Types of tenancy
Types of tenancy
If you’ve done any investigating into types of tenancy online, you’ve probably seen that there’s a good number of them scattered around. Assured shorthold tenancy… Non-assured tenancy… Regulated tenancy… What does any of it really mean? When these terms are thrown into property adverts, online articles, or rental agreements without any explanation — it’s easy to feel frustrated.
But we’re here to help! In this handy guide, we’ll take you through all the different types of tenancy agreements in the UK and what each one really means for you. So take a deep breath, get yourself a cup of tea, and let’s get you sorted.
Types of tenancy agreement UK
It’s worth saying to begin with, that there are 4 types of tenancies that are more common than any others.
- Assured shorthold tenancies (AST)
- Excluded tenancies for lodgers
- Assured tenancies
- Non assured tenancies
Of these different types of tenancy, Assured Shorthold Tenancies are by far the most common and you’re highly likely to have one of these if you’re a renter. But to make sure we cover all bases, there are 2 types of tenancy aside from the usual 4 that you’re less likely to come across.
- Regulated tenancies
- Company lets
Regulated tenancies haven’t been used since 1989 and company lets are for, you guessed it, companies. While it’s unlikely that you’ll be dealing with either of these, we’ll run through the details of each tenancy type in this article just so you can make sure.
Assured shorthold tenancy (AST)
The majority of tenancies in the UK are assured shorthold tenancies. There are a couple of features that define this type of tenancy, so if a property checks off the following boxes, it’s safe to say it’s likely rented under an AST.
- The property is privately owned, not commercial
- The rental period started post-1989
- The property is a tenant’s primary home
- The landlord doesn’t live on the property
Not only are ASTs the most common type of tenancy, but they also provide the best protection for tenants. There’s usually a fixed term, that’ll be something like 6-12 months, during which a landlord can’t up the rent unless their tenant agrees or there’s a rent review clause in the tenancy agreement. A landlord will also need to pay their tenant’s deposit into a government-approved protection scheme.
For more info on deposits, why not read: ‘5 things you need to know about tenancy deposits’.
Excluded tenancy or lodging
This type of tenancy is for lodgers who share a property and its facilities with their landlord. Aside from the awkward business of sharing bathrooms and negotiating who takes the bins out on any given day, excluded tenancies don’t offer tenants as much protection as an AST. That’s because landlords don’t need to protect their lodgers’ deposits in a government scheme, and depending on the agreement, they can usually evict their tenants without giving much notice. If you’re considering an excluded tenancy, it’s important to make sure you’re happy with the tenancy agreement before signing.
To learn more about living with your landlord, check out: ‘What is a resident landlord’.
Much like regulated tenancies, assured tenancies are few and far between these days. They were more commonly used between 1989 and 1997 and allowed a tenant to stay in a property for a considerable time. They were usually agreed on at least a 5 year fixed basis, making them a safe choice for long-term accommodation. Housing associations still sometimes use assured tenancies — for example, in retirement villages so the elderly can have peace of mind in their last homes.
Non assured tenancy
Non assured tenancies are like a catch-all for tenancies that don’t quite fit the requirements of other tenancy types. For example…
- If the rent is less than £250 per year
- The property is a holiday home, not a main place of residence
- The landlord lives with their tenant, but no facilities are shared
With this type of tenancy, a landlord doesn’t have to pay their tenant’s deposit into a government-approved protection scheme. They also won’t need a Section 21 or 8 to end the tenancy, but the tenant does have the right to stay in the property until the end of a fixed-term (unless they’re misbehaving and not complying with the tenancy agreement).
You can find out more about Section 21 or 8 notices in: ‘Landlord eviction notice: a guide’.
This is one of the rarest tenancy types, only used pre-1989, and it’ll soon become extinct. It entitled tenants to fair rent as set by the Valuation Office Agency — but if you’re under the age of thirty, you probably don’t need to worry about this one.
Company lets are a whole different kettle of fish. They’re used when a property is being rented out to a company that intends to use the accommodation for its employees — as a result, different rules apply. For example, you’d give a “notice to quit” to your tenant asking them to vacate, rather than a Section 21 or 8 notice. Company lets are also governed by common law, so there might be different rules and regulations for renting this kind of property. However, similar to some of the other tenancy types we’ve discussed, any deposits given won’t need to be paid into a government-approved protection scheme.
A few final tips…
Aside from the different types of tenancy listed here, it’s also useful to note that tenancies are usually either “fixed-term” or “periodic”. A fixed tenancy might be 6-12 months, whereas a periodic tenancy is agreed on a rolling basis — monthly, or even weekly. Now you know your ASTs from your non-assured tenancies, why not take your expertise a step further with: ‘Periodic tenancy: what is it and how does it work’.
If you’re a tenant, you might also want to check out: ‘Your rights as a renter’.
Aspiring landlord? Why not read: ‘Can I rent out my house’.
Urban Jungle is not a financial advisor and information in this article should not be taken as advice or recommendation.