Assured Shorthold Tenancy Agreement


Tenancy Agreement Template

Proving information &
advice for all buy to let
property investors and
tenants in the UK

Jargon Buster

Accelerated Possession Procedure (APP)
A cheap and straightforward way for landlords to gain possession of their property without a court hearing. Unless it considers a hearing is necessary, the Court will make its decision based solely on documents provided by the landlord and tenant. This procedure can only be used where there is a written tenancy agreement and the tenant has been given notice. The procedure cannot be used to claim for arrears of rent.

Annual Percentage Rate (APR)
A standard measure of the cost of borrowing including interest charges and other fees which must be shown on all UK loan advertisements.

Arrangement Fee
Fee charged by some lenders and intermediaries for access to particular mortgage deals, often fixed rate or discounted rate mortgages. May be payable in advance or added to loan.

Association of Residential Letting Agents (ARLA)
Professional association for letting agents which operates a code of practice and bond scheme that protect the clients (landlords) of ARLA members.

Assured Shorthold Tenancy (AST)
A form of tenancy that assures the landlord right to repossess the property at the end of the term specified in the tenancy agreement, which can be for any length of time (although whatever the agreement says, tenants who do not breach its terms can stay in the property for at least the first six months). To gain possession the landlord must serve a notice under section 21 of the Housing Act 1988 giving a minimum of two months’ notice. Landlords may also apply for possession during the course of a tenancy on various  ‘grounds for possession’. Some give the court no option but to grant possession. With the exception rentals with very low, or very high rents (the upper figure is £100,000 a year) ASTs are the default type of tenancy for all new tenancies unless otherwise specified. 

Assured Tenancy
A form of tenancy introduced under the 1988 Housing Act for property let out as a separate dwelling and used as the tenant's only or main home. An assured tenancy will generally allow the tenant to stay in occupation until either he or she decides to leave or the landlord obtains a possession order.

Bank Base Rate
Also known as ‘repro rate’, ‘base rate’ and ‘bank rate’ this, is the rate set each month by the Bank of England’s Monetary Policy Committee as rate at which it will lend to retail banks. It is used as the benchmark for many other interest rates, including personal loans and mortgages.

Buy to Let Mortgage
A type of mortgage designed to allow the recipient to purchase residential property for letting.

Capped Rate Mortgages
Mortgage loans in which the rate of interest is variable but guaranteed not to exceed a specified level for a set period.

Form of tenure created by Commonhold and Leasehold Reform Act 2002 in which leaseholders in a property jointly hold the freehold through an association.

County Court Judgement (CCJ)
A judgement for unpaid debt recorded at a County Court which will show up when a credit check is undertaken.

Court Service
This is a publicly available service that provides online access to various forms that landlords may require when commencing proceedings for possession. The Court Service website also has guidance on such subjects as dealing with squatters. Forms available to download include N5 for use in possession claims, and N5B for use in use of the accelerated possession procedure.

Credit Reference Agency
Companies that can provide credit information about individuals (including CCJs) and confirmation of addresses included on the electoral register.

Deposit Protection Scheme
See Tenancy Deposit Protection.

Discounted Rate Mortgage
Mortgage in which the lender agrees a fixed discount off the normal variable rate for a guaranteed period of time. Likely to include penalties for early redemption.

Discretionary Grounds for Possession
Grounds that may be cited in possession proceedings which allow the court discretion as to whether or not to grant possession – there are also eight mandatory grounds for possession.
The discretionary grounds cover circumstances in which: the landlord has offered suitable alternative accommodation on the same basis; there are rent arrears but not of more than eight weeks (or two months if the rent is paid monthly, or one quarter if paid quarterly); there are persistent and continuing rent arrears; the tenant has breached the terms of the tenancy agreement; the tenant has neglected or damaged the property or has sub-let; the tenant is causing nuisance to neighbours; furniture supplied under the tenancy agreement has been damaged; the accommodation is linked to employment which has ended; and the tenant has knowingly or recklessly made false statements on which the landlord has relied in granting a tenancy.

