Tenancy Agreements for Letting

There are various types of tenancy agreement. Almost all new tenancies granted by landlords and letting agents are ‘assured shorthold tenancy’ (AST) agreements. There are a few exceptions where an AST is not created, such as when a tenant is a limited company or the rent is very high or very low.

ASSURED TENANCY

An assured tenancy gives the tenant the right to exclusive occupation of all or part of the property whilst the landlord has the right to charge a market rent. The landlord’s rights include recovering possession of the property if the tenant falls into rent arrears of more than two months.

ASSURED SHORTHOLD TENANCY (AST)

Where an assured tenancy is also ‘shorthold’, in addition to the right of landlords to recover possession of the property if tenants fall into rent arrears of more than two months, the landlord also has the right to recover the property at the end of a specified fixed term (normally six or twelve months) but ONLY where proper notice has been given to the tenant. Most tenancies are automatically ASTs unless otherwise specified.

Once a fixed term expires, the tenancy automatically continues as a ‘periodic’ tenancy. It does not end until the proper notice is served by the landlord or tenant.

RENT ACT TENANCY

Tenancies granted in England and Wales before the 15 January 1989 are regulated by the Rent Act 1977. Rent act tenancies are less favourable to landlords than assured tenancies. If a tenancy was granted before 15 January 1989, you cannot simply convert the tenancy to an AST by giving the tenant a new fixed-term tenancy.

COMPANY LETS/NON-HOUSING ACT

Most tenants are private individuals but it is also possible to give a tenancy agreement to a limited company, in which case most of the rights enjoyed by individual tenants under the Housing Acts 1988 and 1996 do not apply.

VERY HIGH OR VERY LOW RENTS

Tenancies where the rent payable is below £250 or above £100,000 per annum are excluded from the statutory protection as defined in the Housing Act 1988. In such cases the tenancy will be regulated under the ‘common law’.

Up until 1st October 2010, the upper rent limit for tenancies protected by the Housing Act 1988 was £25,000. After the 1st October 2010, all tenancies with rent of between £25,000 and £100,000 will automatically convert to assured shorthold tenancies regardless of the type of tenancy agreement originally signed (unless the original tenancy was created between 15 January 1989 and 28 February 2007, in which case it will convert to an assured tenancy).