19th June 2021
19th June 2021
Residential leases are an important and staple part of the property market in the UK. Almost 20% of all homes in the UK are privately rented and this means that there is a significant demand and reliance upon landlords issuing their tenants with the correct legal documents in order to protect the rights of both parties during the term of any lease and to protect the property itself. However, knowing the correct form of lease to use can be confusing and can lead to potential headaches for both landlords and tenants where the wrong contract is put in place. This guide shall set out the most common types of rental agreements that can be used around the UK. Crucially, the type of lease available to tenants and landlords will depend upon the location of the property that will be rented. There are different laws and rules around renting that apply depending on if the property in located in England and Wales, Scotland or Northern Ireland.
The most common type of lease that is used for properties rented in England and Wales is known as an Assured Shorthold Tenancy (AST). The overwhelming majority of leases created on or after 28th February 1997 are ASTs. In order for an AST to be used the following criteria must apply:
ASTs tend to be favoured by landlords because they can operate for fixed periods or periodically. They also provide the landlord with the opportunity to evict a tenant without giving a reason where they follow the correct procedure to do so. Where a landlord decides to use an AST they must provide their tenant with the following information as a minimum:
If a landlord wishes to take a deposit from their tenant at the beginning of the lease, they have shall to lodge the deposit with a relevant tenancy deposit scheme. This must be done within a minimum of 30 days of the date on which the deposit was paid by the tenant. The landlord must also provide the tenant with information relating the the deposit scheme they have lodged the deposit with. At the end of the tenancy, the tenants of the landlord can contact the landlord and request that their deposit be returned.
Regardless of if the AST functions on a fixed term of periodic basis, the landlord must at all times provide a tenant with the relevant required notices in order to terminate the tenancy. Where the AST functions on a fixed term basis and neither party gives notice to terminate the tenancy at the end of the fixed period, the agreement shall automatically continue on a periodic basis from month to month until any relevant notice is given by either party.
If a tenant should wish to sublet the property they are of a tenant of this will be dependent on a certain factors. The main factor that will determine if they shall be able to sublet the property is if they are permitted to do so under the tenancy agreement they have with their landlord. Where their tenancy agreement does allow them to sublet the property it is important that they receive the written permission of their landlord before doing so. A sublease agreement, will again most often take the form of an AST and therefore all of the criteria stated above shall need to apply to the relationship between any sub-tenant and original tenant (who shall become the sub-landlord) in order to properly sublet the property using an AST.
Where a landlord shall be resident in the property, they should always use a lodger agreement. A lodger agreement differs from a tenancy agreement, such as an AST, in that it creates a licence for a lodger to occupy a room (or rooms) within a property. It is different to a tenancy agreement in that it does not create the same rights for a lodger as a tenant would have under a tenancy.
Lodgers will normally be given the use of a room in a property, but will not be given exclusive possession, and will share common parts of the property with the landlord and/or other persons. In particular the landlord should retain access to the room that is to be used by the lodger. Where the lodger is granted a licence, the landlord does not have the same obligations placed upon them as those that are placed upon them in a tenancy agreement. Most notably, landlords do not have the same obligations to carry out repairs of the property under a lodger agreement as they do under a tenancy agreement.
Lodgers also do not have the same protection that tenants have should their landlord wish the evict them. Landlords must give lodgers a reasonable amount of notice before they wish them to leave the property but they do not need obtain a court order to be able to do this.
For residential properties in Scotland the only type of lease that can be awarded after 1st December 2017 in a Private Residential Tenancy. A private residential tenancy creates open ended residential tenancies where the tenant and the landlord are private individuals. The landlord may also be a private company. Crucially, a private residential tenancy will apply where:
A private residential tenancy also means that a landlord can only increase the rent once every 12 months and can only do this in line with commercial value or in line with the statutory limit in designated rent pressure zones.
By law in Scotland, a landlord needs to provide their tenant all the terms of the tenancy agreement in writing. Before awarding a lease to a prospective tenant, a landlord should be registered on the Scottish Landlord Register with the local council relevant to the location of the property that will be let under the tenancy agreement. Failure to register may result a landlord not being able to charge the tenant rent or a £50,000 fine.
The landlord, by law, needs to provide every tenant with a copy of the Private Residential Tenancy Statutory Terms Supporting Notes alongside the written agreement. These documents need to be provided to a new tenant before the end of the day on which the tenancy will start.
As with tenancies in England and Wales, landlord must lodge any deposit they take from the tenant with a recognised tenancy deposit scheme. This must be done within 30 working days' of the date on which the tenancy began and the landlord must provide the tenant with certain information regarding the scheme they are using. Once again, at the end of the tenancy the tenants of the landlord can contact the tenancy deposit scheme or the landlord and request that their deposit be returned.
