28^th April 2022

What are the different types of tenancy?

The key to a harmonious relationship between landlord and tenant is a clearly worded written tenancy agreement. But how many different types of tenancy are there, and what does each type entail?

Fundamentally, any tenancy agreement will lay out the precise terms of the tenancy, so it benefits both parties. The landlord is committing to deliver the terms of the tenancy, while the tenant knows exactly what to expect and can hold the landlord to account if they fall short in any area.

In essence, there are six types of tenancy:

• assured short-hold tenancy (AST)
• excluded tenancy
• assured tenancy
• non-assured tenancy
• regulated tenancy
• company let

Assured short-hold tenancy
The most popular type of tenancy is the first in the list – the assured short-hold tenancy – and by default most tenancies end up in this format. To qualify as an AST, the property must be let privately after 1989 – not as commercial premises – and must be the tenant’s main accommodation. In addition, the landlord will most likely live elsewhere, although it is possible to use an AST if you live in the property but let out rooms individually and offer shared amenities. However, you can’t use an AST if you’re charging either a very high or very low rent, or even no rent at all, or if it’s actually a holiday let.

Most ASTs run for six or 12 months and the rent must stay constant throughout the tenancy period unless the tenant agrees to a rise or you’ve included a rent review clause in the agreement. The tenant’s deposit must be protected in a government-approved deposit protection scheme. When the specified fixed term comes to an end the agreement can either be renewed for a further fixed term if both parties agree, or it will revert to a rolling contract known as a periodic arrangement. The type of periodic arrangement will depend on whether the AST specifies it as a contractual or statutory tenancy. Once a tenancy moves to this arrangement, rent increases should be undertaken either with the agreement of both parties or by formal notice from the landlord under Section 13 of the Housing Act 1988.

Excluded tenancy
In most cases, the agreement will be classed as an excluded tenancy if you also occupy the property and share the facilities with a lodger. An excluded tenancy doesn’t protect the lodger to the same degree as an assured short-hold tenancy does a tenant. Significantly, the landlord isn’t compelled to protect the deposit in a government scheme, and the tenant can be evicted with only four weeks’ notice.

Assured tenancy
Assured tenancies are often used by Housing Associations because they offer tenants long-term rights and were most prevalent between 1989 and 1997.

Non-assured tenancy
You can only use a non-assured tenancy in certain circumstances where the assured equivalent isn’t possible. This might be because you’re charging less than £250 per year in rent, the tenant lives elsewhere most of the time or if you live with the tenant but don’t share amenities. You’re not required to protect the deposit in a government-backed scheme and you don’t need to issue a Section 21 or Section 8 Notice to end the tenancy. It’s worth noting, though, that it’s within the tenant’s rights to remain in the property providing they observe the terms of the tenancy agreement.

Regulated tenancy
Regulated tenancies were almost entirely phased out in 1989. They were long-term tenancies offering tenants a ‘fair’ rent which was set by the Valuation Office Agency.

Company let
A company let comes into play if you’ve decided to rent your property to a company rather than to an individual tenant. As it isn’t an assured short-hold tenancy, this type of agreement isn’t covered by the same rules around eviction and deposit protection, meaning that you can issue a ‘notice to quit’ to bring the tenancy to an end instead of serving a Section 21 or Section 8 Notice.

When it comes to tenancy agreements, Andrew Ward, owner of Award Property Management, believes in keeping things simple. ‘Our objective at Award is to ensure that both landlord and tenant are afforded protection as that leads to the best long-term relationships,’ comments Andrew. ‘As a result, the vast majority of our agreements are assured short-hold tenancies, apart from the small number of company lets we’ve arranged. These latter are on specific agreements more in the form of a licence. With assured short-hold tenancies we’re able to ensure that all the terms are clearly laid out and – most importantly – that the tenant understands what’s expected of them, when they need to give notice and where and how their deposit is protected.’

Award Property Management are letting agents in Cambridge. If you need any help and advice on how to rent your property, please get in touch.