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What’s the Point of a Tenancy Agreement Anyway?

Landlord X’s tenant has registered a business at her address, changed the locks, put holes in the walls, let in another occupier, allowed his favourite orange tree in the garden to die and has breached 25 other terms of the tenancy agreement. Landlord X wants her out, and is therefore extremely upset to discover that despite all these breaches, he has to go through a court process and persuade a judge that it is reasonable to grant a possession order. Landlord X asks “What’s the point of a written tenancy agreement?!!”.

The (non-exhaustive) points are:

  1. Oranges are not the only fruit: eviction is not the only remedy. The tenancy agreement is a contract, and under normal contractual principles Landlord X may be entitled to damages to compensate him for any loss suffered as a result of the tenant’s breaches. A written agreement that sets out the terms (e.g. not to put holes in the walls) is essential if one wants to be able to prove breach of those terms and resulting loss and to end up financially compensated.
  2. A rose by any other name would smell as sweet: if a tenancy falls within the protection of the Housing Act 1988 (occupation of dwelling house by individual for rent of less than £100,000 p.a.) it will be an AST, written terms or not. A landlord will not be able to use the section 21 procedure to evict the tenant until after the first 6 months. Further the Landlord will continue to be subject to the repairing obligations as set out in s11 LTA 1985.
  3. Bad apples: some tenants fail to pay rent. The most common ground for bringing possession proceedings in an AST (other than expiry of a s21 notice) is on expiry of a section 8 notice for rental arrears. The Housing Act 1988 specifies that the courts can only order possession on the grounds specified in the act ( grounds 1-17 set out in schedule 2). The courts will not imply a forfeiture clause where there is none in the agreement in AST and non-ASTs alike. A written agreement providing for re-entry on the specified grounds is an essential insurance against non payment of rent.
  4. It makes sense to know exactly what is agreed between landlord and tenant so both parties know where they stand in terms of covenants and liabilities. The easiest way to know what exactly is agreed is to have it recorded in a written document.
  5. Where assured shorthold tenants have not vacated in accordance with an expired s21 notice, the court service’s accelerated procedure can be used to recover possession, which in theory should a quick and relatively cheap process. There is no hearing and if the claim is not defended the landlord can gain a possession order approximately 3-5 weeks after sending the papers to court, compared to the 8-12 week timescales involved when there is a hearing. In order to go through the accelerated procedure the tenancy must, among other conditions, be the subject of a written agreement.
  6. There is certain information that landlords are statutorily required to provide to tenants in written form, such as the prescribed information set out in the Housing (Tenancy Deposits)(Prescribed Information) Order 2007 where a deposit is taken. Therefore as soon as a deposit is involved certain written information must be available. The Housing Act 1988 requires the landlord to provide the tenant with a written statement of tenancy terms on request by the tenant. In Northern Ireland the legislation has gone so far as to require all tenancy agreements to be in writing on pain of criminal sanctions.
  7. Any tenancy agreement – including an assured shorthold tenancy – created for more than 3 years must be in writing. (Law of Property Act 1925 s54).
  8. When either party to a tenancy agreement defaults in any way it can be extremely frustrating not to be able to walk away from the contract immediately: Landlords want to evict; Tenants want to find somewhere else to live. Eviction is the ultimate sanction against tenants for breach of tenancy agreement, and those with experience of bringing possession proceedings against residential tenants will be aware that unless the court is statutorily obliged to give possession, it can take much convincing that granting a possession order is reasonable. Likewise the tenant is not in a position to consider the tenancy at an end because of a minor breach by the landlord. A written tenancy agreement is no guarantee against landlord and tenant disputes, and there are statutory obligations that cannot be contracted out of; nevertheless it is an important contractual document that both parties should ensure is properly drawn up.

    Tenancy Agreements are available to be bought from the Painsmith Solicitors webshop.

One Comment

  • tenants rights UK 9th February 2011 at 10:57 pm

    I still find it ammusing that most people think that the tenancy agreement is a formality and not a binding contract

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