Tenancy agreements for landlords in England: what to include in your rental agreement

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A robust tenancy agreement is the cornerstone of a successful tenancy. It protects both the landlord and the tenant, so although it is not a legal requirement, everyone benefits from having one in place.

This guide aims to help landlords in England to understand the importance of the tenancy agreement – why you need one, what should be included in a rental agreement, and what to do when it comes to ending a tenancy agreement. We’ve also included a mydeposits case study to illustrate the importance of having a tenancy agreement. The rules on rental agreements are different in Wales and Scotland, so we will signpost you to the relevant resources.

You can skip to the section you’re interested in by using the menu below:

• What is a tenancy agreement?
• Why do you need a residential tenancy agreement?
• The Assured Shorthold Tenancy Agreement (AST)
• Rental agreements in Scotland
• Rental agreements in Wales
• Types of tenancy agreements
• Examples of tenancy agreements
• What should you include in your residential tenancy agreement?
• Additional clauses in a rental agreement
• Example case study – withholding rent
• Ending a tenancy early
• What is a break clause in a tenancy agreement?
• What happens when the tenancy agreement ends?
• Summary

What is a tenancy agreement?

A tenancy agreement is a binding contract between the tenant and the landlord. It sets out the legal terms and conditions of the tenancy – and any other expectations – clearly and without room for misinterpretation. It also explains what either party can do if the other doesn’t keep to their side of the agreement. Without having a tenancy agreement in place, there is no written record of the contract for either party, which can cause misunderstandings and put a strain on the landlord-tenant relationship, especially if expectations aren’t met.

Why do you need a residential tenancy agreement?

As we’ve already mentioned, although they are not legally required to be in writing, tenancy agreements are important as they are about protecting the legal rights of both parties. This sets everyone up for a good landlord-tenant relationship from the beginning as everything is clear. Here are some of the key reasons why you need a residential tenancy agreement:

• Most insurers insist on a rental agreement being in place before offering landlord insurance
• The tenancy agreement details all the terms of the tenancy, which can include more but not less than the statutory/legal rights and responsibilities
• Resolution cases are more likely where an arrangement is only informal
• Accelerated eviction procedures can only be used where there is a written agreement
• Tenants on benefits will need a tenancy agreement for any claim

The Assured Shorthold Tenancy (AST)

The majority of private rented sector landlords in England will use an Assured Shorthold Tenancy (AST) as most meet the conditions below. This has recently changed in Wales, while Scotland uses Private Residential Tenancy agreements (see more on both below).

An agreement will be an AST where the following conditions are met:

• The rent is between £250 and £100,000 per year
• The tenants are people rather than an organisation such as a company
• The property will be the tenant’s main home
• The landlord does not live in the property
• The length of the tenancy is between six months and three years

GOV.UK has more detailed guidance on the criteria for ASTs. There are other types of tenancies, including excluded tenancies or licences, assured tenancies and regulated tenancies, but these are far less common than ASTs. Shelter provides information on the different types of private tenancies.

Suzy Hershman, Resolution Department Lead at mydeposits, says:

“While some will argue that the tenant signed a licence or an assured tenancy, it is often to avoid the legalities around the deposit protection or eviction processes. However the courts will consider all the facts and if it looks and feels like an AST that will be what it is, despite the heading on the contract which the tenant has signed.”

 

Currently, a tenancy in England can either be:

• fixed-term (running for a set period of time)
• periodic (running on a week-by-week or month-by-month basis)

Under the Renters’ Reform Bill there are proposals to move to a system of periodic tenancies – rather than fixed term – in England. Both landlords and agents should make sure they are prepared for the changes when they come and we will keep you updated.

Rental agreements in Scotland

Periodic tenancies have been the default tenancy arrangement in Scotland since 2017. This tenancy is open-ended, with tenants able to serve just 28 days’ notice to end their agreement and leave the property. If you are a Scottish landlord, you will need a Private Residential Tenancy (PRT) agreement. Visit the Scottish Association of Landlords or mygov.scot for more information.

Rental agreements in Wales

Under the Renting Homes Act, which came into force in Wales on 1 December 2022, tenants and licencees are now known as ‘contract-holders’ and tenancy agreements have been replaced with ‘occupation contracts’.

There are two types of contract: ‘Secure’ for the social rented sector and ‘Standard’ for the private rented sector. Existing tenancy  agreements will ‘convert’ to the relevant occupation contract on the day of implementation, and landlords have a maximum of six months to issue a written statement of the converted occupation contract to their contract-holders. Visit gov.wales for guidance and forms, including model written statements that landlords can use as a basis for new and converted contracts. You can also read more about the changes on the Wales section of the NRLA website.

