Common law tenancy agreement with service charge

What is a common law residential tenancy agreement?

Most residential properties are let under assured shorthold tenancy agreements. An AST gives the tenant strong rights, particularly in respect to security of tenure - the right to stay in the property after the fixed term has ended.

However, some tenancies fall outside of the scope of the Housing Acts and therefore do not have to be assured shorthold tenancies or assured tenancies. Instead, contractual common law applies. The landlord's and the tenant's obligations depend on the terms written into the contract and not statutory law.

When to use a contractual (common law) tenancy agreement

This document is most likely to be used where the annual rent of the property is more than £100,000 (or greater than £8,333.33 per month if the term is for less than a year). That rent is one of the criteria that disqualifies the property from being let under an AST. As such this agreement also includes full provision for a service charge: defining what services are included, how the charge is to be calculated, and the basis of accounts. It also includes the clauses needed to bring in a guarantor. Both the service charge and the guarantor are optional.

Other circumstances where a common law tenancy agreement might be used include where:

• the tenant is not using the property as their only or principal home or main residence (for a holiday property, use our holiday house letting agreement, not this document)
• the rent payable is less than £250 per annum
• the rent payable is less than £1,000 per year and the property is in Greater London
• the dwelling-house comprises premises licensed for the sale of intoxicating liquors for consumption on the premises (e.g. a flat that shares an entrance with a pub)
• the landlord is a resident landlord as defined in Schedule 1 Housing Act 1988
• agricultural land of more than two acres is let with the property

Unfair terms

This agreement has been carefully written so that no term would be considered unfair.

For common law tenancies, the landlord can add terms that would not be enforceable in an assured shorthold tenancy agreement such as payment for services, but if added, you should make sure that they wouldn't be considered unfair.

UInfair terms might include the landlord's right to enter the property at any time without notice (removing the tenant's right to quiet occupation), forcing the tenant to pay for any damages caused by the negligence of the landlord or (in a multi-tenanted building) making one tenant responsible for maintenance of common parts.

Ending the tenancy

Technically, the agreement is for a fixed term tenancy - the tenancy ends on the date specified in the contract. The landlord does not have to give notice to quit to the tenant, but it would be recommended as good practice to remind the tenant of the date of the end of the tenancy in advance (and as a means of starting negotiations of a new tenancy).

If there are problems during the tenancy (that have been provided for in the agreement), then the landlord can give notice for breach of contract. One of the grounds for eviction specified in the Housing Acts does not have to be used.

The Protection from Eviction Act 1977 does apply. If common law tenants refuse to leave, a court order will be required to evict them from the property.

Contents

Here are some of the most important provisions in this common law tenancy agreement template:

• Guarantor
• Provision for the property to managed by an agent
• Rent deposit provisions (which are not controlled by statute law)
• Landlord's access - to view or show prospective lenders or buyers
• Draft form of inventory (provided in the document, with explanatory notes on how to use)
• Full service charge provision (such as for maintenance, associated services on-site and for council tax payable by the landlord)

Covenants

Every let requires different terms. We give you a menu of over 40 items of control provisions (covenants) to protect your property as you would like. You can select what you want and easily delete the rest. Of course, you can also choose to keep in or take out standard terms such as a provision for guarantor and provision to use a separate managing agent.

Drafting guidance notes

Extensive drafting notes explain each point and how to edit the document.

Alternative documents

Another situation where a common law tenancy agreement should be used is where the tenant is a company that rents the property to house employees. In this situation, use a company letting agreement instead.