the spectre of the notion of rent restraint and unjustified levels of tenure security. These two elements were the main responsible for the continual decline in the private letting industry. It was in 1988 that the Act was amended later through the 1996 Housing Act. The new rules were updated and made it much simpler for landlords to rent properties without fear that they might not be able to return their property when they reach the conclusion of the lease.
The assured Tenancy
As I’ve already mentioned, you can establish an tenancy without having a formal agreement. But, a tenancy agreement can be useful. It lays out in simple terms the rights and obligations of the tenant and landlord. If there are disagreements, this agreement can be helpful in settling disputes that could end up in the Courts. What kinds of tenancies do I have and what do I have rights and responsibilities as an owner?
There are two kinds of tenancy that pertain to the renting of residential properties:
It is comprised of the Asured Tenancy (AT) in addition to the Assured Shorthold tenancy (AST).
Beware of the resemblance between their respective names. The two kinds of assured leases are different .
The AT offers tenants a lot of protection from tenure. It means at conclusion of the agreed-upon term the tenant is not required to leave, but has legally the right remain unless the landlord is able to establish reasons for the possession. ATs allow tenants to have the option of having their rent assessed by the Rent Assessment Committee if they think it is excessive. This kind of tenancy was designed primarily to provide tenants with greater assurance of tenure. For the majority of landlords and tenants, this isn’t a good option. The reason is that for tenants, one benefit of renting is the fact that it gives temporary, flexible housing. What a landlord would like is the ability to charge a market rate and get vacant property quickly and efficiently.
Because of this, the most tenancies in the country are assured Shortholds. Before the 28th of February 1997, all tenancies were assured tenancies (AT) without notice was signed in order to signify the existence of an AST. The unquestionable popularity of the AST over its more restrictive ‘cousin’ that, from February 28th 1997, the situation changed as all assured leases immediately are now shortholds unless specifically stated.
