How to ensure your tenancy agreements are fair and meet your legal obligations

28 August 2019

Letting agents need to be aware of their legal obligations around supplying prospective tenants with a copy of the agreement, and explaining what it means.

It's important that letting agents are aware of their obligations when it comes to tenancy agreements and Consumer Protection Law, which includes supplying prospective tenants with a copy of the agreement in advance of signing, explaining what the agreement contains, and ensuring that it doesn't contain any unfair terms.

When do you need to give prospective tenants a copy of the tenancy agreement?

You need to provide prospective tenants with a copy of the tenancy agreement before you take a tenancy deposit, according to the guidance from the Competition & Markets Authority (CMA). The reason you need to do this is to ensure that tenants have enough time to familiarise themselves with the agreement and decide if they’re happy with their obligations before signing it or paying any money in relation to it. The CMA notes that letting agents should not place prospective tenants under any undue pressure to pay a deposit before they have been given the opportunity to review the tenancy agreement.

What do you need to explain to the tenants about the tenancy agreement? 

You should highlight any terms that are likely to be surprising or are unusually onerous before they sign the agreement. The CMA says that tenants are likely to assume that the “small print” is standard, which means any unusual clauses (for example, to do with restrictions on use or treatment of the property) may take them by surprise unless they have been specifically brought to their attention. It could also be considered a misleading omission if you fail to inform prospective tenants of any important obligations under the tenancy agreement. It’s also recommended that you explain how either party can end the tenancy.

How should tenancy agreements be worded?

Under the Unfair Terms in Consumer Contracts Regulations 1999, all contract terms must be written in plain English, which means they must clearly set out the tenant’s rights and obligations. You shouldn’t use property-specific terminology without an explanation - even if that term would be clear to a lettings agent, because it could be considered unfair or misleading if the tenant is unlikely to understand it. 

The terms of any agreement should be fair, which means the letting agent shouldn’t - whether deliberately or unconsciously -  take advantage of the tenant’s weaker bargaining position, including his or her needs, lack of resources, lack of experience or unfamiliarity with the subject matter of the contract. Unfair terms are not binding on the tenant and shouldn’t be included in a contract  - for example, fees that are banned under the Tenant Fees Act or a requirement to have a property professionally cleaned at the end of a tenancy.

It's important to note that this article isn't exhaustive and doesn't constitute legal advice. See the Competition & Market Authority’s guidance for letting professionals for more information. 

Further reading