The landlord-tenant relationship is a complex one. There are countless steps and legal obligations that take place from the minute the landlord lists the property until the tenant turns the key. But which steps in the process are legally binding and when can either party back out without financial ramifications?
Here we’ll take an in-depth look into what let agreed means, how it works, and what legal obligations are tied to it.
What Does ‘Let Agreed’ Mean?
Consider it a handshake or a gesture of good faith, but ‘let agreed’ is when both the landlord and prospective tenant enter into a verbal or written agreement that will eventually result in signing an official tenancy agreement. During these early stages, both parties move forward with background checks, referencing, and filing all necessary paperwork to make things legal.
The difference is that no legal paperwork has been signed at this point. That means neither party is legally bound to move forward and the other party can’t take any legal action if the deal falls through. ‘Let agreed’ also means that neither party will be exploring other options during this time. That means the prospective renter won’t be searching for other properties and the landlord will cease all showings and stop actively seeking out tenants.
Prospective tenants may notice listings on Rightmove or Zoopla with the words ‘let agreed’ beside them. That means that the property is in the early stages of the tenancy agreement and is currently unavailable. While the property isn’t currently let, ‘let agreed’ means it will be in the near future. Essentially, the landlord has accepted the prospective tenant’s offer but before official paperwork is signed, all checks and references must be complete. This is similar to a property sale that’s listed as ‘pending’. The wheels are in motion but no legal paperwork is in place.
Can ‘Let Agreed’ Properties Fall Through?
In short, yes. Anything can happen which is why a ‘let agreed’ property isn’t officially off the market. With no legal obligation by either party, things can fall through at any time. A few things can cause this good-faith agreement to fall apart.
For starters, the tenant may decide that the property isn’t as ideal as they once thought. The tenant may also fail their reference checks or show inadequate funds. The landlord may also explore other tenant options or delay renting the property immediately. This can be frustrating for both parties but until the tenancy agreement is signed, neither party has any legal recourse.
If you’re a tenant interested in a property that’s currently listed as ‘let agreed’, don’t give up hope just yet. While the deal will most likely go through, there are no guarantees. It may be worth it for you to contact the landlord or agent anyway to express your interest in the property. If the deal does fall through, you’ll be at the top of the list for future consideration. In some cases, the agent may have access to other, similar properties that might also fit your needs. Just keep in mind that most ‘let agreed’ properties are well underway to being a done deal, so don’t end your search until you have a solid agreement.
Why Do Landlords Still Advertise Properties that Are ‘Let Agreed’?
Finding affordable rental properties in the UK can be frustrating. What’s even more frustrating is finally falling in love with a property only to see the words, ‘let agreed’ beside the listing. As a prospective tenant, you may be wondering why landlords are able to list properties when there’s a potential renter already on the line. As frustrating as it might be, there are valid reasons why landlords and property owners continue to list properties that are ‘let agreed’.
Things Can Still Fall Through
This is the number one reason landlords and agents still leave property listings on popular portals despite them being ‘let agreed’. If agents remove the listing and then the deal falls through, they’re left starting from square one. That means listing the property again, drumming up interest, and paying for advertising. By leaving the listing in place, landlords can continue to generate interest until a final tenancy agreement is signed. Think of it as a backup plan for the property owners.
The entire online property search process follows a certain formula. To improve the user experience, listing websites like Zoopla and Rightmove will bookmark your favorites and help generate similar results. By deleting listings completely, the user experience would be compromised. Users want to be able to find their bookmarked information, which is why many listing portals keep featured properties on their pages, even if they’re currently unavailable.
‘Let agreed’ property listings give tenants and agents a better idea of how the market is currently behaving. By seeing which properties are switching from available to ‘let agreed’ and how quickly, renters know what they’re up against and the average monthly rent.
The Difference Between ‘Let’ and ‘Let Agreed’
‘Let agreed” is when a landlord and tenant have entered into an agreement together that allows the reference process to proceed but without any legal agreements in place. During this time, the deal can still fall through but neither party should be actively seeking other rental arrangements. When a property is listed as “let” it means that the deal is officially complete.
All the reference checks have been done including financial, and that the official rental agreement is legally in place. Even if the tenant hasn’t moved into the property yet, they’ll begin paying rent and start the moving process. At this point, the landlord cannot accept another offer without legal complications. The most common types of tenancy agreements for the private rental sector, or PRS, in the UK are known as assured shorthold tenancy agreements (ASTs).
An AST is a standard agreement that details UK housing laws guaranteeing tenant’s the right to rent and use the property for the entire term of the contract. It also protects the landlord’s rights to repossess the home after the terms of the agreement end.
The Responsibilities Associated with a ‘Let Agreed’ Arrangement
Most let agreements involve three parties — the tenant, the estate agent, and the landlord. In order for things to run smoothly, each person must perform their own tasks and obligations. Here’s a breakdown of exactly what those are, though they may vary from one arrangement to the next.
