The first thing to understand in answer to the question, “What tenant contract should I offer for my buy to let property?” is that there is no standard contract in place for landlords to use.
Indeed, there’s nothing in law to say you must have one and you can create a contract to suit your own needs, though it must be legally compliant (you cannot absolve yourself of legal responsibilities, for instance).
This advice is those who are offering a tenant an assured shorthold tenancy which will see a minimum agreement of six months.
Nearly all lettings will be an assured shorthold tenancy and you’ll need an agreement between you and your tenant detailing the rights and duties for both of you.
Remember, unfair clauses such as stating that the landlord can visit without warning will break the law and be invalid.
Legal obligations that all landlords must meet
Also, there are legal obligations that all landlords must meet and if you leave them out of your tenancy contract, they will still apply. There is no avoiding of the legislation that landlords must follow.
So, having established that your tenant will have a contract confirming that they have an assured shorthold tenancy, and even if you don’t offer a legal contract, then their stay will be recognised in the eyes of the law under the terms of an AST.
However, there are some details that you should add to your tenancy agreement so this becomes a binding and easy to understand contract between the landlord and the tenant.
- Length of tenancy: A legal stipulation is that the landlord cannot end an AST before six months have passed, so all agreements are usually for an initial fixed term of six months. While you cannot make it shorter, you could make it longer, say for 12 months, and you may find that mortgage lenders will have issues with the tenancy agreement running for more than 12 months.
- Rent: Your contract will need to state clearly how much the rent will be and how the tenant will pay it. For example, it should be monthly, a specific amount and paid in advance. This is also the point to highlight when the rent will be reviewed, so you could state quite clearly that when the 12 months’ contract is up for renewal, then the rent could be reviewed. You cannot increase rent before the end of the contract’s fixed term.
- Include all names: This may appear to be a basic stipulation for a tenancy contract, but you should write clearly the tenants’ names, your name, as well as the property’s address and the tenancy’s start date. All tenants will need to sign it as they will be ‘jointly and severally liable’ for the rent. This means that should someone stop paying, the others will need to pay the full amount and not just their share of it.
- Clauses: Your tenancy contract is the opportunity to add those clauses that you want to see adhered to. For example, you could define that tenants need to carry out minor repairs and pay for any damage – though many landlords will remove the cost for damage and repairs from the security deposit.
- The notice period: The tenancy contract will state clearly what the notice period will be, it’s usually two months’ notice from the landlord or the tenant. If, after the fixed term has ended, the tenant could leave your property with no notice or give less than two months.
- Termination: The Housing Act 1988 states clearly that the landlord can end the tenancy under some conditions, including late rent payments and rent arrears as well as property damage.
- Security deposit: We have mentioned the deposit and you’ll need to state clearly how much this will be and where it will be protected. It’s now the law that the deposit must be kept with a Government-recognised third party, and when the tenancy ends you can have any damage deducted from that amount but be aware that the tenant can also apply for a full refund if they disagree.
- Household bills: While all-inclusive rents are growing in popularity in the UK, the landlord usually states who will pay the council tax and utility bills. This will normally be the tenants, but for those who are offering student accommodation, then they may include the bills.
- Pets: For many landlords, pets are a contentious issue and many refuse to have them in the rental property because of the damage they can cause. However, some landlords allow pets to be kept in their rental home and various surveys highlight that landlords offering rental homes to tenants with pets have good tenants who look after the property and stay a long time.
- Rent guarantor: Finally, along with rent guarantee insurance, there is another way for a landlord to guarantee that they will get their rent should their tenant fail to pay. That’s when a rent guarantor, usually a family member, will be obligated to pay the rent.
A tenancy contract
So, while you do not need a tenancy contract in place, it’s a good idea because it will protect you and your interest in the property and also help deal with any situation should the tenancy not run smoothly.
And since the law recognises an assured shorthold tenancy even if there’s no agreement, the contract between the landlord and their tenant is also a good place to put in writing what is expected of the tenant and what they can and cannot do.
However, the most important answer to the question, “What contract should I offer tenants for my buy to let property?” is that the agreement you put in place will enable you as a landlord to regain possession of the property when the term ends.