Many landlords think that it’s all a matter of choosing the right tenants. But it’s not uncommon to hear stories about landlords getting into a wide range of problems even though their tenants have passed the screening process. In most cases, the reason behind these problems is the lack of a rental agreement. It’s so tempting to take shortcuts and just let tenants rent the property without any written contract.
What is a Letting Agreement?
A letting agreement, also referred to as a tenancy agreement, refers to a legally binding document that grants the right to the landlord to receive rent and the right to the tenant to live in the property. The majority of landlords take the time to prepare this document, but there are those who choose not to go through the trouble, thinking that it’s an unnecessary expense.
Many landlords decide to create a letting agreement without the guidance of a legal professional. Their primary goal is to save money on legal fees. If budget is an issue, however, it’s worth looking into legal document templates. For instance, Net Lawman offers templates and sample agreements, allowing you to select the right type of agreement depending on your unique requirements. After filling in the details, the document runs past their team of property lawyers so you can ensure that it’s done properly.
Why is a Tenancy Agreement Important?
Preparing an agreement for your renters offers several benefits. Firstly, it shows that you’re serious about your role as their landlord. It creates a good first impression as this document serves as proof that you care for both the tenants and the rental property.
The agreement also includes a list of things the tenant cannot do. Can they keep pets? Are certain parts of the property off-limits? Do they have the right to sublet the property? These things can be made clear in the letting agreement so misunderstandings in the future are prevented.
Of course, you should also be aware of the legal reasons to use a tenancy agreement. If you’re like most landlords, then you will ask for a deposit from the tenant. In this case, a written contract is absolutely necessary.
A letting agreement is also required in case you want to issue section 21 accelerated possession procedure.
What to Include in the Agreement?
The details to be included vary depending on the type of letting agreement you need. In general, however, the following information should be found in the document:
Tenant’s contact information
Mode of payment
Proposed term of the tenancy
Rights and obligations of the tenant and landlord
Forfeiture clause to gain possession of the rental property in case the tenant is at fault
Special arrangements such as setting rules or boundaries
Finally, be sure that the document is legally binding and updated. Preparing this document usually goes beyond the knowledge and experience of most landlords. It pays to work with a letting agent to help create the agreement or use an updated sample agreement to serve as your guide.