A private residential tenancy creates an open ended agreement which will continue until the relevant notice to terminate the agreement is given by either the landlord or the tenant. The tenant has more protection from being evicted without due cause and a landlord must obtain a relevant court order to be able to evict a tenant lawfully. As a minimum standard, a landlord must provide at least 28 days' notice to terminate the agreement where the tenant has been resident in the property for less than 6 months. If the tenant has been resident in the property for over 6 months, the landlord must provide them with at least 84 days' notice.
Sublease agreements in Scotland are again dependent upon the permission of the landlord. The ability of a tenant to sublease the property will be stated in the original tenancy agreement between the parties. Again, it is good practice for a tenant to receive the written permission of their landlord before the sublet the property. Subleases in Scotland must also take the form of a private residential tenancy and therefore all the above criteria shall apply to any subleases in Scotland created after 1st December 2017.
Where the landlord will be resident in the property they should use a lodger agreement. In Scotland, these will take the form of a common law tenancy and should be used where someone wishes to rent out a room (or rooms) in their house to another person. A Lodger should be given exclusive use of a certain room within the property but will be sharing facilities, such as the kitchen, bathroom, living room etc, with the Landlord. Lodgers do not have the level of protection that is given to tenants under a private residential tenancy however they must be given at least 4 weeks' notice before the agreement can be terminated. Where a lodger refuses to leave, the landlord will need to apply for a court order to take possession of the property and force the lodger to leave.
In Northern Ireland, there is no legal obligation for landlords to issue their tenants with a written tenancy agreement. A private tenancy agreement is the most common types of lease awarded in Northern Ireland where a landlord does wish to have a written agreement with their tenant. A private tenancy is where the property is owned by a private individual (e.g. a person or a business) and not by a public body. A private tenancy can be used to specify many elements of a tenancy and will clearly display the obligations placed on each party, most tenancy agreement will deal with the following issues:
There are certain legal rights tenants have and therefore certain information they must be presented with regardless of if the landlord issues them with a written tenancy agreement. All landlords must provide their tenants with a rent book which should provide information on the name and address of the landlord, the rent payable and its relevant due dates and any council tax that is payable on the property. Landlord's are also forbidden from being aggressive or threatening towards tenants, from interfering with their utilities or accessing the property without the permission of the tenant. Tenancies which begin after 1st April 2007 set out certain standards of repair that the landlord must adhere to and also certain responsibilities tenants have in caring for the property. It should also be noted that landlords in Northern Ireland should first register with the Landlord Registration Scheme.
Landlords must also protect any deposit they receive from the tenant in a registered tenancy deposit scheme and they must provide tenants with the relevant details of the scheme within 28 days' of the deposit being paid by the tenant. At the end of the tenancy, the tenants of the landlord can contact the tenancy deposit scheme or the landlord and request that their deposit be returned.
When landlords wish to terminate the tenancy, they must also provide their tenants with a minimum of 4 weeks' written notice before the date on which they wish the tenant to leave the property.
A sublease agreement in Northern Ireland will also normally take the form of a private tenancy. This means that any sub-tenant shall have the same rights as the original tenant of the property that they are subletting. However as in England and Wales and in Scotland, the tenant must have the permission of their landlord before they sublease the property where they are a tenant.
Where the landlord intends to be resident in the property, the should use a lodger agreement. A lodger agreement in Northern Ireland is extremely similar to one in England and Wales as it provides the lodger with a licence to occupy a certain room in the property. It is different to a tenancy agreement in that it does not create the same rights for a lodger as a tenant would have under a tenancy. Similarly to England and Wales, the landlord should retain access to the room that is to be used by the lodger and landlords do not have the same obligations to carry out repairs of the property under a lodger agreement as they do under a tenancy agreement.
Lodgers in Northern Ireland also do not have the same protection as tenants have should their landlord wish the evict them. Landlords must give lodgers a reasonable amount of notice (this can be written or verbal and in some cases could amount to only a few hours) before they wish them to leave the property however they may still need to obtain a court order in order to achieve this.
The types of lease that are available to tenants and landlords around the UK differ greatly depending on where the property is located. However there are similarities between all of the leases available. In all cases, the landlord must protect a deposit paid by the tenant in a tenancy deposit scheme which is recognised by the relevant government authority. They must also provide the tenant with a minimum amount of notice before terminating the lease and have a duty to keep the property in a fit and habitable condition for the duration of the lease. In all cases, where a landlord will be resident in the property they should use a lodger agreement rather than a tenancy agreement. Where any tenants wish to sublet the property they are a tenant in, it is imperative in all cases that they should receive the permission of their landlord before they do so and check their existing tenancy agreement first.