There are 2 main differences between a Tenancy Agreement and a Lease Agreement.
- Length/ period of tenancy
A Lease is a document that creates a fixed term tenancy for more than 3 years. To execute the lease, there must be a deed, meaning that the agreement has to be signed, sealed and the parties should exchange copies of the lease. A lease should be registered in the Lands Registry.
A Tenancy Agreement creates a tenancy for a period not exceeding 3 years. To enforce a tenancy agreement, it can be signed or verbally agreed between the parties. However, to protect their interests, both parties should keep a copy of the Tenancy Agreement as signed.
- Capacities of the parties
The capacities of the parties entering into the Lease/Tenancy Agreement affects the formalities for the execution of the agreement.
Generally, a party entering a lease must affix a red seal next to the signature of each signing person. A party entering into a tenancy agreement should affix a chop next to every signature.
| Capacity of parties | Formality requirements (wording commonly used for the execution clause) Lease | Tenancy Agreement |
|---|---|---|
| Individual | Signed, sealed and delivered by [name of party] | Signed by [name of party] |
| Sole proprietorship | Signed, sealed and delivered by [name of the sole proprietor] trading as [trading name of the sole proprietorship] | CHOPPED WITH the chop of the [Landlord/Tenant] and signed by [name of the sole proprietor] trading as [trading name of the sole proprietorship] |
| Partnership | Signed, sealed and delivered by [names of all partners of the partnership] trading as [trading name of the partnership] | CHOPPED WITH the chop of the [Landlord/Tenant] and signed by [names of all the partners] trading as [trading name of the partnership] |
| Limited company | Sealed with the common seal of [name of the company] and signed by [name(s) of the signatory(ies)], duly authorised by its Board of Directors | Signed for and on behalf of the [Landlord/Tenant, with company chop] by [name of signatory], duly authorised by its Board of Directors |
Key Takeaways
- A tenancy agreement is usually shorter in duration than a lease
- Different parties agreeing to a tenancy or lease agreement will require different formality requirements