After all these years of seeing and hearing it all, I shouldn’t still be mortified whenever I hear about landlords using the wrong type of tenancy agreement contract. But I am, because it’s such a schoolboy error. It happens way too often, and it’s worrying that such carelessness is applied to something so pivotal (err… sorry to kick you in the teeth if you’re down after using the wrong type of tenancy agreement).
The most common mistake I hear about is when landlords provide their lodgers a contract drafted for assured shorthold tenancies (ASTs). Epic fail.
The bat-shit craziest scenario is – and yes, this happens frequently – when letting agents (i.e. the so-called professionals) find ‘lodgers’ for live-in landlords and then use a tenancy agreement contract to seal the deal (which they shouldn’t). Although, funny enough, that really doesn’t surprise me! But that’s a toxic rant for another rainy day.
While there are several common cases where incorrect contracts and forms are used, like when a AST contract is used for a commercial let *slaps forehead*, I’m mostly going to focus on the lodger/AST balls-up because that seems to be the most popular of all balls-ups. However, I will touch on a few other scenarios where an AST contract should not be used, but frequently is.
As a disclaimer, I just want to clarify that the following is based on the most common situations, so while the following will apply to most scenarios, it may not be entirely true for all cases!
You should provide an ‘Assured Shorthold Tenancy Agreement’ contract if…
- You are not a live-in landlord i.e. if you do not share the property with your tenant(s)
- Your tenants moved into the property on or after the 28th February 1997
- The property is being rented by one person, a couple, a family, or a group of friends
- The rent is less than £100,000 per year
- If the property you are letting is a private residential property
- If the tenant is NOT a limited company.
If all the above is true, then you should most likely use a standard AST. You can find tenancy agreement contracts available here.
The reality is, most tenancies in the UK are ASTs when letting a private residential property (i.e. not commercial) and when the landlord doesn’t live in the property.
Different types of Assured Shorthold Tenancy Agreement contracts!
Even if a tenancy is an AST, there are different types, and each type should be reflected in the type of tenancy agreement used. For example:
- House of Multiple Occupation (HMO) / shared housing: if you have a HMO (you can find a definition of a HMO here), each tenant should have a tenancy agreement for their own room, and with the shared use of the rest of the property (e.g. kitchen, living room etc). You should use a tenancy agreement suitable for HMO tenants, which take into consideration communal areas and exclusive rights to bedrooms.
- Student lets: if you are renting your property to students, you should a tenancy agreement suitable for students.
You should provide a ‘Lodger License’ if…
- You are a live-in landlord (i.e. you live in the same property as your tenant)
- You share living accommodation, such as bathroom, kitchen or living room with the person you are renting to.
Company lets, not to be confused with letting commercial properties (which I touch on below)!
If you’re renting your property to a company (i.e. if the company is the tenant, which provides accommodation to its director(s) and/or employees) rather than an individual, the tenancy isn’t an AST. You will need to use a ‘Company Let Agreement’.
If you are letting commercial property, you will need a special ‘Commercial Agreement’ as it is not an AST.
Unfortunately I’m a residential landlord, so I know absolutely nothing about commercial lettings.
What happens if you provide the wrong contract?
Using the wrong type of contract won’t affect statutory rights. For example, if you ignorantly provide your lodger with a tenancy agreement, your lodger will still have the same statutory rights as any other lodger (but they won’t be protected by the same statutory rights as a tenant). Statutory rights cannot be overwritten unless the law itself changes.
That’s the good news.
Now for the bad…
- Many of the T&C’s in the contract won’t be enforceable by law, and many of the clauses probably won’t even make sense with in the context of the situation. For example, if a lodger licence is provided to a tenant that has sole occupancy of a property, it won’t make sense if the contract mentions shared/communal areas.
- The contract cannot determine the status of the occupant, only the actual circumstances can. For example, if a lodger signs a tenancy agreement, it doesn’t make them a tenant!
- The fatal problem with using the wrong type of contract is often recognised when there is a dispute between landlord and occupant, as it will be difficult to determine what the terms of the agreement actually are.
- If any dispute ends up in court, it may cause problems when it comes to the Judge making a decision, and the outcome may not be desirable because of the incorrect contract used.
Bottom line, please don’t use the wrong type of tenancy agreement if you’re a landlord (or tenant, for that matter).
Disclaimer: I'm just a simple landlord blogger, I am not qualified to give legal or financial advice. Any advice I give is my opinion based on my experience, and is never legal or professional advice. You should always get professional advice on any legal and financial matters!