Types of tenancy agreements

The Government has created a generic model tenancy agreement for ASTs, for use when a landlord and tenant are entering into an AST agreement in the private rented sector. There is no legal requirement to use it and landlords who do plan to use the model agreement are encouraged to also see the Government’s how to rent guide.

There are other tenancy agreement templates available, but if you do choose to use one, make sure it is from a trusted source, or you may prefer to take legal advice to be on the safe side – AST agreements can be written to reflect the varying and more specific circumstances of tenants, providing more flexibility for landlords and agents although statutory rights cannot be overridden.

Landlord Action, which like mydeposits is also powered by Total Property, offers a tenancy document drafting service and can help self-managing landlords tailor their tenancy agreements, either through their checking service or by drafting the agreement in line with the landlord’s specific requirements.

For agents who would like advice drafting tenancy agreements, premium members of HF Assist, the letting agent helpline, benefit from access to dedicated legal expertise, as well as a resources library containing an extensive range of useful documents and templates, and a tenancy review system.

Examples of tenancy agreements:

Tenancy agreements for certain kinds of properties, for example houses in multiple occupation (HMOs), may have different requirements. In these cases, the agreement can be adjusted for things like how many people are going to be renting the property, and the relationships between them. Here are some examples of tenancy agreements.

AST for a family or two people who are unrelated: This is for use when renting out the entire property to a family or a couple of friends on one joint tenancy. In this type of tenancy agreement every adult is equally responsible for meeting the terms of the agreement including paying the rent. It is designed to be used with or without a security deposit

Joint AST for a group of sharers: This agreement is for use with houses in multiple occupation (HMOs) – when renting a property to three or more people where at least two of them are unrelated to each other. These types of arrangements have their own specific requirements which the tenancy agreement covers. There is a separate ‘sharer agreement’ for four or more sharers who are not related to each other.

Tip: For landlords with larger HMOs (four or more tenants), it is best to let using the standard ‘room-only ‘AST as it allows easier access to the communal areas of the property in order to comply with HMO requirements such as fire safety.

Standard room-only AST: This agreement is intended for landlords who are renting out a property to three or more people – at least two of whom are unrelated – and need to comply with stricter HMO regulations. The best way to do this is through a ‘room-only’ agreement so that inspections of the communal areas of the property can be carried out whenever you need.

Suzy Hershman advises,

“Understanding HMO rules can be tricky, so make sure you know what the rules are by checking with GOV.UK, or consider using a reputable letting agent.”

Additional clauses in a rental agreement

You can also include individually negotiated clauses at the end of the tenancy agreement, for example relating to decorating a property or when and how the landlord can access the property. These must be fair, reasonable, clearly communicated and signed by the tenant, otherwise they could be seen as unfair and will be difficult to enforce. Any unfair, unreasonable or illegal clauses will be invalid and any court or adjudicator will simply disregard them. For this reason, a solicitor may be needed to draft additional clauses.

It is quite common for landlords and tenants to identify changes after the tenancy has started, and in this scenario an addendum can be created and signed, which is then simply an addition to the overall AST tenancy agreement.

If there is an issue requiring resolution between you and the tenant at any stage of the tenancy, the tenancy agreement is one of the most important pieces of evidence you will need to provide to an adjudicator, as it outlines both your and the tenant’s responsibilities.  This is a contract which should be robust and comprehensive, containing anything you may need to rely on at a later date.

Example resolution case study – withholding rent

The following case study involves a tenant withholding rent and highlights the importance of the tenancy agreement as evidence.

Disputed amount: £625

Background:

• A resolution case was raised over unpaid rent and fees for re-letting the property. This followed the tenant’s decision to withhold rent and end the tenancy early due to the landlord’s extensive delay in completing repairs

The tenant said:

• the landlord fell short of their responsibility in the tenancy agreement by neglecting their duty to carry out repairs on a defective boiler and faulty electrics
• these were grounds for them to end the tenancy, move out of the property and pay no more rent for the remainder of the contract

The landlord’s response was that:

• although the tenant claimed the property was uninhabitable after having no heating or hot water for eight days and no electricity for two days, they were always kept informed. The repairs were delayed from being completed because of a delay in receiving the parts required to fix the problems
• the tenant remained responsible for paying the outstanding rent. However, new tenants were found and moved in 17 days later, so this is the only rent being claimed together with the agent’s re-letting fees, which were to be covered by the deposit

What evidence was submitted?

