Caven's guide to residential leases
In its most simple terms, a lease is a contract between a tenant and a landlord that sets out the agreed terms of the tenancy.
Most people will have signed a residential lease at sometime in their life, either as the tenant or the landlord. Although residential leases are more basic than commercial leases (take a look at our guide to commercial leases), it is still just as important to be thoroughly aware of the provisions of a residential lease before signing it.
Landlord and tenant disputes are common and a good way to prevent them from happening is by being familiar with the terms of the lease.
So what do you need to know? We will go through several of the most important parts of a lease that you should understand, and which could cause issues in the future. It's always best to be prepared and informed.
The rent clause sets out how much rent the tenant must pay the landlord, when the rent is due and how it must be paid.
Paying the rent is one of the key obligations the tenant has under the lease so it is important they know exactly what that obligation involves.
Failure to pay the rent is a serious breach of the lease which may lead to its termination and even legal action by the landlord. Tenants should therefore pay particular attention to this clause before signing the lease.
A residential lease may contain a clause that allows the landlord to increase the amount of rent payable by the tenant. The rent clause will outline when the landlord is able to ask for an increase and the procedure they must use.
If the tenancy is a periodic tenancy, the landlord will usually only be allowed to increase the rent once per year without the tenant’s agreement. If the tenancy is a fixed-term tenancy, the landlord must wait until the fixed term has ended before increasing the rent, if they do not have the tenant’s agreement.
Landlords must give tenants notice of any increases to the rent. If the rent is paid monthly or weekly, the landlord is required to give one month’s notice. In addition, the rent increase the landlord is asking for must be fair and realistic.
A landlord will always be responsible for a number of repairs under a residential lease. These include repairs to gas appliances, baths, sinks, drains, pipes, electrical wiring, the property structure and exterior, heating and hot water. In addition, they will responsible for repairing any damage caused during repair work. Landlords are also usually responsible for repairs to communal areas, such as staircases and driveways.
Tenants may be responsible for some repairs. They should only attempt to carry out repairs specified in the lease; otherwise all repair work should be done by the landlord. Tenants may be responsible for repairing damage caused while decorating or flood damage caused by an overflowing bath.
If a tenant has signed a lease for seven years or more, the lease agreement may say they have to contribute towards the costs of running and repairing the building. These costs are known as ‘service charges’. They can include the cost of repair to the structure of the building and communal areas, the cost of insuring the property, the cost of maintaining outside areas, and the cost of managing the property.
Service charges are one of the main causes of disputes between landlords and tenants. Tenants often dispute the cost of the repairs and refuse to pay the landlord. Landlords will want the work carried out to a certain standard but the cost of this standard may seem unreasonable to the tenants.
To avoid these kinds of disputes, the lease should include a consultation process that the landlord must follow before work is started. If tenants disagree with the quote, they can ask the landlord to obtain alternative estimates and the landlord must take these requests into consideration.
The landlord must also give the tenants notice of any service charges and make a formal request for payment. Many residential leases will have a minimum service charge that must be paid every year and if the costs run over, the landlord will ask for the balance at the end of each year.
Forfeiture of a residential lease is when a landlord terminates the lease because the tenant has breached their obligations under the lease. The landlord cannot terminate the lease for any breach; it must be a material breach and it must be expressly stated in the lease. This offers the tenant protection from the landlord arbitrarily ending the lease or from ending it before the tenant has had time to repair the breach.
If a landlord intends to terminate the lease, they must act immediately. If they do not, they may be deemed to have accepted the breach and forfeiture will not be allowed. For example, acceptance could be implied by the landlord’s acceptance of the next lot of rent paid by the tenant.
If a landlord wants to get the tenant out of the property they must apply to the court for an order authorising forfeiture. Attempting to remove a tenant from the premises without a court order is illegal and the landlord may end up having to pay the tenant compensation.
If you are about to enter into a residential lease, it is advisable to get an expert property solicitor to review it on your behalf before you sign it or hand it over to be signed. They will make sure all the necessary clauses are included and they will explain your obligations to you. Protect yourself by seeking legal advice on your lease today – call us on 08001 221 2299 or fill in the web-form above.