Agreed rent is the term used when the tenant and landlord go through the process of checks, references and paperwork that takes place before progressing to the signing of the tenancy agreement. In simple terms, there is a big difference between an agreed tenancy and a rented property. An agreed tenancy means that a tenant has shown a serious interest in a property and has made a verbal offer to rent it. This initial offer will have been accepted in principle by the landlord or letting agent and, as a sign of the tenant's commitment, the tenant will have been asked to pay a refundable deposit to reserve the property, while the necessary reference checks are carried out.
The deposit is limited to one week's rent in the case of fixed-term tenancies. The agreed tenancy is used when a prospective tenant has indicated that they would like to rent a property and has made a verbal commitment to rent it. However, the process is far from complete. The term "Let Agreed" means that the prospective tenant has expressed a desire to rent the property in question, has made a verbal offer and the landlord has accepted it.
The tenant will also deposit a deposit to pass the property to Let Agreed, but the deal is not yet finalised. The term "agreed tenancy" is used to explain that a tenant has been found for a property and the terms and conditions have been agreed. As a result, the potential tenant will deposit a bond to guarantee that the landlord or letting agent will "hold" the property for them. Basically, the deposit is like a "reservation fee".
The agreed rent is almost the equivalent of "sold subject to contract" when buying a property. Even if a property says "rented subject to agreement", the property will still appear on the market for some reasons. The agreed rent means that the property is no longer on the market. A tenant has been found and the landlord or letting agency is in the process of signing the documents that initiate the lease.
Note: In all short-term rental agreements, security deposits must be placed in a government-backed rental deposit system. So at what point is an "agreed rent" agreement legally binding? As soon as all parties involved sign the rental agreement, it becomes an official and legal document. If the tenant decides to terminate the contract after having paid the security deposit, he or she may not get it back. Some may not do so at the request of the landlord until everything has been agreed and the security deposit has been paid, but this is unlikely to happen particularly often.
For those entering the rental market for the first time, terms such as 'Let Agreed' may leave them scratching their heads. Once all the necessary checks have been carried out and the landlord and tenant agree to the terms of the tenancy, contracts will be signed and the rental of the property will be completed. If you are interested in a property but see that it has "agreed rent", it is worth asking to be put on a list in case it falls through so that you can be the next to view the property and agree terms with the landlord. A tenancy agreement offers more flexibility as it is usually a 30-day term that is automatically renewed at the end of the rental period unless one of the parties decides to terminate the agreement.
The rental agreement is not legally binding and, even if there is a verbal agreement between the tenant and the landlord, it is no more official than a "handshake". A lease is a longer term agreement, usually lasting 12 months, but some landlords offer 6, 18 or 24 month leases. The landlord or owner has a long list of responsibilities and obligations when entering into an "agreed tenancy" situation. An agreed tenancy means that a tenant has made an offer for a property and that the general terms of the agreement have been decided by both parties (the landlord and the prospective tenant).
Tenants who have signed a tenancy agreement are bound by it, regardless of whether or not they have paid a deposit.