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What is a tenancy? 

A tenancy is the granting of the right to exclusive use of a landlords property and land for a determined period of time.  The owner of the land, including buildings that may be on it is called the Landlord.  In return for the use of the land, a rent is paid as agreed between the Landlord and the person using the land known as the Tenant.

It is worth pointing out that the Landlord can often be a Leaseholder.  For example they own a flat on a long lease but have to pay a ground rent themselves to the owner of the land upon which the flats were built.  The person owning the land is referred to as The Freeholder.

So you often get the situation whereby the Freeholder is paid rent by the Leaseholder (Tenant) who in turn is paid rent by the Tenant.  Let's not get too complicated.

All tenancy agreements must comply with statutory law.  This is law that is passed in parliament and is therefore legally binding and enforceable without any argument at all.

The granting of a tenancy is done upon the agreement of two parties, The Landlord and The Tenant.  This can unwisely be done verbally by both parties agreeing the length of time the agreement shall be in force, the rent to be paid and a notice period.  This is so unwise we are not going into it any further.  All sensible landlords will have an tenancy agreement in place if for no other reason than peace of mind should the landlord have to take the tenant to court.  Judges still tend to side a little more with the tenant than the landlord if they can!  Anyone can draw up a tenancy agreement!  But you need to know what to say in it to ensure that you are complying with the law of the land and are not being unfair to the tenant.

There are several types of residential tenancies currently in force:

1. The Protected Tenancies Rent Act 1977 - tenancies entered into before 15 January 1989.
2. Protected Shorthold Tenancies Housing Act 1980
3. The Assured Tenancy - introduced by the Housing Act 1988.
4. The Assured Shorthold Tenancy - introduced in 1988 but modified by the 1996 Housing Act.

Protected Tenancies Rent Act 1977

Otherwise known as Regulated Tenancies, they are governed by the Rent Act 1977 and the Housing Act of 1988 has absolutely no effect on them whatsoever. In order for a tenancy to be legitimately a Protected Tenancy under the 1977 Act, the dwelling must be let as a seperate dwelling under section 1 of the Act and must not fall into any of the express exclusions under Part 1 of the Act.  A protected tenancy is a statutory tenancy rolling on from month to month giving the tenant the right to a fair rent, not a market rent!  At no time can this type of tenancy be changed to An Assured Shorthold Tenancy, even if ownership changes or a new tenancy was granted after January 15th 1989 (please note new tenancy, not new tenant) .

Protected Shorthold Tenancies Housing Act 1980

This Act was introduced to encourage residential lettings in the private sector.  This type of agreement can not be created nowadays, since the Housing Act of 1988 cam into force.  Whilst the tenant is still protected by rent control, the tenant has no right to possession at the end of the fixed term and the landlord can invoke mandatory grounds for possession, as long as the landlord has abided by his statutory requirements.  A protected shorthold tenancy could be granted for a period of 1 to 5 years.  Note: a Protected Shorthold Tenancy could only be granted if a service was served on the tenant prior to the commencement of the tenancy and a protected shorthold tenancy could not be converted to An Assured Shorthold tenancy unless the fixed term came to an end after January 15th 1989 when the Housing Act 1988 came into force.

The Assured Tenancy:

This type of tenancy gives the tenant the right to possession of the property even after the fixed term has come to an end.  The only way a landlord can get rid  of a tenant is by court order or the tenant leaves voluntarily.  Note that the tenancy must include at least one tenant for whom the property is their principal home.  If at any time this is not the case then the tenancy ceases to become assured,  It is however, very difficult to prove this and the courts are not always that favourable to landlords.  Once the fixed term of the tenancy comes to an end, unless the tenancy is renewed it becomes a statutory periodic tenancy.  This means that the tenancy is governed by law to run from period to period.  Period being the term upon the rent is paid, usually monthly.

The following can not be Assured Tenancies:

1. The tenancy was created before January 15th 1989

2. A property who's rental value is in excess of £25,000 per annum

3. A tenancy where the rent payable is less than £1,000 per annum in Greater London and £250.00 elsewhere.

4. A let to a student granted by an educational establishment

5. A holiday let.

6. A let where there is a resident landlord.  If a landlord owns more than one flat in a block purposefully built as flats (not a converted house) and the landlord lives in one of the flats, then the landlord is not resident.

NOTE:

An increase in the rent can be proposed by the landlord once every twelve months by serving a notice of their intention to do so under section 13 of the Housing Act 1988.  The tenant can refer the increase to a fair rent board.

A landlord can not terminate an assured tenancy by refusing to renew a fixed term that has come to an end by serving a Notice to Quit.  An Assured Tenancy can only be brought to an end by the tenant leaving freely or in the courts.

Fortunately the strict regime of this type of tenancy was altered by the Housing Act 1996.  Since February 28th 1997, the method of creating an assured tenancy is by:

1. Serving notice on the tenant at the commencement of the tenancy stating that the tenancy will be assured.

2. include a clause in the agreement stating that the tenancy will be assured.

3. serving notice on the tenant during the fixed period that the tenancy will no longer be an assured shorthold tenancy but will become an assured tenancy.

Recovering Possession Of Assured Tenancy:

For a periodic tenancy or a fixed term tenancy with a break clause, the method prescribed in the Housing Act 1988 must be complied with:

1. The landlord serves a notice of intended possession proceedings on the tenant, using the notice shown in the Act under section 8

2. The landlord must have grounds for possession.

There are two types of grounds for possession:

a/ Mandatory - possession must be granted

b/ Discretionary - the court decides that there are reasonable grounds - or not.

