Granting an Assured Shorthold Tenancy Checklist

The Golden Rules of Letting a home
The vast majority of problems with tenants arise because the landlord has broken one of the Golden Rules set out below. The risks involved in letting will be greatly reduced if you follow the Golden Rules.

Before the tenancy starts

  1. Tenant to complete an Application form (F009)
  2. Tenant to provide identity (1 x passport or 2 x other). This ID to be copied and retained.
  3. Tenant to provide written proof of income.
  4. Landlord to check tenant’s references.
  5. Landlord to obtain a homeowner as Guarantor
  6. Landlord to check tenant and guarantor for County Court Judgements and credit score, you can use the Guilds Tenants Vetting Service
  7. Landlord to check guarantor is homeowner with Land Registry
  8. Tenant to pay holding deposit (maximum one weeks rent)
  9. Tenants should be asked to sign on the same day they intend to move in except students who will commonly sign much sooner. For students follow next heading even when sooner than moving in day.

 

On same day as tenant moving in

  1. Guarantor to sign guarantee (before tenancy)
  2. Landlord and all Tenants to sign Tenancy Agreement and if deposit taken, prescribed information.
  3. Tenant to pay first full amount of rent and tenancy deposit (less any holding deposit already paid)
  4. Tenant to sign a Standing Order (F034)
  5. Tenant to sign a detailed inventory at start of tenancy

 

Within 30 days of tenancy start

  1. If deposit taken, register deposit with one of the schemes (within 30 days of receiving deposit)
  2. Notify all utilities and in particular water supplier of names of all occupants, their dates of birth and commencement date of tenancy.
  3. Landlord to keep proper rent records (F008)
  4. If tenant is claiming Local Housing Allowance or Universal Credit, payments will go to the tenant directly. Landlord should request direct payment if tenant becomes 8 weeks or more in arrears.

 

The vast majority of problems with tenants arise because the landlord has broken one of the Golden Rules set out above. The risks involved in letting will be greatly reduced if you follow the Golden Rules.

Inventory
Whilst the property is empty (or about to be empty) you could take this opportunity to create an inventory.

If you are taking a high value deposit, it may be worth considering a specialist inventory clerk who will both perform a check in inventory (when the tenants move in) and a check out inventory (comparing the property when they move out). This provides independent proof of the condition of the property before and after the tenancy.

Alternatively, you can produce your own inventory, this can include photographs of the property and video.

We have an inventory template (F030) which you can be downloaded from our landlord form page under the pre-tenancy category.

Energy Performance Certificate
Before you begin marketing the property, you must have an Energy Performance Certificate (EPC). At the very least an EPC must be commissioned before marketing and then obtained within seven days.

The EPC must be made available to “prospective tenants”  when you are viewing the property or if they request written particulars about the property from you. The person who ultimately becomes the tenant must have been given the full EPC.

The prospective landlord or letting agent must place either (or both) of the following within any advert for the property, on-line, newspaper or particulars handed out:

  • the asset rating by way of a numerical score and representative letter e.g. “Energy efficiency rating 44 – band E” or,
  • insert the graph from the EPC which contains the asset rating band. The graph may be more visually pleasing and understood by prospective tenants.

Information on providing an Energy Performance Certificate is available on our January 2013 changes article.

You can obtain an EPC in your area here.

From 1 April 2018, in order to grant a new tenancy, the property must have a minimum “E” rating as shown on the EPC. There are a number of exemptions and if an exemption applies the property must be registered on the National PRS Exemptions Register.

Gas Safety Record Required Before Occupation
Under regulation 36 The Gas Safety (Installation and Use) Regulations 1998, landlords have certain duties in relation to gas appliances within their properties.

A gas safety record (some people incorrectly refer to it as a “certificate”) is required within 12 months of the first install of an appliance and thereafter no more than 12 monthly intervals.

A landlord shall—

  • ensure that each appliance and flu has been checked for safety within a period of 12 months before the lease commences or has been or is so checked within 12 months after the appliance or flu has been installed, whichever is later; and
  • ensure that the last 2 records are retained (although we recommend keeping them for much longer).

A copy of the report must be given “before occupation” for new tenants and within 28 days of the report where there is an existing tenant.

