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When Does A UK Tenancy Agreement Become Legally Binding?

April 29, 2020

Like any legal contract, an assured shorthold tenancy agreement becomes legally binding as soon as all parties – the landlord, tenant and guarantor (if applicable) – sign the document. A legally binding UK tenancy agreement is enforceable through the courts.

Once you have signed the agreement as the landlord, you are agreeing to uphold your duties and responsibilities outlined in the document. It’s imperative that you and the tenant understand the tenancy agreement before signing it.

When should landlords sign tenancy agreements?

After agreeing the offer with the tenant, a refundable holding deposit is sometimes required to be paid, while you or the agent does a tenant credit check and referencing. Then, the next stage is drafting and getting the tenancy agreement signed.There are benefits and risks for landlords to sign tenancy agreements in advance or to wait until the day the tenancy is set to begin. Signing the document in advance provides the tenant and landlord assurance the tenancy will begin. However, once the contract is signed, it’s difficult for either party to withdraw.

Once a tenant signs a tenancy agreement, they are agreeing to pay rent for the entirety of the tenancy. After the contract is signed by all parties, the tenant pays their tenancy deposit and first month’s rent. On the day the tenancy begins, which should be clearly stated on the contract, the landlord or agent should hand over the keys to the tenant.

You can get a good estimate of how much rent you should be charging with a free, online rental valuation.

How to ensure your UK tenancy agreement is legally binding

As there have been numerous recent legislative changes impacting landlords in the UK, your assured shorthold tenancy agreements need to abide by the law, and you need to ensure the contract would hold up in court. Of course, if you let your property and use a local letting agent, they will ensure your tenancy agreement is 100% legally compliant and legally binding.However, if you’re a private landlord navigating the process on your own, there are a range of bases that you need to cover in order for a tenancy agreement to be legally binding. If there’s a dispute and you don’t include necessary information, the contract won’t be relied on as a legally binding document. Certain statutory laws apply even if they’re not specifically stated in the tenant agreement. However, if there’s a clause that violates a tenant’s statutory rights, it won’t be valid or legally binding even if the tenant signed it.

As a landlord, you can create and use bespoke clauses; however, they need to be legal, fair and should not discriminate against current or potential tenants. The agreement as a whole must be clear and easy to understand.

Additionally, digital signatures can make it easier to ensure the tenancy agreement has been signed by all of the relevant parties.

These electronic signatures can also provide a solid trail, showing when it was signed and by what email and IP addresses. Each party involved in the tenancy should also be provided the signed agreement.

What happens when a fixed-term tenancy agreement expires?

Even if a fixed-term tenancy runs out, the agreement can still be legally binding. If the same tenants on the original contract are still living in the property, a periodic tenancy agreement is automatically created if a new assured shorthold tenancy agreement hasn’t been signed yet. The same conditions will apply from the previous contract; however, the periodic tenancy agreement will be rolling running week-to-week or month-to-month.

If no terms within the agreement have been breached, landlords can’t ask a tenant to leave until the end of the initial fixed-term, which is typically 6 or 12 months from the start of the tenancy. When reaching the end of an assured shorthold tenancy or during a periodic tenancy, the landlord is required to provide a tenant with at least two months’ notice to leave by issuing a Section 21 notice, and the tenant is required to provide a minimum of one month’s notice.

How a UK tenancy agreement can be terminated

A UK tenancy agreement can only be terminated by:

  • Mutual agreement from all parties
  • Tenant giving notice
  • Break clause conditions being met
  • Eviction
  • Landlord serving a Section 21 notice or using another legal route

A tenant can end a fixed-term tenancy early if the landlord agrees to it or if there’s a break clause allowing the tenant to do so. The tenancy agreement needs to state if there’s a break clause and if so, when it can be used, how much notice needs to be given and what are the conditions that need to be met.

Note: Section 21 Evictions Being Scrapped Late 2020 - The Latest Plans Landlords Need To Know

A simple tenancy agreement template to help ensure your contract is legal

If you are renting out your property without the help of a letting agent, you need to ensure you have a well-drafted tenancy agreement that is legally binding and legally compliant.

To ensure you have a legally binding tenancy agreement that protects both you and your tenant, we have drafted a simple, editable tenancy agreement template. Our template can help landlords reduce the chance of making any mistakes that could be made while drafting the legal document.

The impartially constructed template fairly documents the obligations and duties of both the tenant and private landlord. With secure digital signing and the ability to be customised with bespoke clauses, the simple tenancy agreement template costs £20 per tenancy.

For more information on our tenancy agreement template or our other low-cost online letting services, please give our team a call on 0207 099 4000!.

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