The Tenancy Agreement

Since 1998 The Assured Shorthold Tenancy (AST) Agreement has been the automatic or default form of tenancy for most residential tenancies. The most important aspect of this type of tenancy is that the Landlord has a right to get his property back at the end of the tenancy.
Despite its name an AST does not have to be particularly short, since 1997 it can be for as long as the Landlord wishes to grant. Neither is there a minimum term although the tenant does have the right to remain at the property for at least 6 months’.

If the fixed term of the AST is to exceed three years the agreement must be drawn up by deed. The services of a solicitor are required for this task.

Who is an AST suitable for?

There are some important requirements for ASTs. The key requirements are:

The tenant must be an individual (as opposed to a company)
The dwelling must be let as separate accommodation
The dwelling must be the tenant's main or principal home
There are also some exclusions (i.e. tenancies that cannot be assured shorthold):

Company lets
Lettings at no rent, low rent or high rent (over £25,000 per annum)
Holiday lets
Tenancies granted by a resident landlord (a landlord who lives in the same property as the tenant)
Tenancies of property let with more than two acres of agricultural land, or an agricultural tenancy.
Tenancies entered into before 15 January 1989, or a tenancy that was previously a protected tenancy.
Terminating an AST

The Landlord is obliged to serve 2 months’ notice (known as a section 21) if they wish to terminate an AST. The notice can be served at anytime during the fixed term but should not be dated to expire before the end of the fixed term. The tenant is not required to serve notice during the fixed term (apart from under the terms of a break clause) as it is assumed that if they are given notice or do not choose to renew they will leave at the end of the tenancy.

Periodic Tenancies

If no notice is served and the tenant remains at the property beyond the end of the fixed term the tenancy becomes “periodic”. Periodic means that there is no fixed term but rather continuous periods, those periods being defined by the time between rental payments.

The Landlord is still required to serve two months’ notice during a periodic tenancy but the expiry of the notice must coincide with the end of a period.

Break clauses

A break clause gives the Landlord or tenant an option to give notice (usually 2 months) during the fixed term of the tenancy. Although notice under a break clause can be given at anytime during the fixed term the tenant’s statutory right to remain at the property for a minimum of 6 months means that they are normally put in to give both the Landlord and tenant some flexibility after the initial 6 months’. Letting agents favour break clauses as they can use them to get a 12 month fee up front even if the tenant only intends to stay for 6 months’.