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Latest News Guide to the different types of tenancy agreements
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Guide to the different types of tenancy agreements

Guide to types of tenancies agreements

What is a tenancy agreement?

A tenancy agreement makes clear the rights and responsibilities of the landlord and the tenant when renting a property. Most tenancy agreements are written down and signed by both parties, but verbal agreements also provide rights to the tenant.

Most agreements will outline, among other things:

  • The length of the tenancy, and whether it’s fixed term or periodic (eg. running month-to-month)
  • The rent amount payable and how often it must be paid
  • What bills or services are included in the rent
  • How the tenancy can be ended
  • Who is responsible for repairs, maintenance and safety

There are, however, several different types of tenancy, and it’s important to know the differences – and what may suit you best if you are a landlord renting out a property.

We’ve broken the article down into the following sections so you can quickly find the information you need:

The difference between a tenancy and a licence

Most private property rentals in the UK are operated under a tenancy agreement, which we break down in detail in this article, but sometimes accommodation will be rented under a licence.

These are situations that fall short of the conditions required to form a tenancy, including where someone lodges with their landlord and shares part of the property with them, such as the kitchen and/or bathroom.

It can also apply to people staying in hostels, hotels, renting holiday cottages, or dog-sitting.

Renters will usually have less protection from eviction if they are occupying under a licence.

 

Types of tenancy agreement

Private tenancies

According to the Office for National Statistics (ONS), 4.5 million households in the UK were in the private rented sector in 2017, up from 2.8 million 10 years earlier.

Private tenancies are now the most common type of tenancy in the UK.

By far the most common type of tenancy agreement is an Assured Shorthold Tenancy (AST), but there are others, most notably an Assured Tenancy and a Regulated Tenancy.

The type of tenancy depends mainly on:

  • the date of moving in
  • who the tenant lives with
  • who the landlord is
  • the type of housing

Assured Shorthold Tenancy (AST)

Most new private tenancies in England are automatically ASTs, unless there are special circumstances surrounding the rental.

A tenancy can be an AST if all the following apply:

  • The property is rented from a private landlord
  • The landlord does not live in the property
  • The tenant has full control of the home
  • The tenancy originally started after January 15, 1989

It cannot be an AST if any of the following apply:

  • It began or was agreed before 15 January 1989
  • The rent is more than £100,000 a year, or less than £250 a year (£1,000 in London)
  • It’s a business let, council house, holiday let, university accommodation, or tenancy of licenced premises

Features of an Assured Shorthold Tenancy

An AST will always begin with a fixed term, usually either 6 or 12 months, which can only be ended during that period by a) mutually agreed termination, or b) a breach of the tenancy agreement by the tenant, which can lead to eviction under a Section 8 notice.

Most ASTs come with a written tenancy agreement but, in their absence, landlords must provide tenants with a written statement of the basic terms of the agreement on request, which includes:

  • The start date of tenancy
  • The rent payable and rent due date
  • Any rent review clause
  • The length of any fixed term agreement

The rent payable and other terms of the initial agreement, such as keeping pets, cannot be changed during the fixed term without both parties agreeing to it and either adding an addendum to the contract, or drawing up a new one.

This type of tenancy agreement provides very little protection against eviction for the tenant once the fixed term period has finished. At the end of the fixed term one of four things can happen:

  1. The landlord can reclaim their property having given sufficient notice for the tenant to arrange a new home
  2. The tenant can choose to leave the property, but may have to give notice
  3. A new fixed term contract can be agreed
  4. If none of the above, the tenancy automatically becomes a periodic tenancy

What is a periodic tenancy?

A periodic tenancy at the end of an AST automatically continues on a month-to-month basis, on the same terms as the previous agreement, for as long as both tenant and landlord are happy.

At any point during the periodic tenancy, the landlord can give two months’ notice of eviction by serving a Section 21 notice under the Housing Act 1988.

Rights and responsibilities

Landlords must protect any damage deposit taken in a government authorised deposit protection scheme.

The landlord has a number of responsibilities, including a duty to provide gas and electrical safety certificates, an energy performance certificate and, after October 1, 2015, a copy of the How to Rent Guide. They are also responsible for maintenance and repairs. Read our comprehensive guide to landlord responsibilities.

For their part, tenants have a duty to take reasonable care of the property on a day-to-day basis, and a right to peaceful enjoyment of the property, with landlord visits by appointment only.

