On the commencement date of the act, i.e., when the bill comes into force, all existing tenancies will become periodic and any fixed term will cease to apply.
Any attempt to create a fixed term tenancy agreement after the act comes into effect will have no legal effect.
Landlords must give a rent period which in most cases will be monthly if rent is paid per calendar month – this cannot exceed 28 days so a monthly rental period would be the best approach for landlords to adopt.
Any attempt to create a ‘period’ longer than one month will have no legal bearing. Instead, it will apply as if it provided for monthly periods, with the rent payable on the first day of each month on a pro-rata basis.
The proposals for how new tenancy agreements will work in practice are set out in the bill.
Any new tenancy agreements will need to include the necessary information to allow landlords to use the new and/or amended grounds for possession and these must be given to the tenant before the tenancy is entered into i.e., the tenant should receive a copy of the tenancy agreement to consider and sign before the commencement date.
What about tenancy agreement terms?
Many of the standard/current tenancy agreement terms should remain. However, there will be no end date as there will no longer be any fixed terms – the tenancy agreement will have the start date and the ‘period’ of the tenancy (normally this will be monthly).
Some of the terms that landlords adopt in current assured shorthold tenancy agreements relating to rent reviews, rent payable in advance and clauses prescribing how or when the tenants can serve a notice to quit will no longer have any effect.
It is expected that the government will publish prescribed terms which must be included – this will likely be in form of a ‘written statement’. We don’t know what these are yet, but it has been confirmed that the prescribed terms will include a statement setting out the duty on landlords under the Equality Act 2010 along with other required terms.
What happens once the act comes into force?
Once the act comes into force, there will be no need to issue new tenancy agreements to existing tenancies so long as the prescribed form is served within the time limit. This can be served as a separate document. The time limit for serving this once the act comes into force is not yet known however, it is expected that landlords will be given a transition period to action this.
For landlords who are entering into new tenancies, they should not use current tenancy agreement templates as these will not be compliant and may leave landlords vulnerable to fines.
Failure to comply
Landlords who fail to provide the written statement, which include the prescribed terms or purport to let a property on a fixed term may be liable for a financial penalty of up to £7,000.
Should you need any further advice on landlord and tenant law or advice/drafting of new tenancy agreements please contact our specialist solicitors on 01616 966 229 or complete our online enquiry form.
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