Creating a Tenancy
Certain conditions must be met in order that a tenancy can be created. The main criterion is that the tenant has exclusive use of the accommodation. For example, if you are intending to let a room in your own home or require unrestricted access to the room then it is likely to be a licence to occupy, rather than a tenancy. Resident landlords cannot usually create an assured or an assured shorthold tenancy and so different rules and rights will apply to both the landlord and occupier. It is not necessary for you to share part of the dwelling with the occupier to be classed as a resident landlord. In some circumstances, merely living in the same building will be enough! For more information, obtain the free booklet Letting Rooms in Your Own Home - A Guide for Landlord and Tenants available from the Department of the Environment, Transport and the Regions (Tel: 0870 1207 405).
Assured and Assured Shorthold Tenancies
The shorthold type of tenancy provides the landlord and tenant with mutual benefits. The landlord has a greater degree of security and an easier means of regaining possession at the end of the fixed term. The tenant has a guaranteed period of occupation, providing they maintain rent payments and other tenancy commitments. The descriptions here refer only to tenancies starting after 28 February 1997.
Changes made by the Housing Act 1996 made the creation of an assured shorthold tenancy (AST) very simple and straightforward. In effect, it reversed the prior situation whereby notice had to be served in a prescribed form to create one. It is prudent for us to examine more closely what criteria must exist for an AST to be created and, importantly, what the difference is between the two types.
Assured Type
This is sometimes referred to as an 'ordinary' or 'full' assured tenancy. The tenant must receive a notice from the landlord stating that it is to be an assured tenancy before it begins. If no notice is issued, then it cannot be of this type. Ordinary assured tenants enjoy greater security of tenure. They can occupy the property for an undetermined period and the landlord can only regain possession if they satisfy the courts that certain 'grounds' exist. They have no automatic right to repossess the property just because the tenancy has come to an end. Tenants also have the right to apply for a rent assessment to be conducted and, once assessed, the landlord cannot charge more than the maximum determined.
Assured Shorthold Type
These exist for a fixed period. The tenant does not enjoy indefinite security of tenure. Tenants can apply for a rent assessment during the initial fixed term. Landlords can regain possession of their property at the end of the fixed term or, if the term is less than six months, after six months from the start of tenancy providing appropriate notice is issued to the tenant. If that seems very complicated, don't worry, it will be explained in more detail later. For now it is enough to understand that an AST gives the landlord greater legal powers to obtain possession of the property at the end of the tenancy term. The tenancy cannot be an assured shorthold if:
- It is a business letting.
- It is a holiday let.
- It is not the tenant's only or main residence.
- The landlord is classed as a resident landlord.
- The tenancy began before 15 January 1989.
- The tenant is not an individual (this does not exclude joint-tenants).
- There is no rent charged or the rent is less than two thirds of the rateable value of the property or is £250 or less a year (£1,000 or less in Greater London).
- The rent charged exceeds £25,000 per year.
- It includes agricultural land of two acres or more or is an agricultural holding.
- The premises are licensed to sell or consume alcohol.
- It is not being let as a separate dwelling.
- The landlord is an educational body, the Crown or a government department, a local authority, housing action trust, or one of several other statutory bodies or a mutual housing association.
- It fails to meet the criteria and definitions laid down in the Housing Act 1988 (as amended by the Housing Act 1996).
