First Lets – How to avoid a tenancy agreement nightmare
Good investment property management should ensure you get the best tenants. From asking the right questions and correctly processing rental applications, through to interviewing techniques and comprehensive background checks, our investment property managers work towards achieving one single aim: getting you the best long-term tenant. The final piece of the jigsaw is putting in place a watertight tenancy agreement.
We’ve met with lots of landlords who have used inadequate tenancy agreements, or, worse, don’t have one in place. If something goes wrong and you find yourself in the same boat – with a tenant from hell who won’t play ball – you’ll be up to the creek without a paddle.
Read on and you’ll learn the nine essentials of a tenancy agreement to help you with your investment property management. Remember, these are the essentials. We use these as a base to build your tenancy agreement. There are detailed clauses that we use to build up a tenancy agreement fit for you, your property and your tenant.
Nine Essentials of tenancy agreements
1. Use the correct tenancy agreement and make sure it is in date
I walked into a high street stationary shop recently. I was stunned to find an out-of-date DIY tenancy agreement package. Two years out of date, in fact. There have been a lot of law changes in the last two years.
Always make sure your tenancy agreement is up to date. It must conform to regulations that protect the consumer. Clauses can’t be deemed as unfair to the tenant.
Depending on the type of investment property you are renting out, you will need a different tenancy agreement. There are different agreements for HMOs, for example.
2. Limit the fixed term to six months
For most investment property management, we’ve found it’s best not to offer a fixed term of longer than six months. A six-month period gives you a great chance to gauge the tenant. It’s a natural period at which to break if needed. A longer tenancy term could make it more difficult to evict if necessary.
3. Comply with the right to rent law
If you’ve found who you think will be a great tenant, and they have the deposit available, you might want to sign an agreement quickly. Be careful not to break the right to rent law. If you sign the agreement before you’ve checked the tenant’s right to rent, the agreement must be conditional on the right to rent check being cleared.
4. Make sure the tenancy agreement states who pays what
With investment property management, if your tenancy agreement doesn’t stipulate which bills are whose responsibility, you could find it’s you that pays them. If you expect the tenant to pay utility bills, water rates and the council tax, this must be put in writing in the tenancy agreement.
A tip here is that if you do decide to pay any of these bills yourself, include a clause that allows you to increase the rent if these bills increase.
5. The tenancy agreement must include the landlord’s address
You must include your address on the tenancy agreement. If you’re using professional investment property managers, you can substitute their address for yours. Having our address on a tenancy agreement for your investment property also protects your anonymity. And before thinking that you could get away with not giving a landlord’s address, get this: if you don’t have this in the agreement, your tenant won’t have to pay the rent!
6. Always protect the tenancy deposit
The deposit must be protected in a recognised tenancy deposit protection scheme. These schemes are approved by the government. You’ll need to tell the tenant about the scheme within 30 days of taking the deposit. If you don’t use a deposit protection scheme, you could face a heavy fine.
7. Include a detailed property inventory
A property inventory is vital. It’s your record of furnishings, fixtures and fittings, and their condition when you first let the property to your tenants. Go through it with the tenant, and have them sign it off.
At the end of the tenancy, this is your proof should you need to make a deduction from the deposit for damage or loss.
8. Never make DIY amendments to the tenancy agreement
Whatever you do, never try to amend a clause in the contract yourself. Always make sure you take legal advice before doing so. One false pen mark could invalidate what might be an essential clause of the agreement.
9. Get the tenant to sign
Whatever you do, do not allow a tenant to move into your investment property without a signed tenancy agreement. We keep the tenancy agreement, with original signatures, on file. The tenant receives a photocopy of the agreement – and this should be signed by you, or your investment property manager.
The tenancy agreement is the document that puts all your verbal agreements for your investment property management in writing. It is this that forms the basis of how you and your tenant act towards each other and your buy-to-let property. It must be written within the law, and be up to date. A DIY agreement will rarely do what you hope. It’s a legal document. One word wrong, one clause neglected, and the implications could be catastrophic.
Contact one of the Ezytrac team today on +44 1522 503 717 or connect with us on LinkedIn. Tell us about your investment property. We’ll be glad to discuss our investment property management services with you. You’ll quickly start to discover why we’re one of the fastest-growing investment property management companies in the UK today.
Yours in effortless property management,
Brett Alegre-Wood MARLA MNAEA