How to ensure tenancy agreement terms are fair and transparent

The two principles that steer the landlord/tenant/agent relationship

When writing a tenancy agreement, two principles must be followed by a letting agent or investment property manager: the conditions included must be fair, and the financial terms must be transparent. In this article, you’ll learn what this means and how you can ensure that your tenancy agreement meets the need to be fair and transparent.

What are unfair terms?

Fairness of terms in a tenancy agreement come under consumer law in the UK. There are reams of documents and guidance explaining and detailing unfair terms (some specific to residential tenancy agreements), but, ultimately, fairness can only be decided in the court.

Potentially, all clauses in any contract could be considered as unfair except those that relate directly to legislation. To avoid clauses being unfair, they should be written in plain English and easy to understand. They should also represent a balance between landlord and tenant.

Examples of terms that may be deemed to be unfair

When deciding whether a term is fair or unfair, you should consider whether it is fair and reasonable. To do so, ask questions such as:

  • Could this term cause undue stress to the tenant?
  • Are the financial penalties imposed reasonably?
  • Does the term allow the tenant to live in the property as if it were their own home (which it is)?

Examples of potentially unfair terms include:

  • Excessive penalties for late payment of rent
  • The requirement for the tenant to carry out maintenance that is the landlord’s responsibility
  • The landlord can enter the property at any time, without giving notice
  • Requiring the tenant to carry out unreasonable tasks, such as delivering the landlord’s mail by hand
  • The property must be returned in a better state than when first rented

Terms must be transparent

The need for transparency in the financial terms of a tenancy means that the investment property manager must be open and honest about all charges and fees that may be levied on either the landlord or the tenant. You’ll find that we display all these fees on our website and in our offices. These include:

  • Fees that we charge to landlords
  • Fees that we charge to tenants
  • The redress scheme to which we belong
  • The client money protection scheme we use

When must an investment property manager tell you their fees?

An investment property manager must tell tenants and landlords of all fees and potential fees at the earliest opportunity, and they must be quoted inclusive of VAT. Tenants and landlords must be made aware of all fees before signing any agreement – if they’re not, the agreement could be considered to be illegal in its entirety.

In summary

Tenancy agreements must strike a balance between the needs of the landlord and the needs of a tenant. While landlords need to be protected by the tenancy agreement, so do tenants. Actually, striking this balance is in the interest of the landlord, and the tenancy agreement should be seen as the foundation for a good, long-lasting landlord/tenant relationship.

A good tenancy agreement will remove all ambiguity, assure the tenant that the landlord will treat them with respect, and provide fair and reasonable terms under which the right to live in a property as a home is exchanged for money. Additionally, it is obligatory for landlords and tenants to be fully informed about all fees and charges before signing the tenancy agreement (or other contracts) – if this is not the case, a financial upset could destroy trust and that important landlord/tenant/agent relationship.

Don’t leave your tenancy agreement to chance. For effortless property management, contact Ezytrac today on  +44 0 1522 503 717.

Live with passion,

Brett Alegre-Wood

By | 2018-10-15T02:52:05+00:00 October 29th, 2018|Landlord lessons, Property Management, Tenant Management|0 Comments

About the Author:

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Ezytrac. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids. Brett holds both the Level 3 Property Mark Qualifications for Property Sales and Property Lettings and Management.