Knowing the Basics of a Fixed Term Tenancy Agreement before Closing the Deal

Before renting out your property, be it a house or a plot of land, you need to decide what tenancy scheme you’re going to go into. A fixed term tenancy agreement, as opposed to a periodic one, is a contract between the landlord and the tenant which runs for a very specific period of time. Most landlords prefer this type of tenancy agreement because it gives them sure revenues for months, or even years, depending on what is stated in the contract.

A periodic tenancy agreement, on the other hand,runs for an undetermined period of time. In short, it will run as only long as both parties agree to stick to terms and conditions of the contract. Should either of them decide to terminate the contract, they can do so more freely than in the fixed term tenancy agreement.

Things you need to find out

You have to be very careful in choosing your tenants, as a landlord, once you go into a fixed term tenancy agreement. While this kind of tenancy agreement secures your revenues for a specific period of time, a long fixed term tenancy agreement can put you in troubled waters when you’re faced with a bad tenant. Unless you’ve stated terms and conditions for compensation in your contract, your tenant can get away with “improvements” that actually depreciate the value of the property, instead of appreciating it.

Ideally, the landlord should get his/her property back in the same way she left it with the tenant. Should the property be damaged in any manner, the tenant should be liable for the repairs. For example, the landlord can include a clause forbidding the tenant to remove any walls in the property. If s/he decides to alter the structure of the room in the house, s/he should ask the permission of the landlord first. This is the reason why the description of the property is a very important part of the fixed term tenancy agreement. It supports the landlord’s claim for damage compensations at the end of every lease period.

What’s in a fixed term tenancy agreement?

When a tenancy agreement runs for a fixed period of time, the paperwork is slightly different from a periodic tenancy agreement. In a fixed term tenancy, the specific term of lease is stated on the contract. This means that if the tenancy agreement only runs for 6 months flat, then the tenant will have to move out of the property or agree to renew the contract with the landlord. S/he may also choose to sign a totally new agreement with the landlord which may contain terms are either disadvantageous or advantageous for his/her position.

If you’re a landlord, and you’re composing the tenancy agreement, you should make sure that it contains the tenant’s full name and address. A very detailed description of the property is also in order as it determines the value of the house or land being leased out. To protect the property from damages, the landlord should include certain clauses forbidding the tenant from making any drastic changes, and holding him/her liable for any depreciation of the land.

On the other hand, this same clause can work against the landlord at the end of the lease because s/he will then be required to compensate the tenant should the tenant make any improvements that raise the value of the property up a notch.

Other conditions

As a landlord, you may also want to include clauses that indicate exactly how many people are allowed to live in the property, whether or not pets are allowed, whether or not children (toddlers who like to draw on the wall) are allowed to be a part of the tenancy, and whether or not the tenant is allowed to plant absolutely anything on the garden/field.

Landlords should also protect themselves from manipulative tenants who might try to sublet the property. Remember, liabilities could be messy ones subletting is involved. As much as possible, you should control the number of living creatures inhabiting your personal assets.

Getting the lawyer’s go signal first

While it’s tempting to compose the tenancy agreement yourself, you might want to have the draft examined by a lawyer who knows about these things better than you do. It’s actually pretty cheap to do this if you’re contacting the housing department of your city hall. A lawyer’s expertise is always needed when it comes to checking your tenancy agreement against existing tenancy laws within your state or country. It’ll save you the trouble of altering it later on when the tenant disagrees with your terms and conditions.