A Rent-to-Rent business depends on permission.
You may have found a suitable property, negotiated an attractive rent and built a strong operating plan. However, if your intended use is not properly documented, the entire business may be exposed.
A standard residential tenancy agreement may prohibit:
* Subletting
* Paying guests
* Short-term accommodation
* Commercial use
* Multiple occupants
* Alterations
* Advertising the property
You should never assume that a landlord’s verbal approval automatically overrides the written tenancy terms.
The agreement must accurately reflect what both parties have approved.
**This article provides general educational information and is not a substitute for advice from a qualified legal professional. Property laws and contract requirements may vary by location and transaction.**
## 1. Full Details of the Parties
The agreement should clearly identify everyone entering the contract.
Include:
* Landlord’s full legal name
* Operator’s full legal name or company name
* Contact addresses
* Telephone numbers
* Email addresses
* Identification or company-registration details where appropriate
* Authorised representatives
Confirm that the person granting you the tenancy has the authority to do so.
Where an agent is involved, verify the landlord’s ownership and the agent’s authority.
## 2. Accurate Property Description
The agreement should identify the exact property.
Include:
* Full address
* Apartment or unit number
* Property type
* Number of rooms
* Parking allocation
* Included furniture and appliances
* Shared facilities
* Storage areas
* Any excluded part of the premises
Attaching photographs, an inventory and a condition report can prevent future disputes.
## 3. Approved Use of the Property
This is one of the most important clauses.
The agreement should state exactly how the property may be used.
Examples include:
* Residential subletting
* Room-by-room accommodation
* Student accommodation
* Corporate accommodation
* Serviced accommodation
* Short-stay accommodation
* A combination of approved uses
Avoid vague language.
If you intend to host short-stay guests, the agreement should not describe the property only as a private residence occupied by you.
The written agreement should also clarify:
* Maximum number of occupants
* Whether guests are permitted
* Whether bookings may be advertised online
* Whether the operator may collect rent from occupants
* Whether the operator may issue licences or subtenancy agreements
## 4. Express Permission to Sublet or Manage Occupants
Do not rely only on the absence of a prohibition.
The landlord should expressly permit the approved arrangement.
The clause should explain whether you may:
* Sublet the entire property
* Rent individual rooms
* Host paying guests
* Use booking platforms
* Enter occupancy agreements
* Collect deposits
* Manage occupant access
Clear permission protects both parties.
## 5. Tenancy Term
State:
* Commencement date
* Expiry date
* Renewal process
* Notice period
* Whether renewal is automatic
* Whether rent will be reviewed
* Conditions for extension
Consider whether the tenancy term is long enough to recover your setup costs.
A short agreement may be risky if you are investing heavily in furniture and renovation.
## 6. Rent and Payment Terms
The agreement should record:
* Total rent
* Payment frequency
* Payment dates
* Approved payment method
* Bank details
* Late-payment consequences
* Rent-review process
* Whether VAT, service charges or other fees apply
* Whether rent is refundable in any circumstance
Keep evidence of every payment.
## 7. Deposit and Other Initial Payments
Document:
* Security or caution deposit
* Agency fee
* Legal fee
* Service charge
* Utility deposit
* Estate charges
* Refund conditions
* Permitted deductions
* Timeline for returning the deposit
Do not pay undocumented charges.
## 8. Repairs and Maintenance
The agreement should distinguish between:
### Landlord responsibilities
These may include:
* Structural defects
* Major plumbing failures
* Roof problems
* Electrical infrastructure
* Building defects
* Pre-existing damage
### Operator responsibilities
These may include:
* Routine cleaning
* Minor repairs
* Damage caused by occupants
* Replacement of consumable items
* Interior upkeep
* Reporting serious defects promptly
Define the approval process for repairs and whether repair costs can ever be deducted from rent.
## 9. Furniture, Alterations and Improvements
If you plan to furnish, decorate or modify the property, obtain written permission.
