Guidance how to sign a lease

A Guide to Lease Signing for Landlords: Step-by-Step Process and Best Practices

There are two types of legal property ownership: freehold and leasehold. A freehold property is when an individual owns both the property and the land on which it is built.

In contrast, a leasehold means you sign a lease agreement with the freeholder, allowing you to use the property for several years.

After signing a lease agreement, the landlord would charge ground rent and an annual service charge as contributions to maintaining communal grounds or making overall repairs.

However, the Leasehold Reform (Ground Rent) Act 2022 has ended the ground rent of new residential leasehold properties.

Apart from this, landlords must consider several legal elements when signing a lease agreement; this information is crucial to protect both the landlord and the tenant.

This article offers a step-by-step guide on the entire lease agreement process for landlords. Keep reading to learn more.

Role Of A Lease Agreement

In simple terms, the lease agreement is the contract between the landlord and tenant stipulating the terms both parties agree upon and will be responsible for throughout the lease.

A lease agreement includes the property manager’s appointment and responsibilities and obligations, along with the compensation, lease term, monthly rent (if applicable), security deposit, and much more.

While the least agreement is beneficial, the several steps involved can be daunting. Below, we will discuss the critical steps for landlords looking to draft and sign a lease with tenants.

Before The Lease Signing Process

Every landlord must understand certain aspects before signing a lease agreement to ensure the entire process is smooth and you don’t get caught up in hurdles after drafting the agreement.

Here are the key factors to keep in mind:

Lease Type

Since a lease is legally binding, you must choose the best way to have it.

While it is legal to have a verbal agreement for a one-year contract with a month-to-month tenancy, it is always better to have a written agreement signed by both parties as proof to prevent any breach of terms.

Tenant Screening

To avoid having troublesome tenants, landlords must thoroughly screen and do background checks on potential tenants.

This saves landlords the burden of countless problems, which can be as minor as payment defaults or property damage to worse situations that involve a lawsuit.

Preparing The Property

Keeping your property on top of its maintenance and repair jobs is extremely important, especially if you plan on leasing it.

If your property is in its best shape, it will impress potential tenants and prevent them from backing out after seeing their future home.

The Lease Signing Process

After performing all the necessary checks and approving your tenant, you should draw up the lease agreement and complete the signing process.

What To Include in The Agreement?

● Tenant Details: The tenant’s full-length name is a must so the landlord has an accurate record of their property’s occupants; this will also foster accountability and responsibility among tenants, safeguarding the landlord against any breaches.

● Property Details: Include a thorough property description, such as the address, storage areas, assigned parking zones, etc.

● Lease Duration: Specifying whether it’s a fixed-term lease or a month-to-month arrangement. Beware of renewal clauses and clarify whether to terminate or extend the lease after the initial period.

● Payment Details: You have to be direct and precise about payment terms and conditions; list the monthly rent amount, payment due dates, late payment charges, and requirements for a rent increase to prevent any financial disagreements.

● Security Deposits: If applicable, state the purpose and amount of the security deposit. Stipulate a complete refund upon the lease termination and specify situations that warrant withholding this deposit.

● Maintenance Requests: Ensure the tenants know if any maintenance charges are applicable, and keep provisions for the tenant to submit maintenance requests in case they encounter any defective or dangerous circumstances.

● Subletting Clause: Specifying whether your tenant can sublet or have any guests on the property is crucial. This ensures you’re aware of any unknown individuals around your property.

● Dispute Resolution: Not everything is as sweet as honey, and some sticky situations may arise. State the legal measures involved to ensure conflicts have quick and unproblematic resolutions.

● Date and Signature: This one goes without saying, but without a date and signature, the value of your agreement is nullified, so make sure it’s there to confirm both parties accept the lease terms.

Signing The Agreement

The landlord can sign the lease in person or online using digital signatures.

All parties must sign this document, including the tenant(s), property manager, and owner; if a co-signer is involved, they must also sign it.

On a side note, having the tenants sign the agreement first is good, especially if the owners or managers aren’t present.

Best Practices For A Smooth Leasing Process

Craft a good lease.

Know the laws governing landlords and tenants and create a law-abiding lease with relevant information and simple language.

Update the lease to avoid any legal faux pas because laws change often; this will also help you in case of any major defaults, such as sudden property abandonment by tenants.

Be clear about any expectations.

Keep your agreement crystal clear and concise about rules or covenants to ensure both parties are on the same page and avoid misunderstandings.

Wherever duties and decorum are involved, mention everything from noise caps to furry friends to DIY property projects.

Inspect the property before the tenancy begins.

Create a move-in checklist to specify the property’s condition and existing damage to prevent confusion about its condition when the tenants move in or leave.

Document the state of the walls, ceilings, doors, windows, floors, plumbing fixtures, appliances, electricals, cleanliness, trash, recycling, etc.

Tenant-landlord relationship

Get to know your tenants and understand their concerns or queries while voicing yours.

Landlords and tenants often find themselves at loggerheads due to a lack of communication, and one of the parties feels wronged. So, build a stable relationship with them.

The British Landlords Association is a national landlords association for residential & commercial landlords. Join us today; membership for the year is only £79,95!

British Landlords Association