A right, such as a right of way, which the owner of one property has over an adjoining property.

Empty Dwelling Management Orders
An EDMO is an order that, once approved by an independent property tribunal, gives a local authority power to take possession of an empty property so as to bring it back into use. Ownership does not change, but the council can do most things the owner would normally be entitled to do.

There are two types of EDMO. An interim EDMO lasts for no more than 12 months, during which time the council must try to work with the owner to agree a way of getting your property back into use. It must ask the owner’s permission before it can let the property. If that permission is not given, the council may make a final EDMO, which can last for up to seven years. If it does not issue a final EDMO, it must end the interim EDMO and hand back possession of the property to the owner.

Energy Performance Certificate (EPC)
An assessment of household energy usage and the extent to which this can be lowered. Certificates give properties a rating from A to G presented graphically in much the same style as used for fridges, washing machines and other white goods. Residential rental properties must have a certificate that is not more than 10 years old.

In most cases it is illegal for a landlord to evict a tenant without a court order. The Protection from Eviction Act 1977 also protects tenants against being forced to leave a property through harassment, such as threats or physical violence, or through withdrawal of services such as disconnecting the electrical supply or refusing to carry out vital repairs. Also see ‘Grounds for Possession’.

Fair Rent
Rent determined by the Rent Service applicable to regulated tenancies, set according to local market conditions but with any increase on a previously registered fair rent capped (except where the landlord has made substantial improvements to the property), by a formula based on the rate of inflation.

Final Management Order (FMO)
Orders which local authorities can obtain to extend the powers to take over management of rental properties that have been subject to and IMO (see below) for a further five years.

Financial Services Authority (FSA)
The Financial Services Authority has statutory responsibility for regulating the financial services sector including the sale of private homebuyer mortgages but not business or buy to let mortgages.

Fixed Interest Rate Mortgage
Mortgage loan in which the interest rate is fixed for a set period of time whether or not the base rate Bank

Articles such as radiators, boilers and baths, attached to the house itself and deemed to be part of it.

Flexible Mortgages
Mortgages allowing for the possibility of part redemptions and repayment holidays without penalty.

Indefinite ownership of a property as opposed to a leasehold tenure which is for a fixed period. The relatively recently introduced Commonhold tenure combines elements of freehold and leasehold.

Good Repair
Landlords are required by law to keep their rented properties in good repair and fit for human habitation. Should local environmental health officers rule that a tenant’s health has been affected by the state of living conditions, he or she would be able to claim compensation from your landlord. Also see HHSRS below.

Grounds for Possession
There are 17 grounds for possession laid down in the Housing Act 1988, as amended by the Housing Act 1996, that may be cited in possession proceedings against a tenant. Eight are mandatory grounds which oblige the court to award possession provided the landlord has complied with the procedure set out in the Housing Acts and has served the tenant with the appropriate notices. Nine are discretionary, allowing the court some leeway. Landlords may also seek possession when it can be demonstrated that a tenant is no longer using the accommodation as his or her principal home.

Harassment is a criminal offence under the Protection from Eviction Act 1977. The term refers to acts by a landlord or agent likely to interfere with the peace or comfort of a tenant or involve the withdrawal or withholding of services reasonably required for occupation. Harassment can include the landlord continually visiting the property or contacting tenants.

Health and Safety Rating System (HHSRS)
A risk-based method of assessment  which councils are required to use when evaluating  a property’s safety. This may be undertaken following a complaint, or for other reasons, such as when a HMO licence is applied for. HHSRS is  primarily concerned with those matters which can properly be considered the responsibility of the owner (or landlord). There are 29 headings under which risk is assessed. Should hazards be identified under any of these, councils must go on to assess the likelihood of those hazards crystallising and causing harm – and the probable severity of any such harm. The assessment culminates in a ‘hazard rating’ for the property. There are four classes of harm, of which ‘category one’ is the most severe. These are risks that could lead to death, permanent paralysis below the neck, regular severe pneumonia, or 80% burns or worse. Local authorities have a duty to take action on category-one hazards and the power to take action on category-two hazards. This applies to all properties, whether owner-occupied or rented, although landlords are the most likely to affected.

