If you’re new to the rental market, it may prove helpful to have a detailed understanding of a rental agreement. Setting this up correctly at the start is crucial to avoid costly legal battles down the line. To assist you with understanding the necessities of a lease agreement below is an easy guide to use when you or your managing agent drafts one:

What is a lease agreement?
The lease agreement is a legally binding document that contains all the necessary stipulations to help landlords and tenants avoid any complications or misunderstandings regarding the responsibilities of each party for the duration of the tenancy.  

The layout of a standard lease agreement
The layout of your lease agreement should follow something that resembles the below structure:

1. Naming the two parties involved.
2. A detailed list of definitions so that nothing is left open to interpretation.
3. The time frame for the lease and a renewal clause that outlines how the renewal procedure will work.
4. The amount payable in rent, the date by which rent should be paid, penalty charges for late payments, and the banking details where the rent should be paid into.
5. The deposit amount and a list of circumstances where this amount can be used by the landlord. It should also state how this money will be repaid to the tenant at the end of the lease period.
6. Other common clauses to include: a detailed outline of who is responsible for maintenance and repairs; stipulations around sub-letting; procedures around terminating the lease; procedures for breach of contract; and a section that outlines any rules against pet ownership and structural changes to the property.
7. Lastly, the signatures and full names of both parties involved as well as witnesses for each party will need to be on the document.

Aspects the lease should always cover
The more detailed the contract, the smoother the rental should run, as each party knows exactly what is expected of them. No aspects of the rental agreement should be left open to interpretation. The document should cover all aspects, such as:

• Acceptable tenant behaviour
• Breakage costs
• Preferred method of payment
• The date that the rental is payable
• Time frames to the required clauses
• The penalties for breached conditions

Include all contract breaches
Common breaches of contract for tenants include defaulting on payments, making structural changes to the home, or keeping pets when the lease agreement stipulates not to. Likewise, a common breach of contract for landlords is the failure to maintain aspects of the property. Tenants and landlords should check that these aspects are covered in the lease agreement to avoid issues during the tenancy.   

Why should you use a rental agent?
For a percentage of the rental income, a rental management agent will assist you with tenant selection, reference, and credit checks, as well as taking care of the day-to-day management of the property. They’ll also be up-to-date with the latest legal and regulatory developments to protect landlords and tenants. When enlisting the services of a managing agent, you should also sign an agreement with the rental agent in which all T&Cs outlined, such as the commission structure and what is expected from the agent.

Reach out to a rental professional
If you’re still unsure of how to go about creating a lease agreement, we’d recommend reaching out to a real estate professional who’d be able to offer you expert advice. For those who are thinking of putting their property on the market, it’s best to involve a rental agent from the start so that they can help set up a lease agreement that protects both parties and ensure a smooth tenancy.