Where there is no gas appliance in any room occupied by the tenant (for example a shared HMO), the landlord may, instead of ensuring that a copy of the record is given to the tenant, ensure that there is displayed in a prominent position in the premises, a copy of the record with a statement endorsed on it that the tenant is entitled to have his own copy of the record on request to the landlord at an address specified in the statement.

From April 2018, the date a gas safety is due is known as a “deadline date”. A landlord can obtain a gas safety record up to 2 months before the deadline date and will retain the deadline date for the following year. This allows you to arrange early access and not be penalised. Please see here for more detailed information on this and other changes from April 2018.

Electrical Inspection and Test Before Occupation
Since 1 June 2020, all rented property for occupation as an individuals main home must have an electrical inspection, test and report. For any new tenancy, renewal or statutory periodic tenancy starting from 1 July 2020, the report must be given to the tenant before they occupy under the new (or renewal) tenancy. For all existing tenancies, the report must be done and given to the tenant by 1 April 2021.

The report will last for a maximum of five years (less if the report says less) after which a new one will be required. In principle, it’s very similar to the gas safety legislation except for the interval between reports.

Please see here for full details about electrical inspection, testing and the report.

Advertising the Property
Members of the Guild of Residential Landlords can advertise their property through upad at a 50% discounted rate which boasts advertising on almost 1000 websites including globrix.comrightmovegumtree and primelocation.com and findaproperty.com.

Advertising in local papers doesn’t tend to work nowadays. A suggested advert that we would personally put on the internet is copied below and works very well for us (we even get other landlords often ringing asking if we have let our property because they haven’t let theirs and we always have let the property as a result of the wording.)

Very spacious 2 bedroomed flat located close to town centre to let.

  • Spacious.
  • Gas central heating.
  • Close to town centre

Suit couple or or small family. Home owning guarantor required. £190.00 admin fee will apply.

Always put who the property would suit. If it were a small flat we would put “suit couple or single person” for example.

When advertising on the internet, please check out our article titled photographs, photographs, photographs.

Suggested Forms Required
The below forms are what we suggest you could use but all are optional (although I suppose you would want the tenancy agreement at the very least!)

All these forms are available for download here (“granting an AST” category).

Form Number (on website)

Description

Tenancy Builder Assured Shorthold Tenancy agreement (depending on tenancy deposit scheme) Otherwise No Deposit tenancy agreement
F008 Rent sheet (excel file)
F009 Application for Accommodation
F110 Receipt for holding deposit
F028 Granting of tenancies sheet (to give at time of viewing)
F030 Inventory Template (Word document)
F033 Confirmation certificate (if using DPS custodial scheme)
F034 Standing order form
Initial Viewing with the Prospective Tenant
You must give all prospective tenants a copy of the EPC you have previously obtained. If you have placed an order for an EPC which has not yet arrived, you may continue to market the property and show prospective tenants.

If an interest is expressed by the prospective tenant, give them a granting of tenancies sheet [F028], explaining your requirements (e.g. if guarantor required, no DSS, no pets, requirement of a reservation fee etc.)

Always make sure they are aware of your requirement for a home owning guarantor.

Explain to the prospective tenant that references and a credit check will be required and that this may take several days. The reason for saying this is to put off the urgent tenants that try and con landlords into granting tenancies straight away. The only reason this is done by tenants is (a) because they are being evicted or (b) to try and avoid you carrying out credit checks.

Be VERY wary of tenants offering six months rent in advance or similar in order to get into the property quickly. If this is offered, do not get greedy and take the money and think all will be well because the chances are it won’t be after the six months rent has been used up. Often this offer is a ploy and is commonly offered when the property is going to be used for some illegal purpose for example cannabis farms or prostitution.

By all means accept the six months rent in advance but only after you have treated them like any other tenant as if paying one month in advance. Still carry out all the credit checks and INSIST on a home owning guarantor. If you do accept six months rent in advance, changes to the tenancy agreement will be required for which see this article.

The simple fact of renting is that at some point you will experience a bad tenant. A home owning guarantor is probably the best way to avoid such problems. The guarantor is often a family member (but doesn’t have to be) and is not only useful for recovering payment, the guarantor will often put pressure on a tenant should you contact them during troubles.

