Amending a tenancy agreement
How can you change a tenancy agreement without spending time and money renewing the whole contract? Find out how to make amendments to a contract using a tenancy agreement addendum.
A tenancy agreement can’t predict everything that might come up during the course of the tenancy. Circumstances often change, as may the relationship between the landlord and tenant. Maintaining a relevant agreement is an important part of managing a buy to let property.
Let’s say you find out three weeks into the tenancy that your tenant is a qualified painter and decorator. They would like to decorate the property to a professional standard for free, but the tenancy agreement doesn’t allow it.
You might also have to change agreement terms that discriminate against a tenant. For instance, a ‘no pets’ clause will discriminate against a tenant who uses an assistance dog. Unless you have a good reason, you will need to change this clause to allow guide dogs in the property.
It is best practice to put any change to a tenancy agreement in writing. This will generally mean amending the tenancy agreement, which you can do by adding an addendum.
Amending a tenancy agreement with an addendum
An addendum is a form that is added to the end of the agreement. It details which parts of the original contract are changing (if any) and what is replacing them. Both parties, the landlord and the tenant, need to agree upon and sign an addendum.
An addendum won’t always be necessary. Many clauses qualify their provisions with the phrase “without the express permission of the landlord”. In these cases, written permission will suffice. Written permission won’t need a signature, but you will wish to keep a copy of the letter for your own records.
Side letters; an alternative to addendums
Landlords and tenants quite frequently enter into side letters (supplemental to the lease) to reflect particular arrangements between them.
Side letters can include rent concessions where the landlord might, for example, agree to accept a lower rent than that specified in the lease. It is relatively common practice for a landlord to specify in such a case that if the tenant breaches a condition of the concession or a term of the lease then the concession given to the tenant will be cancelled.
The difference between an addendum and side letter
“We are sometimes asked the difference between an addendum and a side letter. An addendum to a document simply means an addition to a document but the expression does not in itself specify how the addition is documented. Commonly, an addendum is simply used to describe a schedule, specification or other similar item attached to the end of the document in question. A side letter – in the context of something such as a lease - is a more specific description of a letter signed by the parties which contains details of additional terms agreed between the parties and which are not mentioned in the lease itself”. Spire Solicitors (www.spiresolicitors.co.uk).
The law remains complex and each individual case will depend, among other things, on how the individual side letter is drafted and construed. The reality, however, is that a landlord will no longer have the guaranteed ability to cancel a concession or other term of a side letter in the tenant’s favour purely because the side letter states that such remedy is available to the landlord. Landlords must be mindful of this when negotiating any side letters which include concessions.
When is an addendum not suitable?
Tenancy agreements cannot override UK statute. Standard contracts distinguish certain responsibilities, such as maintaining the structure of the property, as the landlords. Changing this using an addendum will have no effect and will make the clause unenforceable.
Likewise, new amended clauses should not make excessive demands or that impose excessive penalties on the tenant. A court would consider such terms unfair and thus unenforceable.
Do you have the necessary knowledge and expertise to draft the addendum yourself? If not, use a solicitor. When considering any addendum:
- make sure both you and your tenant agree to the changes
- make a written notice stating the change to be made to the agreement
- include any further necessary terms, such as restoring the property at the end of the tenancy or extra cleaning required for pets
- if the change supersedes anything in the original agreement, strike it out and make sure both you and your tenant initial the change
- make sure both you and your tenant sign the addendum
- make sure both you and your tenant have a copy of the addendum and keep it with your copies of the original tenancy agreement
This information should not be interpreted as financial advice. Buy to let mortgage rates are subject to change. Speak to our advisors for a mortgage illustration. Seek tax advice from a professional.