What tenancy is right for you? A comprehensive guide for landlords

As a landlord, choosing the right type of tenancy or occupation agreement for your property is crucial. The decision depends on factors such as the nature of the property, the purpose of occupation, and the level of control or flexibility you wish to retain. Below, we outline common types of tenancies and agreements, explaining their uses and how we can assist you in making the best choice.

Commercial lease
A commercial lease is used when renting out property for business purposes, such as offices, retail units, or industrial spaces. These leases are typically long-term agreements and include specific terms related to rent reviews, repairs, and permitted use. It is best to instruct a commercial surveyor from the outset to draft the Heads of Terms, ensuring all critical points are agreed upon before legal documentation begins.

How we can help:
We can draft, negotiate, or review commercial leases to ensure they protect your interests. For example, we can include break clauses for flexibility or repair obligations that limit landlord’s liability. We also ensure provisions such as rent reviews and service charge clauses are clear and enforceable.

Residential lease
A residential lease, such as a 125-year lease, is typically used for long-term arrangements, often associated with leasehold flats or houses. This type of lease outlines the tenant’s responsibilities, such as service charges and ground rent, and the landlord’s obligations for the upkeep of communal areas or structural repairs. As an example, a lease for a flat may include terms consistent with the building’s management plan, addressing communal maintenance responsibilities.

How we can help:
We prepare bespoke residential leases tailored to your property and tenant’s requirements. For a 125-year lease, we ensure all key terms, such as service charges, ground rent, and repair obligations, are clearly defined and legally compliant. We also advise on lease extensions and compliance with evolving regulations.

Tenancy at will
A tenancy at will is a flexible, short-term arrangement used while negotiating or finalising a more formal lease. It allows immediate occupation without committing to long-term obligations and can usually be withdrawn immediately without notice, offering maximum flexibility for the landlord.

How we can help:
We can draft and advise on tenancies at will, ensuring your position is protected if negotiations fail. We include provisions for interim rent payments, use restrictions, and indemnities to safeguard your interests during the temporary occupation period.

Assured Shorthold Tenancy (AST)
An AST is the most common type of short-term residential tenancy, offering landlords the ability to regain possession after a minimum fixed term, subject to proper notice. Recent government proposals, including the Renters’ Rights Bill, aim to reform ASTs significantly. These changes include the abolition of Section 21 ‘no-fault’ evictions and a shift to periodic tenancies, requiring landlords to provide valid reasons to end a tenancy.

How we can help:
We can draft legally compliant AST agreements that include specific provisions for rent payments, property maintenance, and eviction processes. We also provide guidance on adapting to legislative changes and mitigating risks associated with tenant disputes.

Service occupancy
A service occupancy agreement is used when an employee resides in a property as part of their job. The occupancy is tied to their employment with the landlord. If their employment ends, their right to occupy the property also ceases.

How we can help:
We draft tailored service occupancy agreements that define the terms of occupation and link them to employment. These agreements include detailed maintenance obligations to ensure the property remains in good condition throughout the employee’s tenure.

Guardianship tenancy
Guardianship tenancies, or agreements, are used by landlords to have a vacant property occupied at a discounted rent, ensuring it is maintained and secure. Under these agreements, the guardian takes responsibility for upkeep, basic repairs, and safeguarding the premises.

How we can help:
We draft guardianship agreements that clearly outline the guardian’s responsibilities. We also advise on selecting reputable guardians and ensuring compliance with the agreement.

Lodgers agreement
Lodgers agreements are suitable for renting out a room in a home or houses in multiple occupation (HMOs). These agreements offer more flexibility than ASTs and are not typically covered under the same regulations, making them attractive for homeowners.

How we can help:
We can prepare concise agreements that define the terms of the lodger’s stay, including house rules and notice periods. We also advise on managing lodgers’ rights and resolving disputes.

Farm Business Tenancy
Farm Business Tenancies (FBTs) are primarily used for agricultural land and buildings, offering flexibility compared to Agricultural Holdings Act tenancies. They allow greater freedom to set terms suited to modern farming needs.

How we can help:
We prepare and advise on FBTs, ensuring compliance with agricultural legislation. This includes drafting agreements that incorporate environmental schemes and land use changes.

Licence to occupy
A licence to occupy grants temporary, non-exclusive occupation of a property. It is often used for short-term needs, such as storing equipment or staging items for a project, as examples. Licences to occupy retain landlord control over the property while allowing temporary use.

How we can help:
We draft licences tailored to specific needs, protecting your ownership rights while accommodating short-term requirements.

Licence to access
A licence to access allows entry to a property for specific purposes, such as surveying or carrying out preliminary works. Unlike longer-term agreements, this licence provides no rights of occupation.

How we can help:
We draft licences to access that define the permitted activities and duration, protecting against misuse.

Agreement for lease
An agreement for lease is used when a tenant needs to undertake work on a property before the formal lease begins. It establishes clear parameters for what works are allowed and the timeline for completion.

How we can help:
We can draft and negotiate agreements for lease based on the Heads of Terms agreed via the commercial agent. These agreements ensure all preliminary negotiations are reflected accurately and include guidance on timelines and conditions.

Conclusion
Selecting the appropriate tenancy or occupation agreement is essential for maximising the value and usability of your property while minimising risks. Our team offers tailored advice and documentation to ensure your interests are safeguarded. Contact us today to discuss your requirements.