Types of Tenancies
A tenancy agreement is something that is made between a landlord and a tenant. It sets out the terms of a tenancy as a written or oral (spoken) agreement, protecting both parties involved. As long as the rent is paid and the rules set out in the agreement are followed, by both parties, the agreement is being met.
Tenancy agreements come in different forms. We have discussed short and long-term lets before, but here we are going to explain some further types you may come across.
What different types of tenancy agreement are there?
The two primary types of tenancy agreement are:
- Fixed-term — running for a set period of time
- Periodic — running on a week-by-week or month-by-month basis
Within these two categories sit:
- Assured Shorthold Tenancies (AST)
- Secure Tenancies
- Non-Assured Shorthold Tenancies
Assured Shorthold Tenancy (AST)
This term applies to a majority of tenancies. The indicators that a tenancy is an AST are:
- The property is private (not commercial)
- The tenancy started after 1989
- The property is the tenant’s main accommodation
- The landlord doesn’t live in the property
Even if a landlord is renting individual rooms within a larger property to tenants who share facilities, an assured shorthold tenancy is legal. However, an AST is not possible if:
- Rent is extremely high (over £100k per year)
- Low or no rent is being charged
- It’s a holiday rental
Most ASTs will stipulate an initial fixed term of six or 12 months. During this time, the rent cannot be raised unless the tenant agrees to it or there’s a clause in the agreement that says the rent can be reviewed during this period.
Any deposit that has been paid has to be protected. The landlord must use a government approved deposit protection scheme to do this. The latest developments in tenant fees and deposits came into effect on the 1 st June 2019. Read about the tenant fee ban here.
Once the fixed term stated in the AST is up, two things can happen: a new contract is signed between landlord and tenant or the tenancy agreement automatically becomes ‘periodic’, moving to a monthly rolling contract with the same rent.
Unsure of some of the wording you’ve found in a tenancy agreement? Try our handy haart jargon buster.
A secure tenancy was a type of tenancy that got replaced by an AST by the Housing Act 1988. It is a lifetime tenancy, and most council tenants are secure tenants. These types of tenancy give tenants stronger rights and they can only be evicted under specific circumstances.
A tenant can only be evicted from a secure tenancy if:
- They don't pay the rent
- They cause nuisance to neighbours
- They use the property for illegal activities
- They move out of the home or rent it to someone else
The council must follow the eviction procedure for secure council tenants and get a court order in place.
Non-assured Shorthold Tenancy
This type of tenancy can only be used in specific situations, where an AST cannot be used. Examples of when this type can be used include:
- When the rent is less than £250 per year
- The tenant has their main home elsewhere
- The landlord lives in the same property as the tenant but does not share the use of any facilities
Unlike an AST, landlords are not obligated to pay a deposit into a government-backed deposit protection scheme, and a landlord does not have to give a Section 21 or Section 8 Notice to end the tenancy. However, a tenant has the right to stay in the property until the end of the fixed term, if they comply with the terms of the tenancy agreement.
You may assume that as soon as a tenancy expires, the tenancy automatically terminates. This isn’t true, and it’s where periodic tenancies come in. A shorthold tenancy automatically becomes a periodic tenancy if new contracts aren’t signed after the fixed terms expire in the original agreement and the same tenant(s) stay in the property. Tenancies automatically become periodic immediately after the fixed date in the contract has passed and when the tenancy is not renewed. Neither landlord or tenant has to do anything, and a special kind of contract or clause isn’t required either.
The original terms and conditions apply, the only difference is that a new periodic contract begins. It typically will run on a month-by-month basis, hence the term ‘rolling’. These principles apply if the rent is paid on a weekly or bi-weekly basis. Some contracts may also run from quarter-to-quarter or even year-to-year.
Like any other type of tenancy, periodic tenancies should only be terminated through proper legal processes. A periodic tenancy will continue until it is terminated by any one of the following methods:
- Mutual consent — when both landlord and tenant agree to end the tenancy
- Eviction of the tenant by the landlord
- Notice given by tenant (this period will have been outlined in the agreement)
- Notice by landlord (a minimum of 2 months written notice must be given to a tenant)
Are you a landlord or tenant? Do you have questions or need more information? haart has a team of friendly professionals who can answer any questions you need to about tenancies and the legislation behind them.
Get in touch. You can use our contact us form or give us a call on 0345 899 9999.
You can find legal information on tenancies at Gov.uk.