Welcome to our comprehensive glossary of terms used in the UK letting industry. Understanding the terminology associated with renting a property is crucial for a successful and compliant tenancy.
From tenancy agreements and rent reviews to statutory obligations and fair wear and tear, this glossary aims to provide a clear and concise overview of the key terms used in the UK letting industry.
- Assured Shorthold Tenancy (AST): The default type of tenancy that is automatically created when a landlord rents out a private residential property to an individual or a family for a fixed term, usually 6 or 12 months, with the possibility of renewal. The rental amount must be below a certain threshold in order for the tenancy to qualify as an AST. Currently, the threshold is an annual rent of £100,000. If the rent exceeds these thresholds, the tenancy would not be classified as an AST, and different rules and regulations may apply.
- Break Clause: A clause in a tenancy agreement that allows either the landlord or tenant to terminate the tenancy before the fixed term ends, subject to the conditions specified in the clause.
- Business/Relocation/Diplomatic Break Clause: A clause in a contract that allows the agreement to be terminated if the tenant is transferred by the employer to another location or if the landlord’s employer repatriates them.
- Company Let: A rental agreement where a company is the tenant and rents a property for the purpose of housing its employees or for other business-related uses.
- Council Tax: A tax levied by local authorities in the UK on residential properties to fund local services such as schools, roads, and waste collection. The amount of council tax is determined by the valuation band of the property and the local council’s tax rate. Check your band here and find out the amount for that band here.
- Deposit Protection Certificate: Each authorised scheme will provide the tenant with a certificate to confirm that the deposit has been successfully protected.
- EICR (Electrical Inspection Condition Report): Electrical installations need to be tested to ensure they are safe and do not pose any risks of fire or electrical shock. The EICR is valid for five years.
- EPC (Energy Performance Certificate): A document that rates the energy efficiency of a rental property on a scale from A to G, with A being the most energy-efficient. An EPC is legally required for all rental properties in the UK and must be provided to tenants. The property’s EPC rating must be E or higher.
- Fair Wear and Tear: The normal deterioration of a rental property over time, which is expected to be taken into account by the landlord. It is distinct from damages caused by negligence, misuse, or intentional actions of the tenant, which may be deducted from the security deposit.
- Fixtures and Fittings: Any furniture, fittings, sanitary ware, decorative elements, white goods, other equipment, floor coverings, ceiling coverings, or wall coverings that belong to the landlord and are listed in any inventory and/or schedule of condition provided.
- Gas Safety Certificate: Where there is gas in the property, landlords are required by law to have an annual safety check of gas appliances and flues performed by a qualified Gas Safe registered engineer and to provide tenants with a valid Gas Safety Certificate.
- Guarantor: A person or entity who agrees to be responsible for the tenant’s obligations under the tenancy agreement, including the payment of rent and damages. Typically used when the prospective tenant has no credit history in the UK or their salary isn’t sufficient to pass the referencing checks.
- Head or Superior Lease: A lease (if any) that specifies the landlord’s ownership or control over the Premises and that may impose duties on both the landlord and the tenant(s).
- HMO (House in Multiple Occupation): A property rented out to three or more tenants who are not part of the same family and who share common facilities, such as a kitchen or bathroom. The landlord of an HMO must obtain a licence from the local authority.
- Inventory and/or Schedule of Condition: A detailed list of the condition and contents of a rental property at the beginning of the tenancy, used as a reference during the end-of-tenancy inspection to assess any damages or discrepancies. Any serious errors, misdescriptions, or other changes should be reported to the landlord as soon as possible after the lease begins.
- Joint and Several Liablity: A tenancy where two or more tenants are jointly and severally liable for the rent and other obligations under the tenancy agreement.
- Landlord: The person or entity that owns the property and rents it to the tenant.
- Landlord and Tenant Acts: Legislation in the UK that governs the rights and responsibilities of landlords and tenants in residential tenancies. It protects the interests of both parties and provides a legal framework for their relationship. You can read a guide to the Landlord and Tenant Act here, or explore the legislation here.
