With an increase in landlord and tenant disputes in the courts, relying on an oral agreement with your landlord or your tenant is risky. When the relationship sours, it’s quite common for one party to deny the existence of any agreement, leaving the distraught party to start court proceedings as the only means to enforce the oral agreement.
There are differing types of tenancies that can arise pursuant to an oral agreement, each may affect your occupation rights in alternative ways. These agreements can be one of the following:
1. Licence to occupy
This type of arrangement provides permission to use the premises for a short term period which can either be fixed or dependent on payment of rent on a weekly or monthly basis.
The right to occupy the premises is on a non-exclusive basis. This gives the landlord the entitlement to occupy the premises and bring the licence to an end, by serving notice to terminate. A licence to occupy grants the tenant no legal interest in the property.
2. Tenancy at will
A tenancy at will is also used for short term lettings. The length of term of the agreement is not specified and continues while the premises are occupied (with the landlords consent). It can be terminated by either party at any time. The notice period is negotiable between the parties and agreed at the outset. The agreement doesn’t grant any exclusive possession to the tenant. Also noteworthy, the tenancy will automatically end if the landlord sells its interest in the premises or ends its ownership, say by death (or insolvency, if a company ).
A lease offers the most protection for a landlord and tenant however the Law of Property Act 1925 specifies certain formalities must be met for a lease to be validly created by way of an oral agreement. The law requires the term to be agreed at not more than 3 years, the tenant to take possession and pay the best market rent (as opposed to a lump sum premium at the outset).
The key to a harmonious landlord-tenant relationship is transparency, only achievable via formal written documentation.
A properly drafted lease will comply with the various technical requirements to create a valid interest in the property and will clearly set out the landlord’s and tenant’s obligations to one another. With the right legal advice, a lease is the best form of protection for both parties.
For further information please contact us.