Recent research carried out by Direct Line for Business reveals that up to 10% of landlords don’t have a fully legal letting agreement between them and their tenants. The new research results suggest that some landlords have no formal written tenancy agreement with their tenants at all while many others may have a defective one.
The research results indicate that even where legal contracts are placed, many landlords and agents could be using forms which are not fully up-to-date with changes in the law, leaving them not fully protected and in some cases putting their ability to evict a bad tenant at risk.
Of those landlords surveyed who were not using a letting agent, 58% said that they were using modified agreements obtained from previous lettings carried out on their behalf by an agent. Others use a template they were given by a friend (38%) or one they have modified, which they found on the internet (20%).
The survey revealed that it is very common for new landlords to use a letting agent for their first lettings, eventually taking on the job themselves once they have gained enough confidence.
However, what they fail to do is keep themselves up-to-date with changes in the law and the necessary paperwork that goes with it. This approach leads to problems if things go wrong and the relevant documentation is sub-standard. 13% of the landlords questioned reported they have had difficulties in this way when disputes arise. 2015 saw perhaps the biggest amount of legal change in the private rented sector (PRS) for many a year, and the amount of documentation and compliance issues for private renting in England multiplied considerably.
Not just letting agreements, but forms and possession notices such as Section 8 and Section 21 have all changed and will not be legally enforceable if used in their old forms. New legislation introduces during recent times requires important clauses in tenancy agreements, for example in the cases of health and safety: smoke and CO alarms, where the onus is placed on the tenant to make regular checks... during the tenancy.
One issue that is commonly overlooked by inexperienced self-managing landlords is the protection of deposits in one of the government approved deposit protection schemes, and just as important, the serving on the tenant of the deposit statutory notice (section 213).
Without this compliance, and for tenancies starting on or after 1st October 2015, the serving of the Gas Certificate, the EPC Certificate and the government’s “How to Rent” Guide, any possession notice served will be invalid. Nick Breton, Head of Direct Line for Business, said: “…tenants and landlords need a contract in place to protect both their interests. Contracts, deposits, and deposit protection all help to make clear what is expected from each party when renting a property and which can help minimise disputes where possible.
If an old contract is adapted it may not comply with new legislation or be relevant for the current market. Given the volume of disputes arising from tenancy agreements, it’s important to get the contract seen by a legal professional before it’s signed.” Landlords should ensure that they obtain their agreements, forms, and notices from a trusted source where the agreements are regularly updated.
Reference: http://www.landlordzone.co.uk/news/the-importance-of-using-correct-documentation