Landlords should ask for a guarantor if there are any doubts about the tenant’s ability to fulfill his or her tenancy obligations but where the landlord still wants to take him/her on as a tenant. This is usually where the tenant does not meet one or more of the following requirements:

1 Has not lived at the present address for more than 6 months
2 Has not worked for present employer for more than 6 months
3 Is a student
4 Is below the age of 21
5 Has a low or non-existent credit score

A guarantor guarantees (underwrites) the tenant’s obligations; to pay rent, to pay for any damage, to pay for cleaning, any outstanding bills or any other tenancy related liabilities and is legally bound to do so by virtue of the guarantor agreement (contract).

For the landlord, having a guarantor is like having an insurance policy against the risk of a bad tenant. As with all insurance policies, claims against guarantors are on the increase. Landlords must therefore verify their guarantors in pretty much the same way they do a tenant:

1 Guarantors should be credit checked and referenced as you would a tenant
2 Guarantors should show that their earnings or resources are sufficient to pay all tenancy liabilities if necessary.
3 Guarantors should be home owners.
4 Guarantors are often relatives of the tenant, though this is not absolutely necessary.

Where you have a joint tenancy situation, for example a student house, all tenants are individually and severally liable for all tenancy liabilities. Therefore, a guarantor guaranteeing one of the tenants in effect is guaranteeing them all. Not all guarantors are aware of this and they may be unwilling to take on this responsibility if they know. However, the risk is somewhat reduced where ALL the parents of a house of students act as guarantors, though in theory any single one of them could be held responsible.

Guarantors need to be verified just as you would a tenant. This means they need to complete a guarantor application form which is pretty much the same as a tenancy application.

Landlords should be aware that you cannot hold a guarantor liable for obligations he/she is not fully aware of, or for terms in an agreement which are deemed to be unfair. Therefore any tenancy agreement used should be up-to-date (meets Office of Fair Trading guidelines) and be explicit on the following points:

1 The tenancy referred to – full details of the property and its location.
2 The tenant/s referred to – full names of each tenant (having verified their identities).
3 The tenancy agreement and its obligations – the guarantor must be given ample opportunity to read and question the tenancy agreement on any points he / she does not understand BEFORE the agreement is signed and witnessed.

Guarantors MUST have seen and approved the tenancy agreement they are guaranteeing prior to the signing and they must also sign a Deed of Guarantee. This signing should be witnessed.

If the tenant defaults in the payment of rent or any of the other tenancy obligations the guarantor will pay the landlord.

“A fee of x % plus VAT will be charged for a tenancy renewal/extension for a second year or further period”

The fee is normally between 60% and 100% of that charged for the original let. The clause is usually tucked away on the last page of the document and many first time Landlords only become aware of it when they receive an invoice from their letting agent following a renewal. Their reaction is normally disbelief that an agent could charge such a large amount for what they see as re-typing a Tenancy Agreement.

Renewal fees are a long standing convention in the industry. Was the Government to pass a new law today making them illegal I suspect that we would see an immediate increase in the initial commission rate charged of between 20% and 30% as without renewal fees agents would need to take all of the commission upfront rather than on a pro-rata basis. The losers in such an arrangement would be those unlucky Landlords whose tenants only stay for one year and then move on.

Ruses pulled by Landlords to avoid the renewal fee include arranging for the tenant to move out for a single day, claiming to have sold the property to another family member or the most common; arranging the renewal directly with the tenant and then writing to the agent informing them that they no longer require their services. None of these tactics work.

I’ve seen Landlords ask excellent tenants to leave rather than pay the agent’s renewal fee and it is a classic example of false economics. The Landlord ends up paying a higher fee for what will probably be a less reliable tenant. Landlords can ease the pain of the renewal fee by addressing it at the start of their agreement with that agent.

Agents will be far more amenable to negotiate when they are not already holding your signed agreement to the fee. Getting the fee waived is perhaps too much to expect but you should certainly aim for a 50% reduction on the initial fee. I would estimate the less than 50% of tenants stay past their initial term agents will not want to jeopordise a let by playing hardball over a renewal fee that may never materialise.

