Bristol Solicitors

TENANCY AGREEMENTS

Important points to note:

•             The person who appears on the contract does not have to be the one paying rent. However, the landlord will rarely agree to this as it means that he will not be able to pursue the person most able to pay if the rent fell into arrears.

•             Both landlord and tenant should have a copy of the agreement in original versions. They should be signed and dated. If the landlord uses agency, then they should also be provided with a copy.

•             Difference between a fixed tenancy and a periodic tenancy is that:

o             A fixed tenancy agreement is one that specifies the fixed time of the tenancy. This agreement cannot be terminated early by either landlord or tenant. It becomes a periodic tenancy after completion of a fixed term and can be terminated with one month notice.

o             A periodic tenancy agreement is one that continues from month to month. In order to terminate it, the tenant must give two months notice.

•             It is not required by law to have a tenancy agreement and the landlord can rent it to anyone he likes. However, without a tenancy agreement, the landlord has almost no rights to the property or if he want to regain possession. The terms of the agreement must be fair otherwise it may be struck out by court.

•             It is important to include a penalty clause in the agreement specifying that the tenant must pay reasonable interest rate on unpaid rent

•             The terms and conditions of the tenancy agreement can be modified if the landlord and tenant are in agreement. Any new implementations should be in writing.

What problems can arise on old leases which might require a deed of variation ?

The content of residential leases has changed considerably over the last few decades, and it is worth remembering that a lease interest bought now can often involve buying a lease prepared decades ago. Consequently, many flat leases, particularly in older blocks of flats have leases which do not contain adequate Landlord and/ or tenant rights and obligations to make the leases suitable as security for mortgages.

Amongst typical issues with such leases which are unacceptable to lenders are :-

• An unexpired lease term remaining which is too short. You will need to check with each individual lender on their unexpired term requirements but as a rule of thumb 80 years or over will be acceptable.

• If there is a clause in the lease allowing the freeholder to forfeit the lease on the insolvency of the tenant.

• If there are  restrictions on transferring or mortgaging the lease.

• If there are inadequate legal rights of access, services, support shelter and protection

• If there are inadequate arrangements for buildings insurance, maintenance and repair of the structure, foundations, main walls, roof common parts common services and grounds.

• If there are adequate responsibilities on either the landlord or the tenant to insure, maintain and repair the common services of the block of flats.

If any of the above are missing from a residential lease then it is considered to be ‘defective’ and the flat owner may experience difficulty in selling the flat and/or may have to purchase expensive indemnity insurance to cover for the lease defects in order to get the sale completed.

Another problem which can arise is created if the seller, or a previous owner has made alterations to the flat in breach of the lease, even if the freeholder is unaware of such alterations or has taken no action. The difficulty in selling the property may be caused because the old lease plan may no longer reflect the property layout. A retrospective licence for alterations, which is a form of deed of variation may be required, and this generally involves delay and extra cost, not least because the freeholder will appoint solicitors and the seller will have to pay their charges also. As indemnity insurance may be available, but only if the freeholder is unaware of the breach of lease, it is advisable to consult a lawyer before approaching the freeholder for a retrospective Licence for Alterations .