Assured Tenancy

Assured tenancies give tenants long-term occupancy rights, and provide greater protection against eviction. They are usually offered by housing associations, sometimes after an initial 12-month starter tenancy.

As long as the tenant pays their rent and does not break the tenancy agreement, they are able to live in the property indefinitely.

They can also apply to tenancies from private landlords for tenancies starting between January 15, 1989 and February 27, 1997, or if the following is true:

  • The tenancy started before 1997 and the landlord didn’t give a notice stating it was an AST
  • The tenant was informed they were an assured tenant on writing before the start of the tenancy
  • The tenant has full control of the home and the landlord does not live with them
  • The tenant previously had an assured tenancy in the same accommodation with the same landlord

It cannot be an assured tenancy if it’s a commercial let, a holiday let, halls of residence, or where the rent is more than £100,000 a year.

To evict an assured tenant, the landlord must provide evidence to a court that the terms of the contract have been breached – such as two months or more rent arrears, or anti-social behaviour – and gain a possession order.

Tenants and landlords have the same rights and responsibilities as under AST, as these are enshrined in law.

After any initial fixed term period, the tenant can challenge any proposed rent increases by the landlord, the decision being taken by an external arbitration service based on current market rates. Tenants are protected from eviction during the process, and can continue to pay the previously agreed rent.

Assured tenancies can be transferred from one person to another, such as from a husband to a wife upon the former’s death.

Regulated Tenancy

Regulated tenancies were common prior to January 15, 1989, and provided long-term tenancy with private landlords. Regulated under the Rent Act 1977, tenants are entitled to a fair rent set by Valuation Office Agency rent officers. This is reviewed every two years.

Tenants may have a regulated tenancy if they had one and later signed a new tenancy agreement with the same landlord, even if it’s at a different address. Like ASTs and assured tenancies, tenants must have full control of the property and not live with the landlord. They are sometimes called protected tenancies or Rent Act tenancies.

Regulated tenancies provide strong protection against eviction, as landlords cannot use a Section 21 notice. Tenants can only be evicted if the landlord gets a court order, and be able to prove a legal reason for eviction, such as rent arrears, anti-social behaviour or another breach of the tenancy agreement.

A regulated tenancy can be passed on, or inherited by a member of the family or a partner who is living at the property when the tenant dies.

Subletting and lodgings

All of the examples covered so far are tenancies where the tenant is in sole control of the property – it is their home and theirs alone.

Now we’ll look at other types of tenancy, where this is not the case, and tenants either share the property with the landlord or another tenant.

Excluded tenancy

An excluded occupier is someone who shares part of the property with their landlord, or a member of the landlord’s family. For example, a lodger renting a room in a house but sharing the kitchen and bathroom.

Excluded tenancies can be for a fixed period or on periodic, month-to-month rolling basis, but they provide very little security for the tenant, or lodger, compared with an AST. For example, any deposits paid by excluded tenants are not covered by the government’s deposit protection rules.

If the tenant has a fixed-term contract, they have some degree of protection from eviction during the period of the term. Once this period is over, however, the landlord can serve the tenant a notice to quit at any point without having to seek a Section 21 notice or going to court.

The notice to quit period is usually the period of the rental payment, either a month or a week. After this time, the landlord can change the locks on the property, but must return any belongings left behind.

Occupier with basic protection

An occupier with basic protection shares the building with their landlord, but has exclusive occupation of their own accommodation and doesn’t share any areas other than stairs or storage facilities.

For example, the tenant may have the use of a house, but the landlord in a self-contained flat in the same building.

A student living in a halls of residence also has basic protection – which means basic protection from eviction.

They have more rights than excluded occupiers, and landlords must go through a full eviction procedure if they want a tenant removed. The landlord will have to serve a Section 21 notice, followed by a court order.

Deposits do not have to be protected in a government approved scheme.

Like an AST, the landlord must provide gas and electrical safety certificates, and ensure that all furniture provided meets fire regulations.

Subtenants

A subtenant is someone who rents from another tenant, rather than the original landlord of the property. Sometimes, a tenant will rent a property from a landlord and then sublet a room – or even the whole property – as long as they have permission to do so. The original tenant effectively becomes the landlord of the subtenant, and has the same legal responsibilities to them as any other landlord.

