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Tenancy Agreements 33 days of tips – Day 4 – tenancy types

February 1, 2017 by Tessa Shepperson

tenancy agreement 33 days of tips day4Legal background

In their consultation paper on housing law, the Law Commission identified 13 different tenancy/occupation types, and their recommendation was to cut these down to two. This never happened in England (although the Renting Homes (Wales) Act 2016 will change things in Wales when it comes into force).  So we are left with an over complicated and confusing system.

This series (as discussed on Day 1) only covers residential tenancies, and the series is really just about tenancy agreements for the private rented sector.  Note that I am not going to discuss the Welsh reforms as they are not yet in force.

Common law and statute

In this country (England and Wales) we have what is known as the ‘common law’. This is the underlying law which was built up over centuries by the Judges hearing cases. This still happens, but it is often hard for non-lawyers to find out about (without buying expensive legal textbooks), as it is set out mostly in the legal case reports, and develops from case to case (although most important cases are now reported online on BAILII).

However often this underlying common law is changed by an act of Parliament/legislation which imposes a different set of rules, which apply either in all circumstances or sometimes just in some circumstances.  So our law is a mixture of the common law and statute.

Tenancy types

This is the case with tenancies. There are still ‘common law’ tenancies, but in most cases, a tenancy will be regulated by one or other of the two main ‘statutory codes’ which have been set up by legislation.

The older code is set out in the Rent Act 1977, which applies to tenancies created before 15 January 1989,  The Housing Act 1988 applies to tenancies created after that date.  15 January 1989 is, therefore, an important watershed date in housing law.

  • Rent Act tenancies are often known as protected tenancies.
  • Housing Act 1988 tenancies are generally either assured tenancies or assured shorthold tenancies (ASTs).
  • So when I say ‘common law tenancies’ I mean tenancies where neither of these statutory codes set up by these two acts applies.

This will be mostly in the following circumstances:

  • Where the tenant is a limited company (because the statutory codes were set up to protect individuals, not businesses)
  • Where the tenant occupies self-contained accommodation in the same building where the landlord lives (provided the landlord has lived there since before the tenancy starts and provided the building is not a purpose built block of flats where the landlord lives in one flat and the tenant in another)
  • Where the rent is either higher or lower than levels set out in the legislation. This is currently under £250 (£1,000 in London) or over £100,000, pa.  Note that prior to December 2010 the upper limit was £25,000 and many tenancies changed from common law to assured shorthold tenancies at that time.
  • Where the tenant is a student who is going to study a course provided by his landlord, where the landlord is “a specified educational institution” (which includes most colleges and universities)
  • Holiday lets which are where a property is let for the purpose of a holiday
  • There will also be a common law tenancy where the tenant has lost the protection of the act. This will normally be because they have moved out and sub-let it to someone else.  Or it could happen if the annual rent is increased to above the current limit of £100,00.

The importance of selecting the right tenancy agreement

It is important to know what sort of tenancy you have, as you need to select the correct type of tenancy agreement.

If, for example, you use a standard AST for a common law tenancy, this will not mean that somehow you have no tenancy at all.

However, it will be misleading, as some of the terms will be irrelevant. Also, some things, such as eviction and the treatment of tenancy deposits, vary according to the tenancy type, so it is important for everyone to know what tenancy type they are dealing with. It is good practice to make this clear in the tenancy agreement.

For example, if a tenant with a resident landlord is served a notice to quit and takes legal advice on it, the tenant may not tell the legal adviser that the landlord lives in the same building. The adviser, not realising that this is a common law tenancy, particularly if the tenancy agreement appears to be for an assured shorthold tenancy, may then advise the tenant that the notice served is incorrect and tell him to defend the proceedings for possession.

Although the tenant will not succeed in his defence (assuming the landlord has got things right) the defence will cause delay and additional work for the landlord, and will probably cost him extra in legal fees. This would have been avoided if the tenancy agreement had stated clearly that the tenancy is not an AST because there is a resident landlord.  The advisor would then have given the correct advice to the tenant.

Note that on my Landlord Law site, I have a >> Which Tenancy agreement ‘trail’ which will guide you by question and answer, to find out which is the most appropriate type of agreement for your situation.

