Types of tenancies: a guide for tenants

For tenants it is important to understand the different types of tenancy agreements available. A tenancy agreement, whether written or verbal, outlines the terms between a landlord and a tenant, ensuring both parties are clear about their responsibilities. Here’s a detailed overview of the various types of tenancies you might encounter.

What Different Tenancy Periods Are There?

The two primary types of tenancy periods are:

  • Fixed-Term Tenancy: these run for a specified period, such as six months or a year.
  • Periodic Tenancy: continue on a rolling basis, either week-by-week or month-by-month, after a fixed-term ends.

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Fixed-Term Tenancy Agreements

A fixed-term tenancy agreement is set for a defined period, typically six or 12 months, though there is no maximum duration. The agreed length must be specified in the tenancy agreement, and if it exceeds three years, the agreement must be signed as a deed.

Some key points to note about fixed-term tenancies include:

  • Ending the Tenancy: You cannot terminate a fixed-term tenancy early unless there is a break clause in the agreement.
  • Moving to a Periodic Tenancy: Once the fixed term ends, the tenancy automatically becomes periodic unless notice is given.

Periodic Tenancy Agreements

A periodic tenancy continues indefinitely on a weekly or monthly basis until either the landlord or the tenant provides written notice to terminate it. All fixed-term tenancies become periodic if the tenant stays in the property without signing a new agreement.

Assured Tenancies

Assured tenancies, which allow tenants to live in a property for life, are rare today. They typically apply to tenancies starting between 15 January 1989 and 27 February 1997, or later if specific conditions are met, such as receiving a written notice of an assured tenancy from the landlord. Assured tenants enjoy significant protection from eviction.

Assured Shorthold Tenancies (AST)

The most common type of tenancy, ASTs, are governed by the Housing Act 1988. They apply to most residential tenancies that meet the following criteria:

  • The property is privately owned.
  • The tenancy started after 1989.
  • The property is the tenant’s main residence.
  • The landlord does not live in the property.

Key features of ASTs include:

  • Fixed Term: Typically, the initial fixed term is six or twelve months.
  • Deposit Protection: By law, any deposit must be registered with a government-approved protection scheme.
  • Rent Reviews: Rent cannot be increased during the fixed term unless agreed upon or stipulated in a rent review clause.

After the fixed term expires, an AST can either be renewed with a new contract or become a statutory periodic tenancy.

Non-Assured Shorthold Tenancies

Non-assured shorthold tenancies are used in specific circumstances where an AST is not applicable. Examples include:

  • Rent exceeds £100,000 per year.
  • The tenant has a primary residence elsewhere.
  • The landlord lives in the property but does not share facilities with the tenant.
  • In these cases, landlords are not required to use a deposit protection scheme, and eviction procedures differ from those of ASTs.

Excluded Tenancies

Excluded tenancies apply when a landlord has a lodger sharing their home, or if someone is living rent-free with family or friends. These tenancies offer less eviction protection but still come with basic rights.​

Company Lets

Company lets involve a business renting a property to house employees or equipment. This type of tenancy is governed largely by common law rather than the Housing Act 1988, which applies to individual landlords and tenants.

Regulated Tenancies

Regulated tenancies, governed by the Rent Act 1977, are now rare and typically apply to agreements made before 15 January 1989. They offer long-term security and often feature below-market rent levels.

Statutory/Rolling Tenancies

When a fixed-term tenancy expires and no new contract is signed, the agreement becomes a statutory periodic tenancy. This arrangement continues on a month-by-month basis (or other regular periods) until either party decides to end it through proper legal channels.

Choosing the Right Tenancy Agreement

Understanding the different types of tenancies helps both landlords and tenants make informed decisions. Key considerations for tenants include:

  • The start and end dates.
  • The landlord’s details.
  • Rent amount, payment schedule, and potential for rent reviews.
  • Deposit protection details.
  • Responsibility for utility bills and maintenance.
  • For landlords, keeping up-to-date with the latest legislation is crucial to ensuring compliance and supporting tenants effectively.

Creating a Tenancy Agreement

Drafting a tenancy agreement involves ensuring all necessary details are included, from basic terms to specific clauses about rent reviews and deposit protection. Both parties should understand their rights and obligations to avoid disputes.

We are here to help

If you have any questions or need assistance with tenancy agreements, we are here to help at Darlows. Our team of professionals can provide guidance on all aspects of renting properties in South Wales and Cardiff. Contact us today for expert advice.