Is A Tenancy Agreement Really Necessary?

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Having a tenancy or rental in place can incur cost and possibly reduce profit margins. However, the rationale to enter in a tenancy agreement is similar to having any other contract; to have clear terms in black and white to avoid ambiguity. In this article we will discuss about the importance of having a rental agreement for both parties.

1. Fixed Rental Rate And Duration For Tenant

Having a tenancy agreement can prevent the house owner from raising rental fee discriminately within the rental period. The tenant is protected from any rental fluctuation within the duration stated in the agreement.

With no clear agreement about the rental rate and period, owners can increase rental rate at whim and force tenants to comply or leave, resulting in you hunting for a home loan. With a valid tenancy agreement, the tenant is protected within the stipulated parameters of the agreement.

2. Protecting Tenant’s Deposits

A rental agreement is essential as a proof that tenants has placed a sum of money to the owner as a refundable deposit. Without the agreement, the owner can simply deny any transaction that has happened in the past. The owner can also refuse to refund the deposit if he or she decides to do so.

In addition, the tenancy agreement also clearly outlines the responsibilities of the owner and tenant during the whole duration of tenancy. If these terms are not met by the owner, the default in payments can cause the tenants to suffer the repercussions.

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