Housing Benefit
Housing benefits a means tested benefit available to help people who are on state benefits or who have low incomes pay their rent. The current form of housing benefit is known as ‘Local Housing Allowance’.

Houses in Multiple Occupation (HMOs)
In England and Wales HMOs are defined under the Housing Act 2004 as:
• entire houses or flats let to three or more tenants from two or more households who share a kitchen, bathroom or toilet;
• houses converted entirely into bedsits or other accommodation that is not self contained, let to three or more tenants who form two or more households and who share kitchen, bathroom or toilet facilities;
• converted houses containing one or more flats which are not wholly self contained, occupied by three or more tenants who form two or more households and who share facilities; and
• buildings which have been converted entirely into self contained flats but the conversion did not meet the standards of the 1991 Building Regulations and more than one third of the flats are let on short term tenancies.

In each case the property must be used as the tenants’ only or main residence and it should be used solely or mainly to house tenants. Properties let to students and migrant workers will be treated as such tenants’ only or main residence, and the same will apply to properties which are used as domestic refuges. All of these properties could be subject to mandatory or additional licensing requirements, but not all are. It is only those that are of three or more storeys with five or more occupants that in fact require a licence.

In Scotland HMOs are defined as houses used as the only or principal residence of three or more qualifying persons from three or more families. A ‘house’ includes any building, or any part of a building occupied as a separate dwelling. The legislation covers not only ordinary shared houses or flats and bedsits, but all residential accommodation, including hostels, student halls of residence, and staff accommodation in hotels or hospitals. Separate units within a building which share use of a toilet, personal washing facilities or cooking facilities, are taken to form part of a single house.

Two people are members of the same family if they are partners (including same sex couples) or related, including relationships by marriage or by half blood, and children who are fostered, adopted or otherwise brought up as a member of the family.

Houses in Multiple Occupation – mandatory licensing
In England and Wales it is an offence, punishable by fines of up to £20,000, to let properties caught by the mandatory licensing provisions of the Housing Act 2004. Those rental properties that require a licence under the Act are HMOs of three or more storeys with five or more occupants who form two or more households - households being partners and relatives living together – using shared facilities such as kitchens and bathrooms.

Properties do not have to be entire houses but can be part of buildings let to five or more unrelated people even if the tenants have signed a joint tenancy agreement. Attics and basements are included in the storey count if they are used as living accommodation.

In Scotland it is a criminal offence to give permission for a house to be occupied as an HMO without a licence. The maximum penalty is currently £5,000. The application for a licence must be made by the owner, even if the property is leased to or managed by another person or organisation.

Housing Ombudsman Service (HOS)
The Housing Ombudsman Service is set up by law to look at complaints about providers of housing registered with the service. These include all housing associations and some private landlords and management agents. The service is free, independent and impartial. There is a searchable membership database on the HOS website at

Her Majesty’s Revenue and Customs, the UK tax authority for Personal and corporate taxes and for VAT.

Improvement Notice
A notice requiring a landlord or property owner to undertake work where an Environmental Health Officer has found that the property fails to meet the requirements of the Health and Safety Rating System (HHSRS) – see above.

Interest Only Mortgage
Mortgage loan on which no capital repayments are made for a specified time or until redemption.

Interim Management Order (IMO)
Orders which local authorities can obtain to take over management of rental properties that are licenced, or ought to be licenced, where licensing requirements and conditions are not being met. IMOs are for 12 months and allows the authority to do anything in relation to the house, which could have been done by the landlord.

Landlord Accreditation
A growing number of local authorities are introducing voluntary private landlord accreditation schemes, as are universities for student lets, and landlord associations. Generally landlords who belong agree to adhere to given standards in return for being able to say they are accredited.

Accreditation Network UK (ANUK) is a network of professionals and associations that promote accreditation.

Landlord’s Energy Saving Allowance
Tax allowance available to landlords that covers the cost of loft insulation, cavity wall insulation, solid wall insulation, draught proofing, hot water system insulation, and floor insulation.

