Assured Shorthold Tenancy Agreements

This document is not a definitive guide to Assured Shorthold Tenancy Agreements. Please be Aware.

Definition
An assured shorthold tenancy is a type of assured tenancy that offers the landlord a guaranteed right to repossess his property at the end of the term. Although called shorthold, the agreement does not necessarily have to be 'short' in length of time; assured shorthold tenancies completed after 28 February 1997 can be for any length of time the landlord agrees to. The assured shorthold covers the following important points:

1) It is now the most commonly used contract for most residential tenancies
2) The landlord has a right to get his property back at the end of the tenancy 


The landlord and tenant can freely agree the rent but the tenant does have the power (in certain circumstances) to refer the rent to the rent assessment committee.


Details
The Housing Act laid down some important requirements for assured and assured shorthold tenancies. Some of the key requirements are:

1) The tenant is an individual
2) The dwelling is let as a separate accommodation
3) The dwelling is the tenant's main or principal home


There are a number of important exclusions to consider with regard to tenancies that cannot be assured or assured shorthold:

1) Holiday Lettings
2) Lettings to Companies
3) Lettings at specific values (no or low rent/ high rent)
4) Tenancies where the landlord is a resident
5) Tenancies of properties with more than two acres of agricultural land
6) Agricultural Tenancies
7) Tenancies completed before 15 January 1989 or previous protected tenancies


Tenancies in the excluded categories above will generally be known as 'contractual' or 'common law' tenancies and an assured shorthold tenancy agreement is not suitable. In the case where a landlord is residing at the same dwelling this form of contract is known as a License.
The Tenancy Agreement

The normal procedure is for the landlord (or agent) to prepare two duplicate copies of the agreement for signing; these are called the Original and Counterpart. When completing the standard form, all details, signatures and dates must be completed on both documents in ink, by hand (or typed). All parts of the form should be completed clearly and fully and with no ambiguity. In the case of dispute regarding any ambiguous portions of the contract the court is likely to choose one of two options:

1) Ambiguity is resolved against the party preparing the agreement 
2) Declare that those parties had still to reach agreement concerning those uncompleted portions (in which case, the agreement as a whole might be declared void).



Completion details:
DATE: enter here the date when the agreement was made between the parties. If the agreement is to be signed by the parties at different times, the date of the first signature can be used.

LANDLORD: enter the name(s) of the landlord(s). If the property is jointly owned, include all names.

TENANT(S): likewise, enter the name(s) of the tenant(s). The full name(s) of the tenant(s) should be completed on the agreement. Where there is a joint tenancy, all joint tenants should be listed.

PROPERTY: the property or dwelling being let should be accurately defined within this section of the agreement such that the address or description fully identifies the property.

TERM: since the changes introduced by the Housing Act 1996, an assured shorthold tenancy can be any length of time. If the fixed term is over three years, then the agreement must be drawn up by deed (consult a solicitor for details).

RENT: the agreement should clearly state the amount of rent payable, and the frequency of the payments (the rental period). Generally, the rental period would be monthly although the rent could be paid weekly or quarterly. If weekly, then a rent book must also be supplied. If the rent exceeds £25,000 per annum, then the tenancy cannot be assured shorthold.

Signing the Agreement
The Original would generally be given to the tenant and the Counterpart would be either kept by the agent or given to the landlord. All parties should sign the agreement. In the case of joint tenants or landlords ALL parties should sign the agreement.

Where the landlord has instructed an agent to let the property and draw up the tenancy agreements, the agent may wish to sign the tenancy agreement on behalf of the landlord (especially if the landlord is overseas or not contactable). In this scenario, the agent should check that they have express permission from the landlord to sign the agreement on the landlord's behalf.

Witnesses
In English Law it is not essential for witnesses to sign Letting agreements if they cover a period less than three years. However it is a good precaution to ask someone to witness the signing to avoid any later dispute. Using a witness is a reasonable safeguard against a party claiming that they never signed the agreement at a later stage.
On a practical note if there are more than 2 or 3 co-tenants signing the agreement this should be sufficient in terms of protection against disputes.


Stamp Duty
Stamp duty is payable on all leases although stamping is not actually compulsory for short residential leases. However a letting agreement must be stamped before it can be accepted in court as a valid document. The general practice is that most tenancy agreements are not stamped unless there is a risk that the document may be produced in court (i.e. if the landlord starts possession proceedings). Although leases should be stamped within 30 days of execution, The Stamp Office will generally accept late documents on payment of a penalty charge.