Furthermore when the time comes to renew the tenancy make your agent work for their fee. You are quite entitled to ask for an increase in rent after 12 months and your agent should negotiate this on your behalf. An increase of 3% is normally acceptable to tenants that don�t want the hassle of moving and would offset a large chunk of the renewal fee. If the property is looking dirty ask the agent to make a major clean-up a condition of the renewal and get them to check that it has been done.

Finally, while renegotiating the renewal fee you may also want to take a look at the other clause in the agreement that is often overlooked by Landlords; the sale clause:

“Should a sale be effected with the same tenant or an associated party, a sale commission fee calculated at 1.5% of the purchase price, plus VAT, will become payable at the time that the sale is completed”.

After all, if you were instructing an agent just to sell the property you would try and keep the commission to a minimum. The type of property that a previous tenant looks for when they decide to buy is often similar to the last place that they rented so it is not that unusual for them to buy their last rental property.

Written by Justin Burns MRICS, owner of a busy North London Lettings Agents and a practising Chartered Surveyor.

This article has been supplied to LandlordZONE by Caroline Wheeler at
www.mypropertyguide.co.uk

How to deal with tenants in a flooded property is a nightmare situation. This article kindly supplied by leading specialist property solicitors, Pain Smith, gives pertinent and timely advice to those unfortunate enough to need it right now.

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As most agents will be aware a landlord is under general obligation to provide property that in reasonable condition for the tenant to inhabit. However, due to unforeseen circumstances property that was in good condition may become uninhabitable in whole or in part during the tenancy.

Agents should be looking to take actions along the following lines:

Habitation clauses: Ideally, tenancy agreement should have clause stating that the rent, or fair proportion of it, is not payable if the property becomes uninhabitable in whole or in part unless the damage is caused by the actions of the tenant. There should also be clause giving either party the right to terminate the tenancy at short notice if the property is to be uninhabitable for any significant length of time.

Insurance: An important followup to habitation clause is adequate insurance for the landlord to be able to recover the rent payments he will lose while the property is not available to be occupied.

However, insurance companies are increasingly unwilling to provide this type of cover, especially at the cheaper end of the market.

The flooding of summer 2007 may make insurance companies even less willing to provide such cover in the case of certain properties that are deemed to be at flood risk. Some policies will pay to have the tenant rehoused. As the premiums are tax deductible expense such policies are to be recommended even though they are provided at higher cost.

Rehousing:There is some doubt as to whether landlord is under legal obligation to rehouse the tenant. On one side there is the presumption that the landlord will provide accommodation to tenant for the term of the tenancy as long as they pay the rent.

On the other side landlords cannot be liable for what is known as force majeure, or an ‘Act of God’. This leaves landlords in something of quandary. The best advice is to offer to arrange the rehousing of tenant as long as they pay the rent or to offer surrender of the tenancy.

Each case will need to be considered in the light of the clauses available in the tenancy agreement, the insurance position, and the availability of alternative accommodation in the area at the time.

With regard to insurance claims agents must remember that FSA regulations prevent them form making claim or form handling claim if they do not have the appropriate registration. For most agents this will mean that they can liaise with the loss adjuster but cannot fill in claim form. Be warned that this is criminal offence.

Dr David Smith is a trainee solicitor with PainSmith Solicitors, niche practice specialising in residential landlord and tenant law. He can be contacted on 01420 565310 or by email at david@painsmith.co.uk. If you wish to subscribe to the free legal updates service then you should email update@painsmith.co.uk with the phrase “subscribe updates” in the subject of the email.

PainSmith Solicitors Legal Updates are provided for information only and are not legal advice. If you do have a legal problem, you should talk to a lawyer or adviser before making a decision about what to do.

You may wish to use the CLS/CDS Directory (www.justask.org.uk/public/en/directory) to locate an adviser. The information provided here is written for people resident in, or affected by, the laws of England and Wales only. You should note that date given in the update and be aware that the information given may become inaccurate due to changes in the law or its implementation.

Many agents and landlords fail to understand the key differences between a commercial or business tenancy and a residential tenancy. This matter is becoming increasingly important as individuals work-life balance changes and more flexible working practices are adopted. Frustratingly, the law has failed to keep pace with such changes in lifestyle and finds itself lagging behind society in this area.

