How To Sign Up A New Tenant & Create A Legal Tenancy Agreement

We’re all starting to rely more and more on automated and online services, and the process of finding tenants certainly hasn’t escaped the transition into the new digital world. It’s never been easier to quickly throw up a rental advert on Rightmove to generate a buttload of tenant enquiries. All it takes is a few clicks of a button and off we go. Weeeeeeeee!

But this revelation isn’t surprising or anything new. Generally, most landlords that’s embraced a smartphone or a tablet has come to grips with the idea of using an online letting agency to help generate their own tenant enquiries, which subsequently saves a shitload of money on agent fees.

So while finding tenants without an agent is relatively straightforward, the bit that comes afterwards is still unclear for many, which might explain why so many landlords are still on the fence about using online agents. I’m talking about the steps that come after receiving the enquiries and taking the viewings.

What next?

What about all the legal paperwork?

How do I actually create a tenancy agreement?

Yup, many landlords get dizzy and feel overwhelmed at this point. Don’t get me wrong, I get it! Anything with the word ‘legal’ can seem rather menacing.

The good news is, those demons are mostly like all other demons, and that is… fictional. But the reality is, creating a legally binding tenancy agreement is a piece of cake. In fact, many landlords do it without even realising it (not in a good way, though! More on that shortly…).

Before signing up a new tenant! The Legal requirements…

To clarify, this blog post is NOT about complying with your landlord legal obligations, this is about how to sign up a tenant by creating a legally binding tenancy agreement.

If you want to go back to basics (I say “basics” because you should know your legal obligations before even thinking about signing up a new tenant), you can hop over to the legal guide for landlords.

How to sign up a new tenant / Creating a legally binding contract

Ok, it’s really easy; far easier than people realise.

Actually, it’s too easy, and that’s why many landlords and tenants do it unknowingly…

Verbal Tenancy Agreements

This is what many landlords and tenants don’t realise…

You can verbally create a legally binding tenancy agreement. In theory, if a landlord gives verbal permission for a tenant to live in their property and then hands over the keys to the premises, a legal tenancy is created, and the tenant and landlord will both be protected by their statutory rights. No more, no less.

That’s why it’s silly/inaccurate when a landlord or tenant claims that there is no tenancy agreement because there is no physical contract.

Of course, you’d have to be an absolute idiot to create a verbal tenancy agreement. But obviously, momma’ didn’t raise no fool, so you’re not going to do that, right?

Creating a written Tenancy Agreements

There isn’t a trick or special ceremonial procedure required to create a valid and legally binding written tenancy agreement. Despite popular belief, you don’t need a solicitor or any form of legal specialist, nor do you need to sacrifice a goat.

Tenancy agreement templates/contracts are easily available online; once a contract is signed by all parties (tenant, landlord and optionally a witness), a legally binding tenancy is created. Most contracts will set out an agreed rent price, property details, the duration and dates of the tenancy, and the other general terms and conditions of the tenancy.

Yup, it’s really that simple: find a template tenancy agreement and get it signed. Done! Legally binding tenancy agreement created.

However, that’s not to say there aren’t crucial aspects of creating a tenancy agreement that you need to be wary of. As with everything, there are sensible and God awful ways of doing it! So here are a couple of tips/points…

• Make sure you source your tenancy agreement from a reputable supplier, and don’t just use the first free one you get can your grubby little mitts on. Many of the tenancy agreement templates I’ve seen circulating are either out of date and/or riddled with junk clauses which aren’t enforceable by law.

  But please note, invalid clauses won’t make the actual tenancy invalid, it just means those certain clauses won’t be legally enforceable. For example, if a clause in the contract stipulates that the tenant has to pay a £1,000 penalty for being one day late on paying rent, it is very unlikely to be enforceable by law, regardless of who signed what.

• It’s important to read through the contract carefully before offering it to your tenant (I’m often amazed at how many landlords don’t do this. Truly baffling!). If there are any clauses that seem unfair, inaccurate or you’re unsure about, you should seek advice from someone qualified to get clarification.
• Don’t just add your own clauses willy-nilly, because the odds are it won’t be valid, and therefore enforceable. If you want to add your own clauses, seek advice from someone qualified to ensure it’s valid/fair.

  Landlords/agents adding their own home-cooked clauses is probably the number one reason for why many circulating tenancy agreement contracts are riddled with invalid clauses, and those clauses usually just get superseded by statutory rights (which can’t be overruled). For example, some landlords commonly add a clause stipulating that the tenant must give 6 months notice before vacating. That’s actually unenforceable, because in most cases, it’s the tenant’s statutory right to provide only a minimum of one months’ notice.

• Many letting agents (not all) use copy and paste contracts, which are total junk and ill-suited. Buyer beware (if you go down the agent route, that is)
• Here you go, a link to some decent tenancy agreements.

Using a high-street agent to handle your tenancy agreement

Of course, you can opt to instruct a reputable high-street letting agent to sign a tenant up for you, but as you’d expect, you’ll probably be paying through the ass for it, because you’ll be charged a ‘tenant find fee’, which includes advertising and finding a tenant, plus paperwork to get them moved in.

However, a good agent will create a valid and tailored contract for you, and go through every clause.

Another thing you need to be extremely wary of is that you’ll most likely be shafted by continuous tenancy renewal fees if you use your local agent to sign up your tenants! That essentially means the tenant will ALWAYS be their client, so you’ll need to pay ongoing fees every time the tenancy is renewed with the same tenants.

Yup, it can all be rather expensive.

Signing up Tenants ‘for less’ by Professionals

Alternatively, if you would prefer to have an expert handle the legal paperwork on your behalf (which I totally get), but don’t want to be subjected to extortionate rates, you can pay a smaller fixed-fee for a specialist ‘tenancy sign-up service’ by using an online letting agent. Yes, the beauty of online agents is that they operate on one off fixed-fees and don’t enforce reoccurring tenancy renewal fees!

So, are we all clear? Signing up a new tenant and creating a legally binding tenancy agreement is easy. Anyone can do it, even the donkey in the mirror!