A Guide to Tenancy Terms (Part 1)

A Guide to Tenancy Terms

Searching for a rental property can feel challenging, and it isn’t made any simpler by the fact that tenancy agreements come loaded with a range of unfamiliar terms. To make things easier, we’ve put together this guide to some of the jargon that tenants find most confusing. You should also check out our post on how to find a property to rent.


Arrears are outstanding rent. Arrears can represent the full value of the agreed rent (if nothing has been paid), or part of the value of the agreed rent (if some, but not all, of the rent has been paid).

Assured Shorthold Tenancy (AST)

This is the commonest form of tenancy agreement, and is known by either its full name, or the common abbreviation ‘AST’.

Banker’s Draft

Sometimes, tenants are asked to pay a deposit, plus a month or so of rent in advance, using a banker’s draft. Banker’s drafts offer a safer alternative to cheques, which can bounce if there are insufficient funds present to cover their value.

To get a banker’s draft you will need to pay the bank cash, and they will issue a draft of the equivalent value. This can then be given to the person you need to pay. Be aware that some banks apply fees and may require 24 hours to issue a draft.

Break Clause

A break clause can be added to a fixed-term tenancy agreement, and enables either party to end the agreement before the term is complete. Break clauses are most often used where the period of the agreement is 12 months plus.

Client Money Protection Insurance (CMP)

CMP protects rental payments that are made to letting agents before being transferred to the landlord. CMP provides protection against the threat of embezzlement (fraud) by a dishonest letting agent.

Council Tax

Council tax is a local authority tax used to pay for services provided by the council. Council tax is charged by local authorities throughout Britain, and the tenant is typically responsible for paying it.


Covenants are terms set out within a rental agreement, which the tenant agrees to by signing that agreement. Covenants cover a range of things which the tenant is expected to either do, or not to do, while a resident at the property. Covenants may also set out the landlord’s obligations.

Credit Search References / Credit Searches and Reference Checks

Most landlords and letting agents perform a credit search and reference checks on prospective tenants, though this work is sometimes outsourced to specialist reference checkers. As part of the process, contact will be made with the tenant’s current landlord and employer, while a self-employed tenant’s accountant may be contacted. It’s also normal for a credit check to be performed at this stage, so the tenant’s history of financial management and loan repayments can be looked at.

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