Q. Someone told me that tenancies for more than three years need to be signed as a deed. Is that correct and what does it mean?
A. A tenancy is technically a transfer of an interest in land and therefore, under the Law of Property Act 1925, cannot be done other than by ‘deed’. A document is created by deed if the signatures are witnessed and the document says that it is a deed.
However the Law of Property Act 1925 also said in s53(2) said that a deed was not necessary if:
- The term was not more than three years
- At ‘the best rent which can be reasonably obtained’.
- Without a ‘fine’ or payment for the tenancy (what in the last century used to be called ‘key money’).
This means that if you are renting a property for six months then if there is no deed (which usually there isn’t), a valid tenancy will be created when the tenants go into occupation. The tenancy agreement they have signed is still effective as a contract and the tenancy will be subject to its terms.
Although it is possible to create a valid tenancy without any written document at all, this is a very bad idea and landlords are strongly recommended to always have a tenancy agreement and not to hand over the keys until this has been signed.
Q. My assistant let our tenant in before he signed the tenancy agreement. He is now refusing to sign it and is also claiming that he has the right to pay rent in arrears. Can he do this?