The agreement should address:
* Painting
* Installation of air conditioners
* Security cameras
* Smart locks
* Signage
* Internet equipment
* Partitioning
* Furniture installation
* Removal of improvements at the end
It should also state who owns added items and whether the property must be restored.
## 10. Utilities and Service Charges
Clarify responsibility for:
* Electricity
* Water
* Internet
* Waste disposal
* Security
* Estate dues
* Cleaning of shared areas
* Generator costs
* Maintenance levies
* Government charges
Unclear utility responsibilities can destroy the expected profit margin.
## 11. Insurance and Liability
The agreement should address responsibility for:
* Building insurance
* Contents insurance
* Public liability
* Occupant damage
* Theft
* Fire
* Water damage
* Accidents
* Loss of business income
Do not assume the landlord’s insurance covers your business activities.
## 12. Compliance With Rules and Regulations
The operator should comply with applicable laws and building rules.
The agreement may refer to:
* Estate regulations
* Noise restrictions
* Waste-disposal rules
* Safety requirements
* Occupancy limits
* Registration or permits
* Fire-safety measures
* Neighbour relations
Before signing, confirm that the proposed use is not prohibited by the estate, building management or superior lease.
## 13. Landlord Inspection Rights
State:
* How much notice must be given
* Permitted inspection times
* Emergency-access conditions
* Frequency of routine inspections
* Who may attend
* How occupant privacy will be protected
The landlord should be able to protect the property without disrupting the accommodation business unnecessarily.
## 14. Breach and Remedy
The agreement should explain what happens when either party breaches the contract.
Possible breaches include:
* Unpaid rent
* Unapproved use
* Property damage
* Excessive occupancy
* Illegal activity
* Failure to repair
* Interference with the operator’s lawful use
Where appropriate, include a period in which the defaulting party can correct the breach.
## 15. Break Clause and Early Termination
A break clause allows one or both parties to end the agreement before the final date under defined conditions.
It should specify:
* Earliest break date
* Required notice period
* Outstanding payment obligations
* Deposit treatment
* Handover requirements
* Occupant transition
* Treatment of furniture and improvements
Without a workable exit clause, an unprofitable property can become a long-term financial burden.
## 16. Sale or Transfer of the Property
The agreement should explain what happens if the landlord sells or transfers the property.
Consider:
* Whether the tenancy continues
* Notice requirements
* Access for inspections
* Treatment of your investment
* Transfer of the landlord’s obligations
## 17. Dispute Resolution
State how disputes will be handled.
Options may include:
* Direct negotiation
* Mediation
* Arbitration
* Court proceedings
* Jurisdiction and governing law
A clear process can prevent every disagreement from becoming an immediate legal battle.
## 18. Handover and End-of-Tenancy Conditions
Document:
* Required property condition
* Final inspection
* Return of keys
* Removal of personal items
* Repair of operator-caused damage
* Utility clearance
* Return of deposit
* Transition of existing occupants
Use a signed checkout report.
## 19. Inventory and Condition Report
The inventory should list:
* Furniture
* Appliances
* Keys
* Meter readings
* Existing damage
* Paint condition
* Plumbing condition
* Electrical fittings
* Photographs or videos
Both parties should sign it before occupation.
## 20. Signatures and Witnessing
The final document should be signed by the relevant parties.
Depending on the transaction, witnessing, stamping or registration may be appropriate.
Seek legal guidance before execution.
## Final Thoughts
A good agreement is not designed to intimidate either party. It is designed to remove uncertainty.
Every major promise made during negotiation should appear in the final document.
Do not start advertising, furnishing or placing occupants in a property until the approved use is properly documented.
The cheapest agreement is not always the safest agreement. A qualified legal professional can help identify risks that may cost far more later.
**Rent2Rent World provides agreement checklists and proposal resources to help you prepare for a professional discussion with your landlord and legal adviser.**