Landlord Licensing
In England and Wales landlords must obtain licences from local authorities for HMO properties of three or more storeys with five or more occupants who form two or more households - households being partners and relatives living together – using shared facilities such as kitchens and bathrooms. The licensing process includes assessment of whether or not they are ‘fit and proper’ to be HMO landlords and apply adequate management standards.

In Scotland all landlords must register with their local authorities under the Antisocial Behaviour etc. (Scotland) Act 2004. Letting property without registering could result in a fine of up to £5,000 and to rental income being withheld.

Land Registry
Official registry of property titles containing the world's largest property database, guaranteeing ownership of £1,300bn worth of property. The Land Registration Act 2002 which came into effect in October 2003 gives owners of registered property greater protection against squatters and allows them to block applications for adverse possession with time allowed for recovery of possession.

Ownership of property for a fixed term granted by lease. The lease sets out details of rents and obligations such as repairs. Other possible tenures include Freehold and Commonhold.

Leasehold Valuation Tribunals (LVTs)
Rent Assessment Panels, which determine specified aspects of leasehold disputes under the Landlord and Tenant Acts of 1985 and 1987, as amended by the Housing Act 1996.

LIBOR is the interest rate applicable to some loans and mortgages. It is the London Inter Bank Offered Rate at which banks lend money to each other. LIBOR changes daily and a LIBOR linked mortgage will normally be adjusted every three months.

Loan To Value (LTV)
Size of mortgage as a percentage of the value of a property. Many lenders offer more favourable deals to customers who are seeking lower LTVs.

Local Government Ombudsmen
The Local Government Ombudsmen investigate complaints of injustice arising from maladministration by local authorities and certain other bodies. There are three Local Government Ombudsmen in England and they each deal with complaints from different parts of the country. They investigate complaints about most council matters including housing.

Local Housing Allowance (LHA)
The current form of  housing benefit based on rents payable within local Broad Rental Market Areas (in which claimants could reasonably be expected to live) and the housing needs of recipients. The benefit is generally paid direct to recipients. Changes announced to take effect in April 2011 are designed to cut the anticipated cost of LHA by nearly 9 per cent.

Mandatory Grounds for Possession
Grounds that may be cited in possession proceedings linked to an assured tenancy which, provided the correct procedures have been followed and notices given, require the court to grant possession. In brief the mandatory grounds cover situations where: the landlord requires the property for personal occupation; a mortgage lender is foreclosing the mortgage; property let for a fixed period is required for return to holiday letting; an educational institution requires return of a student let; a religious body requires return of its property for an alternative tenant; the landlord wishes to demolish, reconstruct or redevelop the property; a landlord wishes to claim possession against the resident heir of a tenant who has died; and the rent is in arrears by eight weeks or more (two months if it is paid monthly, or one quarter if paid quarterly).

Deed pledging freehold or leasehold property as security for a loan (also called legal a charge). If payments are not made according to the terms of the mortgage and fall into arrears the mortgagor will be able to foreclose, claim the property and sell it on to recover the outstanding amount. The term ‘mortgage’ is also often used to mean the loan that is secured by a mortgage.

National Approved Letting Scheme (NALS)
The National Approved Letting Scheme is a government backed accreditation scheme which all letting and letting management agents can join. In doing so they agree to meet defined standards of customer service, to maintain necessary insurances to protect clients' money, and to have customer complaints procedures in place offering independent redress.

The scheme is supported by the Association of Residential Letting Agents, National Association of Estate Agents, and Royal Institution of Chartered Surveyors.

National Association of Estate Agents (NAEA)
The largest professional estate agency organisation in the UK. Representing nearly 10,000 members, the NAEA is committed to raising professional standards across all aspects of the property market for the benefit of member agents and ultimately the home moving public.

National Inspection Council for Electrical Installation Contracting (NICEIC)
An independent consumer safety organisation and has been the electrical contracting industry's voluntary regulatory body for electrical safety matters for more than 45 years.
Building regulations require that most substantial electrical work is carried out by a ‘competent person’ such as a contractor approved by the NICEIC.