Tenancies can either be commercial tenancies or residential tenancies; there is no half-way house. Concepts such as live-work, while they exist as planning categories, do not apply to landlord and tenant law. The test for whether a tenancy is commercial or residential in nature is based entirely on the tenant’s authorised use of the property.

If a tenant is using a premises overwhelmingly for residential use then the Courts will construe it as a residential tenancy. Therefore a businessperson who works from home in the evenings or a doctor who occasionally sees patients at home will both be residential tenants. By contrast, a property with any significant commercial use will be seen as a commercial tenancy even if it also has a residential component. Therefore a tenant who runs a business from home, or who works primarily from home and sees clients there regularly will normally be viewed as a commercial tenant. Particular care should be taken in regard to self-employed persons in this context. Any self-employed individual should have a business address and workplace entirely separate from the rental property address otherwise the risk of inadvertently creating a business tenancy will be high. It should also be remembered a tenant who rents residential premises for the purpose of running a business providing accommodation will also be a commercial tenant. This is increasingly common at the moment, particularly in London.

However, this only applies to authorised usage. A tenant who uses premises for commercial reasons without permission will not be a commercial tenant. However, the fact that the tenancy agreement excludes business use will not necessarily be sufficient to protect the landlord. A landlord or agent who authorises a tenant to use the premises for business purposes will be consenting to that use and creating a business tenancy, notwithstanding any provision to the contrary in the actual written agreement.

If a tenancy is a business or commercial tenancy it is held under the terms of the Landlord & Tenant Act 1954 (“the ’54 Act�). This is a very different piece of legislation to the legislation that covers residential tenancies, such as the Housing Act 1988. One of the key provisions of the ’54 Act is that it provides indefinite security of tenure to most tenants. This means that at the end of their tenancy a commercial tenant can seek a new tenancy on similar terms to the previous one and, if the landlord rejects this, can apply to the Court for a new tenancy. While there are ways of avoiding this they are complex and must be done before the start of the tenancy. Landlords and agents would be very unwise to enter into any form of commercial tenancy without taking legal advice and clearly understanding their rights and obligations.

Commercial tenancies escape much of the legislation that will normally apply to residential tenancies. So, for example, the obligation of the landlord to keep the property in repair as required by section 11 of the Landlord & Tenant Act 1985 will not apply and the landlord and tenant are free to come to whatever arrangement they see fit regarding repairs to the property. In fact, it is currently common for commercial tenants to take responsibility for all repairs and decoration in the premises they rent. However, while the Protection From Eviction Act 1977 will not apply to a purely commercial tenancy it will apply where the tenancy has a mixed commercial and residential component. So, where the tenant is legitimately residing in the Premises a landlord will still need to go to Court to regain possession even if the property has been let on a commercial tenancy.

Dr David Smith is a trainee solicitor with PainSmith Solicitors, a niche practice specialising in residential landlord and tenant law. He can be contacted on 01420 565310 or by email at david@painsmith.co.uk. If you wish to subscribe to the free legal updates service then you should email update@painsmith.co.uk with the phrase “subscribe updates� in the subject of the email.

PainSmith Solicitors Legal Advisors are provided for information only and are not legal advice. If you do have a legal problem, you should talk to a lawyer or adviser before making a decision about what to do. You may wish to use the CLS/CDS Directory (www.justask.org.uk/public/en/directory) to locate an adviser. The information provided here is written for people resident in, or affected by, the laws of England and Wales only. You should note that date given in the update and be aware that the information given may become inaccurate due to changes in the law or its implementation.

Much can turn on whether the tenant is deemed to have accepted the rent proposed by the landlord because time was of the essence in a particular step of the rent review process. It is of course common to find provisions in a lease setting out the mechanism for the rent review process and one of the most common of these provisions is where the lease specifies that if the tenant fails to serve a counter notice within a certain period of time after receipt of the landlord’s initial proposed rent, the tenant shall be deemed to have agreed to pay the rent specified in the rent notice.