Tenant Wishes to Proceed
Once you have a prospective tenant interested, you should do the following:

  • Collect a holding deposit up to a maximum of one weeks rent.
  • Landlord and prospective tenant to sign a receipt for holding deposit. One copy retained by each party. This can be done remotely.
  • Prospective tenant to complete application for accommodation [F009].
  • Tell prospective tenant it will take up to 5 days for all checks to be carried out. Be suspicious of a tenant wishing to take the property immediately. This is usually to prevent checks being carried out or they maybe facing imminent eviction from their current home.
  • Obtain two written references from prospective tenant
  • Obtain written proof of income from prospective tenant (wage slip)
  • Conduct right to rent checks (see below)

For full right to rent guidance, please see here. Basically, in a nutshell:

  • ensure you are using our current application for accommodation as this asks all the appropriate questions
  • ensure you physically see an original passport of all adult occupiers (not just tenants) in the presence of the holder(s)
  • ensure the appearance and age of the holder reasonably matches any photograph and information
  • make a clear copy of the passport and retain it electronically or paper copy – make sure to record the date it was copied
  • retain for at least 12 months after the occupiers have vacated
  • if the applicant does not have a passport you will need two documents from group 2 of list A (if they are EEA or Swiss)
  • if the applicant is not EEA or Swiss and found to have a time-limited right to remain in the UK, follow up checks will be necessary for which consult our guidance
  • contact the Guild if you are unsure of anything or are suspicious in any way (for example a single adult wishes to occupy a five bedroom house with no one else intending to occupy).

Note: The two written references, ID and proof of income can be arranged for later if necessary as long as ID is checked and copied “in person” before occupation.

Can the Tenancy be Assured Shorthold?
In almost all cases, an assured shorthold tenancy will be required. However, before granting an assured shorthold tenancy, it is worth checking that it can in fact be an assured shorthold as there are several exclusions.

You can use our Tenancy Wizard to check and there are some exclusions shown below

Schedule 1 of the Housing Act 1988 contains certain tenancies which cannot be assured or assured shorthold tenancies, for example resident landlords and tenancies where the rent payable is greater than £100k per annum.

A brief list of the exclusions are:

  • Tenancies entered into before commencement (of the Housing Act)
  • Tenancies of dwelling-houses with high rateable values and where rent payable greater than £100k per year
  • Tenancies at a low rent (in Greater London, £1,000 or less a year and, if it is elsewhere, £250 or less a year)
  • Business tenancies
  • Licensed premises (accommodation in same part as licence for pubs, nightclubs etc)
  • Tenancies of agricultural land
  • Tenancies of agricultural holdings
  • Lettings to students by universities
  • Holiday lettings
  • Resident landlords
  • Crown tenancies
  • Local authority tenancies etc.
  • Transitional cases

In addition to the exclusions contained in Schedule 1, there are a couple of other tenancies which cannot be assured or assured shorthold because of the way section 1 Housing Act 1988 is worded.

  • The tenancy must be to an individual, therefore a company let cannot be an assured tenancy
  • The tenancy must be the tenants only or principle home, therefore if the tenant has another home that is his principle home, the tenancy cannot be assured

Virtually all the exclusions that relate to a private landlord, mean that the tenancy will be a common law tenancy. This would be the case even if the landlord had granted an assured shorthold tenancy because law overrides contract and it doesn’t matter what label you put on a tenancy [Street v. Mountford [1985] 2 W.L.R. 877].

Reference Checking
Landlord to do following:

Members of the Guild of Residential Landlords can credit check the prospective tenant and guarantor using the tenant referencing service. This will check CCJs, Electoral Roll, Bankruptcy etc.

The standard tenant assessment check does all of the following:

  • Electoral roll check at the applicant’s current and previous addresses
  • A risk score, predicting the applicant’s likelihood to pay
  • A Public Information check to ascertain whether the applicant has CCJs, bankruptcy orders or voluntary arrangements
  • A check to see if the applicant has any undisclosed addresses
  • An alias check to see if the applicant uses other identities

Check on-line that guarantor is a home-owner at Land Registry Online. This costs £3.00 and is well worth the small fee.

Obtain a reference from a previous landlord if possible but be wary if it is a current landlord as the landlord may give a good reference if he is trying to get rid of the tenants quickly! We have templates available on the referencing page where you can issue a letter to landlords or employers.