National Landlords Association (NLA)
The National Association of Landlords is the largest UK association of private landlords, protecting and promoting their interests and providing membership benefits such as fact sheets, newsletters, insurance discounts, meetings and workshops, and favourable terms with selected suppliers of advice and services.

Noise Abatement Notice
The notice requiring noisy activity to stop or requiring steps to be taken reduce the noise (such as insulation or volume control) issued when an Environmental Health officer finds the level of noise from a property to be prejudicial to health or a nuisance.

Non-resident Landlords Scheme
A scheme for taxing the UK rental income of non-resident landlords. The scheme requires UK letting agents to deduct basic rate tax from any rent they collect for non-resident landlords. If non-resident landlords don't have UK letting agents acting for them, and the rent is more than £100 a week, their tenants must deduct the tax. When working out the amount of tax the letting agent/tenant can take off deductible expenses.

Letting agents and/or tenants don't have to deduct tax if HMRC tells them not to. HMRC will tell an agent/tenant not to deduct tax if non-resident landlords have successfully applied to it for approval to receive rents with no tax deduction. But even though the rent may be paid with no tax deducted, it remains liable to UK tax. So non-resident landlords must include it in their tax returns.

Notice to Quit
A Notice to quit or more properly a ‘Notice requiring repossession’ issued under section 21 of the Housing Act 1988 is notice to a tenant that he or she must vacate a property at the end of an assured shorthold tenancy agreement. There is no prescribed form for the notice but it must specify the date after which the tenant is to give up possession. At least two month’s notice is required and possession may not be required until expiry of the first six months of the tenancy.

Ombudsman for Estate Agents (OEA)
The Property Ombudsman is charged with resolving disputes between property sales and letting agents who have joined the OEA scheme and their clients, including landlords. The service is free and independent.

Since October 2008, all estate agents have been required to register with an Estate Agents Redress Scheme, such as the OEA, that has been approved by the Office of Fair Trading (OFT) and which investigates complaints against estate agents. Lettings and property management agents are not required to register in this way but may do so.

Periodic Tenancy
A periodic tenancy comes into being when a landlord does nothing to reclaim possession at the end of an original assured shorthold tenancy and allows the tenants to remain without issuing a new tenancy agreement. The terms and conditions of the original assured shorthold tenancy agreement remain in place, as does the right of the landlord to bring the tenancy to an end by service of the required two month’s.

See Mandatory grounds for possession, ‘Assured shorthold tenancy’, ‘Discretionary grounds for possession’, ‘Grounds for possession’, and ‘Section 21’.

Quiet enjoyment
Allowing tenants ‘quiet enjoyment’ of their rented homes is an implied term within any letting agreement and affords tenants the right to uninterrupted use of the property during the course of their tenancy without interference from the landlord or the landlord’s agents.

Registered Rent
Rent included on the publicly available Rent Register as determined by a Rent Officer or Rent Assessment Panel recording the maximum that can be charged until a new determination is agreed or the tenant leaves.

Regulated Tenancy
Most continuing private tenancies entered into before 15 January 1989 are regulated tenancies under the Rent Act 1977. This means that the tenant has long term security of tenure and that both the landlord and the tenant have the right to have a Fair Rent registered for the tenancy by an independent rent officer. Both also have a right to appeal to a rent assessment committee if they are dissatisfied with the rent officer's decision.

Once a rent is registered, the landlord cannot normally charge a higher rent without reapplying to the rent officer and a new application for registration is not possible for two years unless there is a relevant change of circumstances. The Housing Act 1988, which introduced assured and assured shorthold tenancies at market rents for most new lettings on or after 15 January 1989, did not change existing tenants' rights to security of tenure and rent control.

Rent Assessment Committees (RACs)
When a landlord or tenant of a Regulated Tenancy has objected to the rent assessed by a Rent Officer, the case will be passed to a Residential Property Tribunal Service and will be heard by one of its Rent Assessment Committees – it also refers to them as Panels - to decide the Fair Rent. Tenants with assured tenancies may also apply to an RAC for a determination of the open market rent they should be paying. They may also apply if the landlord serves notice of a proposed rent increase.