It is then common to find a further provision specifying that time is to be deemed to be of the essence in the rent review process. At first blush it would therefore appear to be a straightforward matter to determine whether time was of the essence, but that presupposes clarity in the lease and as is so often the case, leases can be open to interpretation, thereby casting doubt on whether the parties actually intended time to be of the essence.

The historic position
The historic position was that unless there were contra indications time was not to be of the essence in rent review time table. In United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904, Lord Diplock stated: “I would hold that in the absence of any contra-indications in the express words of the lease or in the interrelation of the rent review clause itself and other clauses or in the surrounding circumstances the presumption is that the time-table specified in a rent review clause for completion of the various steps for determining the rent payable in respect of the period following the review date is not of the essence of the contract�. Further guidance came from the Court of Appeal in Bickenhall Engineering Co Ltd v Grand Met Restaurants Ltd [1995] 1 EGLR 110. The court held that there is a rebuttable presumption that time is not of the essence in a rent review time table.

This presumption may be rebutted by:
• Any contra indications in the express words of the lease;
• Any contra indications in the inter relation of the rent review clause and other clauses in the lease; or
• The surrounding circumstances.

In that case Neill LJ said that in the light of the previous guidance from the House of Lords the contra indications must be “clear and explicit� in order for time to be held to be of the essence in a rent review clause. Bickenhall was referred to extensively in Starmark Enterprises Limited v CPL Distribution Limited [2001] EWCA Civ 1252, where the Court of Appeal held that the normal presumption that time is not of the essence in rent review cases was displaced by a clear provision deeming that the lessees shall have accepted the increased rent if they fail to serve a counter notice within a specified period. Arden LJ added that “where there is a deeming provision in this type of case and nothing more, the time for service of the counter-notice should normally be taken to be the final one�.

It was hoped that Starmark would provide much needed clarity and parties would be left in no doubt where they stood when there were clear deeming provisions in the lease. That, however, has not proved true, particularly in situations where the rent review provisions have been poorly drafted, as exemplified in two recent cases.

Lancecrest
The Court of Appeal in Lancecrest Limited v Dr Ganiyu Aiwaju [2005] EWCA Civ 117, had to examine the issue as to whether a trigger notice served by a landlord implementing a rent review was valid, notwithstanding the fact that it was served late. The landlord was to give a “review notice� to the tenant no more than 12 months before the review date (which was the end of every fourth year of the lease period).

Lancecrest acquired the reversion to the lease in August 2001 some six months after the first review date. No trigger notice had been served and one was only served in February 2002. It was proposed to raise the rent from £6,500 to £30,000. The tenant claimed that the trigger notice was invalid as it was not served before the review date of 5th February 2001. The Court of Appeal placed great reliance upon the House of Lords’ decision in United Scientific and held that despite being over a year late the trigger notice was valid because time was not of the essence.

The court considered that there was nothing express in the lease making time of the essence in the service of the trigger notice. This was also contrasted against the fact that time was expressed to be of the essence in respect of the service of the counter notice. In order for the tenant to have benefited from the provision ensuring that the landlord shall give notice no more than 12 months before the review date, the tenant must have served a notice making time of the essence before the review date.

That is something the vast majority of tenants would not consider doing. It is therefore clear that in order for a party to seek to make time of the essence in a step of the rent review process; clear contra indications must be present. Such an approach was also adopted by the Court of Appeal in Wilderbrook.

Wilderbrook Wilderbrook Ltd v Oluwu [2005] EWCA Civ 1361 concerned a badly drafted lease particularly the provisions concerning rent review. After service of a trigger notice the tenant had one month after receipt of this notice in order to serve on the landlord a counter notice. The lease said that if the tenant shall not serve a counter notice within the specified period then he was deemed to have accepted the rent proposed by the landlord. The lease went on to state: “As respects all periods of time referred to in this Schedule time shall be deemed to be of the essence of the contract PROVIDED ALWAYS that the Landlord or the Tenant may notwithstanding anything in this Schedule require the appointment of the Surveyor to determine the question of new rent payable…and any delay by the Landlord or Tenant in this respect shall not deprive the Landlord or the Tenant of their respective right to have a New Rent determined by the Surveyor�.