Check with other references the prospective tenant has provided, in particular employers. If possible, you should always contact references by telephone. It’s amazing what you can sense by the tones of voice in these situations. Try and get confirmation of references in writing.

A landlord or agent cannot charge for referencing (England from 1 June 2019, Wales 1 September 2019).

Be wary if a tenant provides written references themselves as they may produce their own and give false signatures (we have had this before).

Length of Fixed Term
The length of the fixed term to give is really whatever you feel comfortable with.

When the Housing Act 1988 came into force, it used to be the case that a minimum term of six months was required under section 20 Housing Act 1988. However, section 96 Housing Act 1996 abolished this rule for all new tenancies from 27 February 1997 by inserting a new section 19A into the Housing Act 1988. This new rule even meant that a fixed term was no longer necessary and in fact a periodic tenancy can be granted from the outset.

The new section 19A which applies to all tenancies from 27 February 1997 provides:

19A Assured shorthold tenancies: post-Housing Act 1996 tenancies.

An assured tenancy which—

(a )is entered into on or after the day on which section 96 of the Housing Act 1996 comes into force (otherwise than pursuant to a contract made before that day), or

(b) comes into being by virtue of section 5 above on the coming to an end of an assured tenancy within paragraph (a) above,

is an assured shorthold tenancy unless it falls within any paragraph in Schedule 2A to this Act.

As a result, we used to recommend a blanket 3 month fixed term (except for students) but changes to council tax rules from 1 April 2013 means the position is more complex now. Nowadays, we recommend a fixed term of at least 6 months but the only reason for recommending 6 months over 3 months is for council tax purposes. The problem with a 3 month tenancy since the council tax changes is if a tenant were to abandon, the landlord could be liable to pay council tax for the period of abandonment despite the tenant not giving notice. However, the same situation on a 6 month tenancy would usually mean the tenant would remain liable for council tax until proper notice was given.

See also Ratcliffe v Parkes – High Court appeal which confirms that a fixed term can be for any period including less than 6 months.

As a guide, our recommendations are as follows: 

Type of tenancy / property Recommended initial fixed term
Students 1 year or the length of a term e.g. 1 September to 31 August or 1 September to 30 June depending on market conditions and normal practices
Furnished House / flat – single person, couple, family or joint sharers 3 months (because council tax is payable between lets on furnished properties regardless)
Unfurnished house / flat – single person, couple, family or joint sharers 6 months (because if the tenant abandons without notice, tenant remains liable for council tax until property is re-let or they give proper notice. Anything less than 6 months, landlord would pay in this scenario).3 months If your local authority has generous exemptions / discounts for unfurnished and unoccupied properties for example many authorities offer 100% discount for up to 3 months empty. This way, even if tenant abandons, you will likely have property re-let again before council tax becomes payable. Check your councils website for individual discounts.
HMO – letting of a room in shared house (except students see above) 3 months (because landlord pays council tax where rooms let individually anyway so no benefit in giving longer fixed term)

Once the fixed term has ended, there is no need to give a new tenancy. The tenancy will automatically continue as a contractual periodic tenancy if our tenancy marked 06/13 or later is being used. Otherwise, “statutory periodic tenancy” will arise at the end of the fixed term.

Providing a Rent Book
You should always make the rent payable calendar monthly even if the tenant is to receive housing benefit / Universal Credit. Where the rent is payable weekly, a rent book in the prescribed form must be provided.

Section 4 Landlord and Tenant Act 1985 requires the rent book or similar document to be provided and section 5 describes what information must be contained. The rent book must contain the name and address of the landlord plus other information as prescribed. Where the tenancy is an assured shorthold tenancy, a prescribed form must be used.

The prescribed form that must be used is that contained in the The Rent Book (Forms of Notice) Regulations 1982 which have been amended several times, most recently in 1993 for England and 2014 for Wales.

A failure to provide a rent book is a criminal offence as is the demanding of rent without a rent book having been given. Section 7 outlines the various offences and penalties.

The easiest place to obtain a rent book is a stationers such as WH Smith.

Joint Tenancy Or Many Individual Tenancies?

Joint tenancy or individual tenancies?

It is very much a personal choice as to whether a landlord grants a single joint tenancy or multiple tenancies on a per room basis and most landlords have their own preferences. Below is some summarised pros and cons.