Rent Service
Formerly an executive agency of the Department for Work and Pensions, the Rent Service was transferred to the Valuation Office Agency on 1 April 2009.  VOA is now responsible for rental valuations for housing benefit purposes, making Fair Rent determinations, and advising local authorities about the effects on rent of housing renovation grant applications by landlords.

Rental Yields
Precise definitions can vary but the gross rental yield is usually taken to be the annual rent of a property as a percentage of its capital value or acquisition price. The net rental yield is the annual rent after deducting expenses as a percentage of capital value or acquisition price. The rental return or capital return is the annual income from renting less the costs plus annual capital appreciation as a percentage of the original investment in the property.

Repayment Mortgage
A mortgage loan in which the borrower pays a set amount each month comprising an element of both interest and capital repayment and calculated to fully pay off the mortgage loan by its expiry date.

Residential Property Tribunal Service (RPTS)
The Residential Property Tribunal Service is an independent body which aims to provide a fair and accessible tribunal service to help landlords and tenants and leaseholders settle disputes about rents and about leasehold property. RPTS, whose remit covers England, comprises five regional Rent Assessment Panels, each covering a different geographical part of the country - London; Southern England; Northern England; the Midlands; and Eastern England.

Royal Institution of Chartered Surveyors (RICS)

The professional body for chartered surveyors whose members work in all aspects of real estate, including letting, construction and associated environmental issues. RICS has 110,000 members globally and represents, regulates and promotes the work of property professionals throughout 120 countries.

Schedule A
Letting income is taxed under what is known as ‘Schedule A’ (general trading income is assessed under Schedule D, and income from employment under Schedule E. Each schedule has its own rules for the calculation of taxable income. The Inland Revenue has an explanatory leaflet, IR150, which can be downloaded.

Section 21 Notice
See ‘Notice to Quit’.

Stamp Duty (more formally Stamp Duty Land Tax - SDLT)
Government tax on transfer of property. Duty is levied according to the price of property being transferred and for residential properties is currently nil for properties sold for up to £250,000, 1 per cent of the full price for properties priced between £125,000 and £250,000 (but nil for first time buyers until 24 March 2012), 3 per cent for those priced between £250,001 and £500,000, and 4 per cent for those priced above £500,000. Once a transaction falls into the 1 per cent, 3 per cent, or 4 per cent band, that rate applies to the whole of the purchase price.

Stamp duty of 1 per cent is also payable on new leases and rental agreements where the ‘net present value’ (NPV) of total rent over the period of the lease or agreement plus any premium exceeds £125,000. NPV is the total that will be received discounted for expected inflation taking account of the timing of payments - HMRC has a calculator on its website. In practice SDLT is only likely to be payable on new leases and rental agreements where the rent is very high, or the lease or agreement very long (say 99 years), or both.

Standard Variable Rate (SVR)
Rate of interest normally charged on variable rate mortgage loans. The rate will go up and down from time to time during the course of the mortgage according to general interest rate movements.

Tenancy Deposit Protection
Any landlord taking a monetary deposit must safeguard it by participating in a tenancy deposit scheme. There are two types of scheme available – a custodial scheme which holds the deposit, and insured schemes whereby the landlord retains the deposit but pays an insurance premium. Both approaches include dispute resolution arrangements. Until deposits have been safeguarded by a scheme, landlords are unable to regain possession of the property using usual 'notice only grounds'.

Tracker Mortgage
Variable rate mortgage loan in which the interest rate is linked to an external market rate, such as the Bank of England base rate rather, than a rate set by the lender.

Valuation Office Agency (VOA)
The Valuation Office Agency (VOA) is an executive agency of HM Revenue & Customs (HMRC) with 85 offices spread throughout England, Wales and Scotland employing around 4,300 people.  In 2009 it took over the functions of the Rent Service and is now responsible, among other things, for rental valuations for housing benefit purposes and for making Fair Rent determinations.

Void Periods
Time, usually measured in days, when properties offered for rent remain without tenants.



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