The type of subtenancy in place will depend on the living circumstances:

  • It will usually be an AST if the original tenant lives in a different property to the subtenant
  • An excluded tenancy if the subtenant is a lodger
  • An occupier with basic protection if the subtenant shares the property but has their own kitchen and bathroom

A subtenant’s security therefore very much depends on their situation, as eviction procedures follow those detailed above for all three types of tenancy.

They should always check with their immediate landlord – the original tenant – that they have permission to sublet. If not, and the original landlord finds out, both the original tenant and the subtenant can be evicted by court order for breach of the tenancy agreement. The landlord will need to first evict their original tenant. The subtenant may then be able to negotiate an agreement with the landlord.

Company let

If a landlord rents a property to a company, rather than a private individual, the tenancy cannot be an AST. Therefore, it is not governed by the same rules, such as deposit protection and eviction. A landlord can give a ‘notice to quit’ to end the tenancy without serving a Section 21 or Section 8 notice.

Employment-related tenancies

Sometimes, employers provide temporary accommodation to workers in order that they can carry out their job. The provision of accommodation will usually form part of their contract of employment.

Service occupier

Service occupiers are those whose accommodation is provided by their employer because:

  1. It allows them to better carry out their work duties; or
  2. It is essential to the performance of their duties

These are both tests in law to determine the status of “service occupier”.

Examples of a service occupier include:

  • Holiday reps in a resort, or hotel managers
  • Resident caretakers and groundskeepers
  • Live-in carers or nannies
  • Construction workers living close to a site

A service occupancy differs from a tenancy, because it is merely a temporary licence to occupy the property, which automatically expires as soon as the employment ends. Therefore, a service occupier has fewer rights than a tenant on an AST.

Responsibility for repair and maintenance, and the safety of gas and electricity, falls to the landlord / employer.

Agricultural occupier

Agricultural occupiers are farm workers who live in accommodation provided for them by their employer.

They may be protected either by the Housing Act 1988 (after January 1989) or the Rent (Agriculture) Act (before January 1989).

For protection under either Act to apply, a ‘qualifying worker’ must have worked in agriculture for  91 weeks out of the 104 immediately preceding weeks. Agriculture is defined as:

  • Dairy farming and the keeping and breeding of livestock
  • The production of any consumable produce that is grown for sale or for consumption (eg crops, market gardening and fruit growing)
  • The use of land as grazing, meadow or pasture land, or for use as an orchard
  • Forestry

Extensive guidance on agricultural occupancy can be found here.

 

Council tenancies

A council tenancy is where a tenant rents a house from a local authority, or a social landlord on the authority’s behalf.

Anyone over the age of 18 (16 for some councils) can apply for council housing, but councils decide who gets offered housing based on a ‘points’ or ‘banding’ system, with priority given to those who are homeless, live in cramped conditions, or have a medical condition made worse by their current housing.

Rents are typically lower than for an equivalent private letting.

Types of council tenancy

Introductory tenancy

Some councils run an introductory tenancy scheme, which usually run for 12 months and are like a ‘trial’ tenancy to see if a tenant is able to respect the rules of the tenancy agreement, such as paying their rent on time.

During this period, the council will find it easier to evict a tenant than if they are on a longer-term agreement. The council does not need to prove grounds for eviction to a court, merely identify reasonable factors, such as:

  • Unpaid rent or regular late payments
  • Anti-social behaviour or nuisance to neighbours
  • Causing damage to the property
  • Using the property for illegal activities, or as a place of business.

The council must provide one month’s notice of eviction, stating the reasons and how to appeal.

Introductory tenants cannot make major improvements to the property, swap the property with another council tenant, or apply to buy through the Right to Buy scheme. On satisfactory completion of the introductory period, the tenant will automatically become a secure or flexible tenant.

Secure tenancy

Under a secure council tenancy, tenants can normally live in the property for the rest of their lives, as long as they abide by the terms of the tenancy. Tenants will almost always have this sort of agreement once they have satisfactorily completed an introductory tenancy.

A secure tenancy provides strong protection against eviction. A council can evict tenants after giving notice and proving to a court that there is a legitimate reason for eviction, such as:

  • Rent arrears
  • Violent behaviour
  • Using the property for illegal activities, and other serious breaches of the tenancy agreement.