Grounds For Possession:

Mandatory:

1. A claim by the owner who has:

(a) lived in the property before it was let or

(b) wishes to recover possession because he needs it as a home for himself or spouse.

2.A claim by a mortgagee whose mortgage predates the grant of the tenancy who needs possession in order to sell the property.  A notice must have been served before the tenancy commenced by a mortgagor who is an owner/occupier on the tenant.

3. An out of season let of a holiday home for a period of less than 8 months.  The property must have been let on a holiday basis for the previous 12 months.  Notice must have been served by the landlord not later than the beginning of the tenancy that the property may be recovered on this ground.

4. A tenancy of not more than 12 months and at sometime during the preceding 12 months the property was let to a student by an educational institution.  A notice must have been served not later than the commencement date of the agreement that possession could be sought on this ground.

5. A let of a dwelling that has been used for ministerial purposes and the courts are satisfied that it will again be used for ministerial purposes.

6. The landlord wants to demolish or reconstruct the property and needs possession so to do.

7. The tenant has died and possession has passed to a person without entitlement. ( This is only applicable during a periodic term).

8. Two months (8 weeks) rent arrears exist both at the time of serving notice and on the day of the court hearing.

Discretionary:

9. The tenant has been offered suitable alternative accommodation

10. Some rent was due when the notice was served and at the date of the proceddings.

11. The tenant has been persistently late in paying the rent.

12. Any other obligation in the agreement has been broken.

13. The behaviour of the tenant or someone living with them has caused deterioration to the property or common parts.

14. The tenant or someone living with them is guilty of nuisance or noise anywhere in the locality, or has been convicted of using the property for immoral or illegal means.

15. The condition of the furniture has deteriorated through ill-treatment by the tenant.

16. The tenancy was granted because the tenant was employed by the landlord and such employment has ceased.

17. The tenant falsely induced the landlord into the tenancy.

Notice Of Possession Proceedings:

Apart from Grounds 3,4,8,10,11,12,13,14,15 and 17 where 2 weeks notice will suffice, 2 months notice must be given to the tenant that you intend to seek possession through the Courts.  If you are seeking possession under Ground 8, (2 months + rent arrears etc) you must keep an accurate record of all documentation, letters etc that have been sent to the tenant and when.  This is in case you have to revert to possession under Grounds 10 and 11 (discretionary Grounds).  Always ensure that the correct notice form is used otherwise the proceedings will be invalid.  You must use a Section 8 of the Housing Act 1988.

Housing Act 1996:

This Act virtually made the Assured Tenancy extinct.  The Act relaxed the minimum period of tenancy for the tenant and so now any tenancy agreement can be An Assured Shorthold Agreement (as long as it abides by the other laws).  The Assured Tenancy is very unattractive to the majority of Landlords and should they wish for An Assured Tenancy to be in place, they must notify the tenant in writing prior to the tenancy commencing that this is the case.

Assured Shorthold Tenancies:

A vastly better type of tenancy than the Assured Tenancy, but be warned that this is still a type of Assured Tenancy.  Note that for an Assured Shorthold Tenancy these points are vital:

1.  The tenant must be an individual or group of individuals for whom at least one the property is their principal address.

2.  The tenancy commenced after January 15th 1989

3.  The Landlord can not terminate the tenancy unless he has given two months written notice in the form of Section 21 of the Housing Act 1988.

If the tenancy becomes periodic i.e. the fixed term has run out, then the tenancy continues until the tenant gives one months notice or the landlord gives 2 months notice.  Such notice should coincide with the rent date.

Possession of the property is guaranteed to the tenant for a minimum period of six months.  Possession will not be given to the landlord unless the tenant has been in situ for a minimum of 6 months.  Be warned then that if you allow a friend to stay in a property for a temporary period of 2 months and that friend suddenly decides they want to stay - they can for a minimum period of 6 months.  The periodic tenancy can continue for eternity - there is no time limit.  The rent can be raised by issuing a section 13 notice on the tenant - a legal form that must be used in the proper manner and format as prescribed by legal stationers.  Plus also remember that the rent can not exceed £25,000 per annum.

Company Lets:

A tenancy that is granted to a company is not protected under the Housing Acts of 1988 or 1996.  All agreements created will fall under contract law.  A different kettle of fish altogether.  I strongly advise that you employ a solicitor to look through the contract.  Companies that rent properties for employees on a regular basis often have their own agreements and these must be looked through in fine detail.  The main points to remember are :

Always reference the company.

Ensure the company has a valid registered address in the UK

Ensure you have named occupiers - or that there is a clause saying that the occupiers can not be changed without your written consent.  This prevents the company from using your property as a stop over for employees and therefore increasing the wear and tear as well as you not knowing how many people are in the property at anyone time.

The company is the tenant and therefore you should only accept rent from the company.  If the company says that the occupier is to pay the rent then make sure there is a clause in the agreement that says the occupier is acting as an agent on behalf of the tenant (the company).

Accepting rent:

Always ensure that you accept rent from the persons nominated on the contract.  Because an Assured Shorthold Agreement can be made verbally as well as in writing, accepting the rent from an unknown source could be seen as the making of a contract between two parties and therefore the person paying the rent could state that they have entered into an agreement to rent the property from you, without you realising it.  Horrendously complicated I know, but true.