The landlord or property owner has a long list of responsibilities and obligations when entering into a ‘let agreed’ situation. These include, but aren’t limited to:
- As a landlord, the health and safety of your tenants are of utmost importance. The property must meet all safety and health regulations. This includes structural requirements, complying with local fire and safety regulations, and having all necessary certifications in place. All electrics must be checked and certified by a qualified electrician and all gas appliances must be serviced by a registered engineer. Landlords must obtain and file all documents and certificates that ensure the property is up to code, safe, and inhabitable.
- If the property is fully furnished, the landlord must take a detailed inventory of all the home’s contents including photographs and what condition the items are in. Sometimes, the estate agent will take care of this as part of their agreement. This inventory list and report will come in handy if there’s a dispute over any damage to the property. Landlords must provide this report to the tenant as well.
- To protect your financial interests, landlords should also verify that the tenant is registered for all utility bills and other monthly expenses before the tenancy agreement officially begins.
Estate Agent Responsibilities
Most landlords work with an estate agent to help simplify the rental process. Depending on the types of services the landlord is paying for, agents can help (although charging a fee) with the following services during the ‘let agreed’ process
- Estate agents are responsible for performing all background and referencing checks to ensure the tenant is a good fit for the property. This includes verifying their financial income as well as speaking to former tenants and performing a criminal background check.
- Following these checks, the agent will report their findings back to the landlord and tenant.
- The agent will then determine a move-in date, setting a payment schedule, and rent amount. Once everyone is in agreement, the estate agent will oversee the signing of the tenancy agreement.
- Most estate agents will collect a safety deposit and the first month’s rent before the tenants move in. By law, the safety deposit must be deposited into a safety protection scheme within 30 days.
- For fully managed services, the estate agent is the one to hold and deliver the keys to the tenant on move-in day.
The good news for tenants is that during the ‘let agreed’ portion of the rental process, you’re not responsible for much. The only responsibility a tenant has during reference checks is to be completely forthcoming with their personal information. Once you enter a tenancy agreement, renters must pay the safety deposit in full and pay rent on time, on the agreed-upon date. Tenants are also bound to respect the property and its contents as outlined in the AST agreement.
Are Unwritten Tenancy Agreements Legally Binding?
It’s never a good idea to enter into an official tenancy agreement without a written and signed document. While a ‘let agreed’ arrangement is a sign of good faith when finalizing things, it’s always a good idea to get it in writing. Although a verbal agreement is considered a form of contract, without evidence or an official agreement in writing, your contract won’t hold up in court. This is a dangerous practice for both landlords and tenants and will complicate things if the tenancy ever ends up in court. At this point, it’s a matter of your word against theirs without any real protection for either party.
When Does a Tenancy Agreement Become Legally Binding?
So, at what point does a ‘let agreed’ arrangement become legally binding? As soon as the formal tenancy agreement is signed by all relevant parties, it becomes an official, legal document. At this point, if either party backs out, the other person can take legal action. In order for a tenancy agreement to be legally binding, it must contain certain elements including:
- The full names of all tenants
- The landlord’s full name and contact information
- The full address of the rental property
- The official start date of the tenancy
- The length of the tenancy
- The exact amount of the rental payment
- The date the rental payment is due
- Information about the deposit protection scheme
The minute the tenancy agreement is signed, it’s legally binding. All parties are now legally obligated to comply with the details. This agreement is in place to protect both the tenants and landlords. It’s important to note that until all the involved parties sign the tenancy agreement, anyone can back out. Backing out after the tenant has undergone (and passed) all of the reference checks is bad practice for a reputable landlord.
The ‘Let Agreed’ Period Can Be Stressful
It’s true. The ‘let agreed’ period of time comes with a lot of uncertainty. With no legal document in place, both parties are only morally obligated to uphold their end of the bargain. The good news is, it’s in both the tenant’s and landlord’s best interest to do exactly that. A landlord’s reputation is everything. Backing out of a ‘let agreed’ arrangement could tarnish their record and may scare future tenants away.
Once a tenant secures a property they love and the referencing process is underway, backing out would be foolish — especially in a competitive market where affordable rentals can be hard to find. The uncertainty and instability of a ‘let agreed’ arrangement can be stressful for both parties. A tenant may be stressed over having their entire financial and personal history put under a microscope.
Waiting for approval can also be agonizing for potential renters. If approved, some tenants have to scramble to access the necessary funds to cover both the deposit and the first month’s rent. But this doesn’t mean landlords are without stress during this time. When a landlord is between tenancies, they’re not bringing in any steady income.
The uncertainty of no legal agreement can be unnerving for them as well. With each passing day that the rental property remains empty, landlords worry about paying the bills on an empty house. Fortunately, most ‘let agreed’ properties end with a legal tenancy agreement. Understanding the process and both party’s rights can help protect tenants and landlords as the process unfolds.