- Maintenance: Repairs and maintenance of a rental property, which may be the responsibility of the landlord or the tenant, depending on the terms of the tenancy agreement and applicable legislation. In England and Wales, Section 11 of the The Landlord and Tenant Act 1985 applies; in Scotland, the “Repairing Standard” of The Housing (Scotland) Act 2006 applies.
- Managing Agent: A company or individual appointed by the landlord to manage a rental property.
- Notice: A formal written notice given by either the landlord or the tenant to terminate the tenancy and vacate the property.
- Notice Period: The amount of time required by law for a landlord or tenant to provide written notice before terminating a tenancy or making changes to the tenancy agreement.
- Periodic Tenancy: A tenancy where the fixed term has ended and the contract continues on a rolling basis in line with rental payments (usually monthly).
- Permitted Occupier: Company leases usually specify who is authorised to occupy the property on behalf of the renting company, such as employees or representatives designated by the company, and any changes in occupants may require prior consent from the landlord. Permitted Occupiers may also be added to tenancy agreements in certain circumstances.
- Prescribed Information: Information about the protection of tenants’ security deposits that landlords in the UK are required by law to give to their tenants. This includes specifics regarding the tenancy deposit protection scheme being used, the scheme’s contact information, instructions on how to request the return of the deposit, and other legally mandated prescribed information.
- Referencing: Background checks on prospective tenants to verify their identity, creditworthiness, employment or income status, and previous rental history.
- Rent Arrears: Unpaid rent owed by the tenant to the landlord.
- Rent: The agreed-upon amount of money the tenant pays to the landlord for the use and occupation of the property.
- Rent Review: A clause in the tenancy agreement that allows the landlord to increase the rent after a certain period of time, subject to certain conditions.
- Right to Rent: A legal requirement for landlords to check the immigration status of prospective tenants and ensure they have the right to rent a property in the UK, as per the Immigration Act 2014.
- Section 21 Notice: A legal notice served by a landlord to terminate a tenancy using a “no-fault” eviction process, also known as a “no-fault eviction notice.” It requires the tenant to vacate the property after a specified period, usually two months.
- Section 8 Notice: A legal notice served by a landlord to terminate a tenancy for specific reasons, such as rent arrears, breach of the tenancy agreement, or antisocial behaviour. If the tenant does not comply, an eviction hearing is required before the county court.
- Security Deposit: A sum of money paid to the landlord by the tenant as a deposit for damages or unpaid rent. It is usually refundable at the end of the tenancy after agreed deductions for damages or unpaid rent.
- Stamp Duty Land Tax (SDLT): A tax that might be due on a tenancy agreement, solely the liability of the tenant(s). This is a legal obligation and HM Revenue and Customs may impose fines or penalties for failure to comply.
- Statutory Obligations: The legal responsibilities and requirements that landlords and tenants must comply with, including health and safety regulations, fire safety regulations, and other relevant laws.
- Tenancy Agreement: A legally binding contract between a landlord and tenant outlining the terms and conditions of renting a property.
- Tenancy Deposit Scheme (TDS): Government-backed schemes that requires landlords to protect tenants’ deposits in a registered scheme. The deposit schemes aim to safeguard tenants’ deposits and ensure their proper handling, including dispute resolution services for deposit disputes at the end of the tenancy.
- Tenancy Renewal: The process of extending the tenancy agreement for a further term once the initial term has expired.
- Tenant: The person or entity who rents the property from the landlord.
- Term: The length of time for which the tenancy agreement is valid, such as 6 months, 12 months, or on a periodic (rolling month-by-month) basis.
This glossary of tenancy terms has provided a comprehensive list of some of the most important terms that are commonly used in tenancy agreements. By familiarising themselves with these terms, tenants can ensure that they are on the same page and avoid any misunderstandings or disputes that may arise during the tenancy. Ultimately, having a clear understanding of UK tenancy terms can help to create a positive and mutually beneficial relationship between landlords and tenants and make the process of renting a property in the UK as smooth and stress-free as possible.
Klippa has qualified tenancy experts on hand to assist with all aspects of the property rental process. If you would like to find out more about our tenancy-related services, speak to one of our experts or send a message today.