• The tenant provided email communication between them and the landlord and two gas safety warning notices
• The landlord provided a copy of the tenancy agreement and a copy of the tenant’s emails saying they were moving out early and not paying any more rent

Adjudicator’s findings:

• The landlord had the dangerous fire and boiler disconnected and had arranged for the fire to be removed and the boiler replaced
• There was insufficient evidence that the property was uninhabitable. While repairs were required, the tenant may have been able to deduct the cost of any remedial work from the rent if the landlord had refused to get the work done or there was an unreasonable delay
• In this case, the agent had carried out their duty and organised the work in reasonable time and no tenant has an automatic right to stop paying rent
• In line with the terms of the tenancy agreement, the adjudicator found that the tenant was unable to end the tenancy early without the landlord’s agreement

Outcome

• The landlord was awarded the 17 days’ outstanding rent plus reasonable re-letting costs which they had also claimed

Learning points

• A tenant has no right to stop paying the rent and this should be clear in the tenancy agreement
• Paying rent is a fundamental part of a tenancy agreement and only the ‘rule of set off’, which involves a very specific process, would support withholding any rent
• Always keep written records of communication and follow up any calls in an email as these are often key supporting documents for negotiation if an issue requires resolution

Ending a tenancy agreement early

One way you can end a tenancy early without including a ‘break clause’, is if the tenant has broken the terms of the tenancy agreement. Typical examples of a breach of the tenancy agreement include falling behind on monthly rent payments, malicious damage to the property or inappropriate behaviour towards other residents. The other way is by mutual agreement where you come to an arrangement that suits all parties, even if there is no break clause.

What is a break clause in a tenancy agreement?

As mentioned earlier, the break clause allows either the tenant or the landlord to end the tenancy early, provided that sufficient written notice has been served. There is no standard format for a break clause, but usually it can only be used on or after a specified date. For example a break clause might say the tenant can end the tenancy six months after it starts if they give one month’s notice. It is important that the break clause is clear – the exact notice period, the terms of the break clause and how it can be activated must all be included in the tenancy agreement.

Suzy Hershman, Resolution Department Lead at mydeposits, explains,

 “Common problems adjudicators find is the poor drafting of some terms in tenancy agreements, a good example being break clauses, which can be interpreted in different ways and have the unintended effect of being contrary to the original intent.”

What happens when the tenancy agreement ends?

Even if the tenancy has run its course and is ending in line with the dates in the tenancy agreement, it is still a good idea that the landlord and the tenant communicate with one another to confirm that the tenancy is ending, to avoid any misunderstandings.

If the tenancy ends, with no new fixed term having been agreed and the tenant is still in the property, then a ‘periodic tenancy’ comes into effect. This is a rolling tenancy with no fixed end date, which usually runs from month to month – in line with the terms in the original agreement. The statutory notice for ending a periodic tenancy remains unchanged and the terms and conditions of the periodic tenancy remain the same and can continue indefinitely. However, the landlord can now repossess the property once the correct written notice has been provided.

The proposals put forward by the Government in the Renters’ Reform Bill, aim to move all tenants on ASTs to a ‘single system of periodic tenancies’, which means that tenants will need to give two months’ notice if they wish to leave. Under the Bill, Section 21 will also be abolished but landlords wishing to repossess their property will be able to use the strengthened Section 8 grounds instead.

In summary

The tenancy agreement is a legal contract between you and the tenant, so it is important to take it seriously and make sure it is right for you. With a clear tenancy agreement in place, all parties understand the expectations of them during their tenancy. This reduces the chance of misunderstandings, contributing to a more transparent relationship between landlord and tenant, and ultimately helping to protect your investment.

“Having clear, simple, and easily understood tenancy agreements is key to avoiding issues requiring resolution with tenants. In addition, make sure that you (or your letting agent) are familiar with what your tenancy agreement actually says. We see a number of cases where landlords and letting agents think their tenancy agreements say particular things, when they don’t. Memories can let us down, and it’s surprising what the response can be when asking people when they last read their own tenancy agreement.”

Mike Morgan, Membership and Resolution Department Lead, Property Redress Scheme

If you are a landlord and would like guidance on tenancy agreements, contact housing law specialists, Landlord Action, who can assist with writing and reviewing tenancy agreements. If you are an agent, contact HF Assist for specialist advice from legal experts.