Tomorrow we will be looking at shared houses

Landlord Law Tenancy AgreementsNB Find out more about my Tenancy Agreement Service on Landlord Law

Landlord Law also has extensive information on the different tenancy types, including a ‘tenancy trail‘ which will help you find out YOUR tenancy type by question and answer.  There is also a useful series of articles on occupation types.

click-here

 

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Filed Under: Tips and How to Tagged With: Tenancy Agreement 33 days

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IMPORTANT: Please check the date of the post above - remember, if it is an old post, the law may have changed since it was written.

You should always get independent legal advice before taking any action.

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About Tessa Shepperson

Tessa is a specialist landlord & tenant solicitor and the creator of this site! She is a director of Landlord Law Services which now hosts Landlord Law and other services for landlords and property professionals.

« Did this tenant lose his defence to section 21 possession proceedings due to professional negligence?
Is a clause requiring a tenant to pay council tax unfair? »

Comments

  1. hbWelcome says

    February 1, 2017 at 12:19 PM

    Hello Tessa,

    I’ve followed your “which tenancy agreement” but don’t think it covers a situation I’d like to try.

    I want to let to people working away from home for 1-3 months at a time. Fully furnished, all inclusive. They would have exclusive use of the property and it would not be shared. I would not live in the building. They would have their own home elsewhere, it would not be their PPR. This would be an alternative to a hotel.
    But I don’t think it would be a holiday let as they wouldn’t be on holiday (taken from your link);

    “Holiday lettings

    A tenancy the purpose of which is to confer on the tenant the right to occupy the dwelling-house for a holiday.”

    Not trying to set up a sham license agreement, just want to do it right. Do I just do a 1-3 month AST and hope they leave as agreed? (They would be higher earners with their own home so not such a mad gamble).

    Can it even be an AST if it is not their main home?

    • Romain says

      February 2, 2017 at 1:02 PM

      “I want to let to people working away from home for 1-3 months at a time.”

      If that’s true then whilst you would create a tenancy if you granted exclusive possession it wouldn’t be an AST as the property would not be their only or principal home.

  2. Tessa Shepperson says

    February 2, 2017 at 10:57 AM

    If its not a holiday and you don’t provide services where you enter the property it sounds like an AST to me. I think there is authority for the view that people can have more than one home.

    It might be an idea to make it a license by insisting on providing cleaning services and being able to go in. Otherwise it will be some kind of tenancy.

    I don’t think there is authority for this which is why it may be best to assume its an AST. Just hope you don’t have to evict them!

  3. hbWelcome says

    February 3, 2017 at 11:02 AM

    Thanks Tessa and Romain.

    “it wouldn’t be an AST as the property would not be their only or principal home.”

    That is my understanding too (I’ll be checking they own and live elsewhere).

    Leaning towards doing it as a license/holiday let and also serving a ground 3 notice.

  4. Tessa Shepperson says

    February 3, 2017 at 11:26 AM

    If you want to make it a non-regulated agreement (and on reflection this may be the best way to go) then I think the tenancy agreement should state that somewhere clearly (ideally in the first page) and should also give their main address so it is clear that this property is not their main home.

If you rent property - you need a tenancy agreement!

The 33 days of Tips

Tenancy Agreements Tips During 2017 I published a weekly series of tips on tenancy agreements.

You will find an index here, along with other tenancy agreement related resources.

Index

  • Day 1: Introduction
  • Day 2: Why use one?
  • Day 3: Tenancy or license?
  • Day 4: Tenancy types
  • Day 5: Shared houses
  • Day 6: Right to Rent
  • Day 7: Parties
  • Day 8: Addresses
  • Day 9: Guarantees
  • Day 10: Letting agents
  • Day 11: The Property
  • Day 12: Rent
  • Day 13: The Term
  • Day 14: The Deposit
  • Day 15: Inventories
  • Day 16: Unfair terms (1)
  • Day 17: Unfair terms (2)
  • Day 18: Bills
  • Day 19: Penalty Clauses
  • Day 20: Business use
  • Day 21: Repairs
  • Day 22: Insurance
  • Day 23: Notices
  • Day 24: Inspections
  • Day 25: Ending
  • Day 26: Assignment
  • Day 27: Left items
  • Day 28: Student lets
  • Day 29: Pets
  • Day 30: Preparation
  • Day 31: Renewals
  • Day 32: Reviews
  • Day 33: Finding

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