Single Joint Tenancy – Advantages

If one tenant leaves university during the term, the council tax exemption for students can be a problem. With a joint tenancy, the tenants will be jointly responsible for the council tax (assuming it is in the tenancy agreement), so it is not of concern to a landlord.

If one tenant fails to pay the rent, the others must make up the difference.

The deposit will be treated as one deposit which means less paperwork and fewer deposits to register.

Because the whole house becomes the demise, there are few common parts problems (see multiple tenancies below) and the tenants will always be under a duty to notify for repairs.


Single Joint Tenancy – Disadvantages

If one tenant is noisy, messy and fails to pay the rent, when instigating possession proceedings by service of notices etc a landlord must serve notice on all tenants not just the one causing problems.

Because students have a longer than normal fixed term (between 10 or 12 months) if one student fails to pay the rent, it can take a long time before there is two months arrears because the calculation is taken of the entire rent, not just the single students portion which makes it more difficult to serve a section 8 notice on the grounds of rent arrears. A two months section 21 notice can not be served to expire before the expiry of the fixed term.

If choosing the admin fee option instead of a deposit, it is not so easy to charge £100 – £200 per tenant when there is only one tenancy.


Many single tenancies per room – Advantages

The landlord has complete control over each individual tenancy and if one tenant fails to pay the rent, possession proceedings for 2 months arrears can be instigated quicker.

If choosing admin fee method instead of taking a deposit, it is easier to charge individual tenancies an admin fee.


Many single tenancies per room – Disadvantages

The house will be deemed as a House in Multiple Occupation for Council Tax purposes (do not confuse this with the normal definition of an HMO under Housing Act 2004. The two are different definitions.) This has the result that the landlord will always be liable for Council Tax, so if a student becomes no longer exempt, the landlord will still have to pay the council tax.

Every deposit will have to be individually protected which would mean a lot of paperwork and if using one of the insurance schemes, very expensive!

Further, the Regulatory Reform (Fire Safety) Order 2005 applies to this type of tenancy because there are ‘common areas’. Therefore a fie risk assessment under the Order would have to be undertaken.

There has been a recent case which said that where there are shared facilities, a landlord becomes immediately liable to repair any defect without any ‘reasonable’ time to have the works carried out once the item is out of repair. The same case further confirmed that there is no duty on the tenant notify on these shared facilities where they are not part of the actual tenancy (i.e. shared kitchen, bathroom etc.) This could cause a problem if somebody were to be injured even if the landlord was not aware of any problem.


Guild opinion

On balance the joint tenancy is probably best. Mainly because there is less paperwork and it reduces council tax issues. Also, there are fewer problems regarding fire risk assessments and potential repairing problems. However, just because we say that, multiple tenancies have advantages too and it is a very personal preference and often market led.

Completing the Tenancy Agreement

Tenancy Builder

We use a unique Tenancy Builder system which will produce a tenancy based on the options chosen. In the vast majority of cases, an assured shorthold tenancy will be what’s needed but not every case. The builder only supports assured shorthold currently but the contractual tenancy can be downloaded separately.

You will be able to select various deposit options and the appropriate scheme rules/leaflets will be included in the produced tenancy agreement:

  • No deposit assured shorthold tenancy
  • Deposit Protection Service assured shorthold tenancy (custodial or insured)
  • My Deposits assured shorthold tenancy (custodial or insured)
  • Tenancy Deposit Scheme (Dispute Service) (custodial or insured)
  • Contractual tenancy (often called a common-law tenancy)
  • Lodger agreement

Complete the agreement and attached documents

Complete the builder fields as shown below in the examples but leave out the commencement date and date of agreement if you are not meeting all persons on the same day. You can create a “draft” in the first instance for sending to all parties and this will leave out all dates. The date of the agreement should only be completed when all persons have signed.

We recommend a 6 month fixed term tenancy for all except students. Students will be for a full term or 12 months depending on your local market.

Ensure all documents that will be needed on the day of signing are available and FULLY completed which are:

  • Energy performance certificate (should have been provided at the viewing but at latest upon signing the tenancy)
  • Gas safety record (only required if gas appliances or flues)
  • Information leaflet for the control of legionella
  • If a deposit is taken, the prescribed information relating to the deposit.
  • “How to rent guide” (required for England only – built into our tenancy agreements).
  • Smoke and CO alarm test certificate (required only for England but can be used in Wales as long as alarms are tested as described).
  • Confirmation Of Documents Supplied In Connection With A Tenancy (this is built into our tenancy builder but should be used if you don’t use our agreements).

