What is a tenancy agreement

I see so many keen people entering the property industry as Rent 2 Rent operators believing it to be a risk free money making  option.

Yes it can be a great step on the property ladder but it certainly isn’t risk free.

The most common mistake I see time and time again is R2R operator signing Assured shorthold tenancies (AST) with property owners and then renting the property to tenants who are also issued with an AST.

This equates to subletting, which until specific permission has been sort from the owner, their mortgage company and related insurers is classed as illegal.

So why is an AST not right for R2R?

An AST is an interest in land for a set period of time and for a set rent, the term tenancy is usually used to refer to a short term interests where lease is used for long term interests 

When a landlord and tenant sign an AST the landlord is giving the exclusive possession of the property to the tenant meaning they have control of the property, for this to be legally possible the tenant MUST be in occupation and use the property as they only or main home.

If a tenant never takes up occupation then the AST legally doesn’t come into force.

With this in mind R2R operators who sign ASTs with owners have no agreement in place for the job they will be doing and could find themselves in hot water should the landlord wish to regain possession of his property.

Without the correct agreement in place a R2R operator will have no rights and no power to stop the landlord dealing direct with the tenants and removing the R2R operator with immediate effect.

An AST is a Housing Act tenancies which is also covered by Protection from eviction act 1977, the occupying tenant will also have rights with regards to repairs to the property as well as quiet enjoyment.

If a tenant never takes up occupation none of these can apply, the R2R operator is known as a 'mesne' tenant (pronounced 'mean') and the ladder of interest is below.

Head landlord (owner) > Mesne Tenant (R2R operator) > Subtenant (occupier)

Generally, when a mesne tenancy ends, the subtenancy also ends and the head landlord is entitled to get the accommodation back with no-one living it.

If the mesne tenancy ends, the head landlord can evict the subtenant quite easily. 

In these circumstances they will be regarded as a trespasser and the head landlord doesn't need a possession order to evict.