Picking the right tenancy agreement type is crucial as it is a legal document determining the terms and conditions and rights and obligations of both landlords and tenants. It includes if the rent can be increased, the tenancy duration, who is responsible for repairs, and much more.

Explore the most common types of tenancy agreements used in the UK by private landlords to understand which option is the best for you.

Types of tenancy agreements

As a private landlord in the UK, these are the 2 most common types of tenancies that provide landlords with the most flexibility and protection.

1. Assured shorthold tenancy (AST)
2. Excluded

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Other types of tenancy agreements that private landlords can use are assured tenancy, non-assured tenancy, regulated tenancy, and company let.

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Regardless of which type of tenancy agreement you choose, you’ll also need to consider the tenancy period:fixed-term or periodic

• A fixed-term tenancy is most common, typically lasting between 6 to 12 months.
• A periodic tenancy usually runs monthly or weekly. It is set at the outset or automatically kicks in after the fixed-term tenancy ends.

Assured shorthold tenancy

The assured shorthold tenancy (AST) is the default type of tenancy agreement in the UK; it offers landlords security and flexibility as they can freely determine the rent and claim the right of possession even if the tenant has no fault.

An AST can be issued when:

• The property is rented for private, residential use, not commercial purposes.
• You rent out the entire apartment or rooms in a shared house, where each tenant has their own tenancy agreement.
• Only the tenant(s) resides in the property as their primary residence.
• The tenant(s) is charged an annual rent of above £250 (£1,000 in London) and below £100,000.
• The tenancy began on or after 28th February 1997.

Assured shorthold tenancy features

Most assured shorthold tenancy agreements are issued for a fixed-term of 6–12 months. After that, you can either offer another fixed-term contract or the tenancy will automatically roll into a periodic tenancy.

During the tenancy, you may add new terms, such as rent increase, with a mutual agreement or if there’s a rent review clause in the agreement.

Assured shorthold tenancy agreement for flatmates

When letting an apartment with shared facilities to multiple tenants, you can give them a sole or joint assured shorthold tenancy agreement. Each type comes with its own set of rules regarding who is liable and terminating the tenancy.

A joint tenancy is an assured shorthold tenancy agreement where all tenants sign a single contract. The tenants are then jointly and severally liable for everything laid out in the contract. This is perfect when renting out to a group of friends, a couple, or a family.

With sole tenancy, each tenant signs an individual tenancy agreement. They get exclusive possession of their room and are only responsible for their rent. While tenants need to share and maintain the common living spaces, they’re not responsible for late rent or damage caused by other tenants. This makes sole tenancy perfect for HMOs, where strangers decide to live together.

Landlord responsibilities when issuing an AST agreement

• Protect the rental deposit in a government-approved deposit protection scheme.
• Provide the tenant with a copy of the gas safety certificate and the Energy Performance Certificate (EPC) of the property.
• Conduct an annual safety inspection for all gas-run equipment.
• Send the “How to rent” guide to all tenants whose tenancies started after October 2015.
• Carry out repairs to maintain the habitable condition of the property.
• Allow the tenants the right to peaceful enjoyment and seek permission before entering the property.
• Follow the required notice period and mutually end the tenancy or adhere to the legal eviction protocols.
• Pay council tax on behalf of all tenants, if renting out to multiple tenants.

Evicting

Landlords can evict tenants without providing a reason, as long as they adhere to the responsibilities mentioned above and follow the applicable legal procedures. You can evict a tenant using either a Section 21 notice (a no-fault eviction) or a Section 8 notice (fault-based eviction).

Excluded tenancy

An excluded tenancy is for landlords who want to earn extra money by renting out a room in their primary residence. The tenants, who can be “lodgers” or “subtenants”, share common living areas, such as the kitchen, bathroom, and hallway.

An Excluded tenancy can be issued when:

• The property is rented for private, residential use, not commercial purposes.
• Landlord lives with the tenant and shares a common living space.
• Both landlord and tenant consider the house as the primary residence.
• Once you’ve permission from the mortgage lender if the house is on a mortgage.

Excluded tenancy features

Landlords can offer a fixed-term or periodic excluded tenancy agreement. Typically, landlords start with a fixed-term tenancy and at the end of the agreement, you can change it to a periodic tenancy.

With a fixed-term excluded tenancy, rent cannot be increased unless you both agree or if there’s a clause stating when and how the rent may be increased. With a periodic tenancy agreement, rent may be increased at any time. If the tenant does not agree, you can ask the tenant to leave. If the tenant ends the excluded tenancy early, they’re liable for paying rent until the end, unless agreed otherwise.

Landlord responsibilities when issuing an excluded tenancy

• Although the deposit doesn’t need to be protected by a deposit scheme, it needs to be returned in full or after the required deductions.
• Conduct a right to rent immigration check prior to renting out.
• Conduct an annual safety inspection for all gas-run equipment.
• Carry out repairs to maintain the habitable condition of the property, especially for items you’re required to repair.
• Follow the required notice period to evict a tenant, as set in the tenancy agreement.
• Pay council tax on behalf of the lodger or subtenant.

Evicting

Tenants on a fixed-term excluded tenancy can be evicted without notice and without going to court if it’s at the end of the agreement. They cannot be evicted during the tenancy unless there’s a break-away clause. In this case, the notice period must be followed.

During a periodic tenancy, tenants can be evicted by giving a reasonable amount of notice, which you can specify in the contract. If this clause doesn’t exist in the written agreement, the minimum notice period is at least 7 days. There’s no need to offer a written notice or to go to court for eviction. After the notice period, you may change the locks when the tenant is out, but you may not threaten them or use force.

Which tenancy type is better for landlords?

AST is a better option if you want to

• Let the whole property, either per room or as a whole
• Charge higher rental prices
• Have access to a wider pool of potential tenants
• Make your tenant responsible for council tax

Excluded tenancy is a better option if you want to

• Let a part of your primary residence and don’t mind sharing common spaces
• Have fewer legal responsibilities
• Benefit from flexible eviction rules.

This article is for informational purposes only. Please consult the appropriate authorities for the latest developments or a lawyer for legal advice.

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