Any tenancy granted on or after 1 October 2015 in England where any one of the above documents has not been provided at the time of signing (or before) could have serious problems gaining possession of the property later.

When completing the tenancy, pay particular attention to the start and end dates. Where the rent is to be paid on the same date each month as the commencement, the end date should always be the day before. For example, tenancy commences on 15 January and rent payable on 15th, the end date should be 14 July.

If however, the rent is payable on a different date for example the 1st of the month, the end date should always be the day before the rent is due. So, for example, tenancy commences 15 January, rent payable on the 1st of every month, first FULL rent would be payable on 1 February and end date would be 31 July.

Examples

Option 1 where rent payable on same day as commencement each month. Pay particular attention to start and end dates

AST showing start and end dates

Option 2 where rent payable on DIFFERENT day to commencement. Pay particular attention to start and end dates

AST showing start and end dates

Always make the rent payable calendar monthly if possible even if the tenant is to receive Local Housing Allowance. If the tenant is to receive local housing allowance, you may wish to consider making the rent two calendar monthly instead. See this article for detailed information on creating a tenancy where rent is payable two calendar months in advance as it differs to what’s shown on this guidance.

Service of notices by e-mail

Our tenancy agreements contain an e-mail option for the service of documents. If you are happy to accept notices served by email, complete the box with the appropriate e-mail address. If not, select “none”. Do the same for the tenant email – only if the tenant is content for notices to be served by e-mail. If not, select “none”.

If you do accept notices this way, you must ensure your spam filter allows the tenants e-mail address otherwise you may miss an important e-mail (such as a notice to quit) but you would nonetheless be deemed to have received the notice!

Own clauses

If you wish to add your own clauses that are not contained in the tenancy agreement, there is an “additional clauses” box within the Tenancy Builder. (You should check with us before adding clauses as the tenancy agreement should contain everything needed).

Editing the documents

Within the Builder, you can click on “edit/delete previous entries”. This will display a list of previously completed agreements and click on “edit” to edit the agreement.

Signing

The most popular way to sign the agreements are remotely. There are many apps available and our agreement will work with any of them. However, our agreements will specifically integrate with Signable.co.uk and by selecting that option within the Builder means when you upload to Signable, hidden code will be used to automatically insert date and signature boxes in the correct area.

Completing The Guarantee Agreement
We always advise obtaining a guarantor for every tenancy whenever possible. Ideally, the guarantor will be a homeowner in England or Wales. This is so that if there is money owing it can be easier to get paid.

The Tenancy Builder has a guarantee agreement included if you select there is to be a guarantor.

Check Smoke And Carbon Monoxide Alarms
From 1 October 2015 where a tenancy has been granted in England only, the dwelling must be equipped with a smoke alarm on every storey with living accommodation and a CO alarm in every room with a solid fuel appliance.

The landlord must ensure that each prescribed alarm is in proper working order on the day the tenancy begins. This checking of the alarm can be carried out by the landlord or landlord’s agent.

If not done earlier in the day, you should now check all smoke and CO alarms – ideally with the tenant present. The guidance issued by the DCLG suggests a suitable way of showing the alarms were tested on the start day of the tenancy by making –

provision for the tenant to sign the inventory to record that the required alarms have been tested by the landlord and the tenant is satisfied they are in working order.

Please see this article for full details about these requirements.

Protect the Deposit and Notify Utilities
If a deposit has been taken, register the deposit with the chosen scheme. This must be done within 30 days of receipt otherwise you will be liable to hefty penalties.

Write to the local authority council tax department, electricity, gas and water authority with names of tenants, commencement date and readings as appropriate.

In particular, if the property is in Wales there are severe penalties for failing to notify the water authority. A failure to do so will result in the landlord being jointly liable to pay the tenants water charges. See this article for details.

Once the deposit has been protected, ensure the tenant and any ‘relevant person’ (somebody who paid the deposit on behalf of the tenant) get a copy of the protection certificate issued by the scheme.

Checklist of What to Do at the End of the Tenancy
For a checklist for what to do at the end of a tenancy, please see this article.