There are a number of clauses that some landlords may be keen to include in their agreements.
What should I be aware of when drafting my clauses?
There are a number of pieces of legislation that may restrict what you can insert into the tenancy agreement.
Unfair terms
Your drafted clauses will need to be considered fair and reasonable or will be unenforceable. Since October 2015, the Consumer Rights Act 2015 has been the basis for deciding what is unfair in contracts between tenants and landlords.
This Act considers an unfair term to be something likely to cause an imbalance of power which favours the landlord. Usually this will relate to clauses that remove or restrict a tenant's rights. For example, a clause that prevents a tenant from taking legal action in the event of a breach of the tenancy by the landlord may be considered unfair. Or a clause that restricts the tenant's right to serve a notice to quit in a periodic tenancy.
Similarly, a clause that is so broad that it captures ordinary activities that anyone would engage in are likely to be considered unfair. For example, a strict prohibition on bringing 'any flammable materials' or 'any pets' into the property would likely be considered unfair as they prevent tenants having a box of matches or a goldfish.
You will also need to be clear and open in what you mean with your clauses. A contract that is worded in such a way that it hides an obligation is likely to be considered unfair.
Schedule 2 of the Consumer Rights 2015 contains a number of terms that may be considered unfair that you may wish to check against.
Rent review
The NRLA AST continues as a contractual periodic tenancy. This means that landlords may increase the rent in one of two ways -
- through a rent review clause set out in the tenancy agreement
- through serving a section 13 notice if there is no rent review clause in the tenancy agreement.
To give landlords the opportunity to use their preferred option, the current NRLA AST does not include a rent increase clause as standard.
However, you can insert a rent review clause in the AST should you wish. You should bear in mind that once a rent review clause is in place, even if it is defective, then you cannot use a section 13 notice to increase the rent.
Sample fixed percentage rent review clause
Rent Increase
1 You agree that we may increase the rent by serving a rent review notice on you. The Rent may not increase by more than a maximum of 5% through any single rent review.
2 Any rent review notice we serve on you must be in writing. It must provide you with at least one calendar month in notice prior to the date of the rent increase taking effect. The notice must state the percentage by which the rent will increase, the new rental amount and the date on which the new Rent is payable from.
3 The initial rent increase may take effect no earlier than the first anniversary of the commencement of this Agreement. Until a rent increase takes effect we retain the right to increase the rent at the start of any subsequent rental period by serving a rent review notice.
Once a rent increase has occurred, subsequent rent increases may take effect no earlier than the anniversary of the date the last rent increase took effect.
Superior Lease clauses
The NRLA agreement contains provisions referring to complying with a potential superior lease. This applies where you are the leaseholder of a flat for example and you are obligated to comply with the leasehold covenants in your agreement (the superior lease) with the freeholder or superior landlord.
Provided you give your tenant a copy of the superior lease and can evidence the tenants have received it then they should be bound to comply with these obligations. For additional security however you may wish to add a clause confirming the tenants have received a copy of the superior lease as part of the tenancy agreement.
Superior Lease example
Superior Lease
You confirm that you received a copy of the Superior Lease referred to in this Agreement on <insert the date on which you gave the copy of the Superior Lease to your tenants>.
HMO licence conditions
The NRLA agreements for sharers (the room only agreement and the joint AST for sharers) already have conditions in them relating to the management of HMO properties. These management conditions apply to any property where 3 or more people live in it and at least two of them are unrelated.
However where your property is licensed under Part 2 of the Housing Act 2004 then you will have been given additional conditions as part of your mandatory or additional licence. To ensure your tenants comply with these conditions you should include something about the licence conditions in your tenancy agreement.
HMO licensing conditions clause for any licence
To ensure your tenants understand their obligations under the licence you should include the below clause as part of the addendum
This property is licensed under Part 2 of the Housing Act 2004. You and any Permitted Occupiers must comply with all of the conditions of the licence marked 'A' attached to this Agreement.
HMO licensing conditions for a licence issued on or after 1 October 2018 in England
As of 1 October 2018 in England, a mandatory or additional HMO licence is required to include conditions setting out the maximum number of occupants who may use a room as sleeping accommodation. This limit should be included in your agreement so your tenants understand exactly how many people may sleep in any one room.
Joint tenancy wording
The Property must not have more than ________ person/s living in the Property at one time.
In addition, the maximum number of people allowed to use each bedroom as sleeping accommodation is as follows:
Bedroom X may have no more than (one/two) person/s aged (over/under) 10 years old may use the Property as sleeping accommodation.
Bedroom Y may have no more than (one/two) person/s aged (over/under) 10 years old may use the Property as sleeping accommodation.
This clause does not give automatic permission to assign, sublet or allow a lodger to live in the Property without our written permission (which will not be unreasonably withheld).
Room only wording
No more than (one/two) person/s aged (over/under) 10 years old may use the Property as sleeping accommodation.
This clause does not give automatic permission to assign, sublet or allow a lodger to live in the Property without our written permission (which will not be unreasonably withheld).
Selective Licensing Clause
If your property is licensed under Part 3 of the Housing Act 2004 it will have a selective licence. These licenses apply to any properties in a specific area and do not apply exclusively to HMOs. They are increasingly common and typically set conditions relating to the management of anti-social behaviour.
To ensure your tenants are aware of their obligations under this licence then you should include a clause about the licence in your tenancy agreement.
Licence Conditions
This property is licensed under Part 3 of the Housing Act 2004. You and any Permitted Occupiers must comply with all of the conditions of the licence marked 'A' attached to this Agreement.
Break clauses
As a general rule, break clauses are best avoided as they are prone to misinterpretation and often ineffective when the landlord tries to enforce them. For that reason we do not include example wording here. Instead, it is recommended that your AST have a relatively short minimum term of six months. After that, your tenancy can continue to roll on monthly, allowing both parties to terminate the agreement by serving appropriate notice as set out in the agreement.
Where can I find more additional clauses?
The Government has produced a model assured shorthold tenancy agreement with a number of different clauses that can be reworked and added to your own agreement. The document includes sample wording for things like break clauses and reviewing the rent.
For more information please use the following link https://www.nrla.org.uk/resources/starting-a-tenancy/addendum-agreement