The council is responsible for all major repairs, including the structure of the building, heating, plumbing, sanitation, gas and electricity. Secure tenants can rent out rooms to lodgers with written permission from the council, but may lose housing benefit because of any extra income.

Other features of a secure tenancy:

  • Tenants can buy their property through the Right to Buy scheme, if they have been a public sector tenant for at least three years.
  • Tenancies can be inherited either to a partner or family member who was living in the property at the time of the tenant’s death.
  • Tenants have a duty to undertake day-to-day maintenance tasks, but can carry out improvements to the home – permission is required for some types of work.
  • Tenants may be able to swap their home with another council or housing association tenant with the council’s permission.

Flexible council tenancies

Flexible tenancies differ from secure or assured tenancies in that they are for a fixed period, usually for at least five years, but sometimes less. They became available from April 1, 2012.

At the end of the fixed period, the council can either offer another fixed term, offer a secure tenancy, or decline to offer a further tenancy at all.

The council must give their reasons in writing in a letter of “non renewal”, and tenants can challenge the decision. Councils must:

  • Give at least six months’ notice of termination
  • Give a 21 day period to request a review of the decision
  • Give two months’ notice of possession and obtain a possession order at that time

A council can, of course, instigate eviction proceedings for any of the reasons noted above where a tenant has breached the terms of the tenancy agreement.

As with secure tenants, flexible tenants can sublet rooms (but not the whole property), exercise their right to buy, swap with another council tenant, and transfer the tenancy in some circumstances.

Demoted tenancies

Demoted tenancies are given to tenants who have previously behaved in an antisocial manner, or previously breached the terms of their tenancy agreement. Councils will, effectively, demote such tenants and reduce their rights more inline with the status of an introductory tenancy.

A council must inform a tenant of their demoted status in writing, giving the reasons, the length of the demotion and their new rights and responsibilities. Normally, the demoted period will be on a trial basis of at least one year, with the tenancy reverting to a secure tenancy on completion of what amounts to a probationary period.

During the period of a demoted tenancy, councils can give four weeks’ notice of eviction, and don’t need to prove a legal reason for the eviction.

 

Types of agreement

Fixed term v periodic agreements

A fixed term agreement provides a certain level of security against eviction, assuming tenants comply with all aspects of the tenancy agreement. A periodic agreement, which can come into force at the end of a fixed term, and operates on a month-to-month basis, is less secure. At any point during the periodic tenancy, the landlord can give two months’ notice of eviction by serving a Section 21 notice under the Housing Act 1988.

Written agreements

Most tenancy agreements come with a written agreement, which sets out the terms under which the property is being let. It sets out in detail the rights and responsibilities of both tenant and landlord. A written agreement means it is clear if both sides are upholding their side of the bargain, and makes it easier to resolve disputes when they arise.

Verbal agreements

A verbal agreement still constitutes a contract in law,  but is much harder to enforce than a written agreement. In essence, once a landlord accepts rent from a tenant, then a verbal agreement is deemed to be in force, even if there is nothing in writing.

If a dispute went to the courts, there would be no written tenancy agreement as evidence, so this could result in one of the parties not getting the rights they believe were verbally agreed upon at the start of the tenancy. It is, therefore, in both parties’ best interests to have a written tenancy agreement.

If in a verbal agreement, the tenant should at least ask for a rent book, to prove what rent has been paid and when, and a statement of terms, setting out:

  • When the tenancy started
  • The rent payable, and when it is due
  • The term of the tenancy
  • Information on rent reviews

What is considered unfair terms in tenancy agreements?

An unfair term in a tenancy agreement is one that creates an imbalance between a landlord and a tenant, to the tenant’s detriment. On a basic level, all terms in a tenancy agreement must be written in plain English and not be open to interpretation.

Unfair terms is governed by two pieces of legislation, before and after October 1, 2015: the Consumer Rights Act 2015 and, previously, the Unfair Terms in Consumer Contracts Regulations 1999.

The Acts are not specifically aimed at tenancies, but they are included in its scope, and examples of an unfair term in relation to tenancies include:

  • Giving the landlord excessive right of entry for an illegitimate reason
  • Requiring rent to continue to be paid for an uninhabitable property
  • Attempting to limit the tenant’s right to serve a notice to quit

For more information on the rights and responsibilities of tenants and landlords, and other resources on renting a property, visit our landlord hub here.