A rent review notice was sent to the tenant on 15th April 2003. The tenant’s surveyor responded on 22nd May 2003 – over one month after service of the trigger notice. The landlord alleged that as this counter notice was out of time the tenant was deemed to have accepted the proposed rent.

The Court held that if the above clause had been present but without the proviso the claim that the tenant was deemed to have accepted the proposed rent would be unanswerable. In that situation there would be a deeming provision and a clear contra indication that time was to be of the essence in this step of the review. The Court placed great emphasis on the “clear and explicit� test and held that the proviso as set out above would apply to the whole rent review process. It would therefore include the part of the process concerning the service of the counter notice by the tenant. In this case the contra indications were not sufficiently “clear and explicit� as the proviso appears to limit the deeming provisions.

Conclusion
It is useful to remember when drafting rent review provisions in a lease that, if time is to be made of the essence in a step of the process it should say so. The greater the clarity in drafting, the less likely it is that there will be problems later on. This is particularly important given high amounts at stake in many rent reviews and with parties continuing to fail to adhere to the express time limits. When advising after a problem has arisen it is certainly worth bearing in mind the need to find “clear and explicit� contra indications, which could make time of the essence. Lancecrest and Wilderbrook are just two recent cases which show how difficult that can be.

GARY BLAKER Selborne Chambers

Introduction On 1 December 2005 the House of Lords reversed the decision of the Court of Appeal in London Diocesan Fund v Avonridge Property Company Limited. (Full report at [2005] 1 WLR 3956.) As a result of the House of Lords ruling it is now clear that landlords, when granting new leases of premises, may exclude all liability to their tenants once they have parted with their interest in those premises. This ruling applies to all leases, whether the premises are commercial, residential or of any other nature.

Summary of the case: Until 1st January 1996 whenever a lease was granted the original landlord and the original tenant remained liable pursuant to their covenants in the lease for the duration of that lease unless they excluded or limited that liability. This continuing liability arose because of the “privity of contract� principle. This principle could result in the original parties to a lease being sued for liabilities affecting premises with which they had ceased to have any connection many years earlier. The privity of contract principle was widely acknowledged as imposing unfair burdens on the original parties to leases, particularly tenants.

The Law Commission investigated the matter and reported in 1988. The Commission proposed the total abolition of the privity of contract principle in the case of tenants. However, in the case of landlords, it proposed that they could only be released from their liability if they went through a “notice� procedure. It took some years for Parliament to find time to pass legislation embodying the Commissions’ recommendations.

The legislation took the form of the Landlord & Tenant (Covenants) Act 1995. In the aftermath of the passing of the Act, a question debated by property practitioners was whether the notice procedure contained within the Act was a comprehensive code applying to all leases, or whether the use of that procedure could be avoided by words inserted in the lease, limiting the landlord’s liability.

This is the issue that fell to be debated in the case of London Diocesan Fund v Avonridge Property Company Limited. The facts of the Avonridge case were marked by a lack of factual merit on the part of Avonridge. This had the practical result that Avonridge’s legal submissions initially encountered substantial judicial resistance. In February 2002 Avonridge purchased a lease (“the Headlease�) of seven small shop units in Headstone Drive, Wealdstone, Middlesex. The Headlease was for a term of 99 years, with a rent of £16,700 per annum, subject to rent review. In the space of six weeks Avonridge granted new subleases to six of the shopkeepers. In return for a substantial payment, on average £75,000, each shopkeeper obtained a 99 year sublease at a peppercorn rent. After granting its six new subleases, and having made a substantial profit, Avonridge then assigned its Headlease to a Mr Phithwa.

Mr Phithwa was described by The House of Lords as a “man of straw�. Mr Phithwa paid no rent pursuant to the Headlease and the freeholders of the shops, the London Diocesan Fund, forfeit the Headlease. This meant that all the new subleases were automatically forfeit. To avoid losing their shops the subtenants had to agree new leases. This obliged them to agree to pay rent and also to incur substantial costs. The shopkeepers sought to pass on their financial burden to Avonridge. They alleged that Avonridge was liable for damages due to non-payment of rent under the Headlease. It was common ground that Avonridge had not adopted the notice procedure in the Act. Avonridge’s answer was that it did not need to use this procedure because it had limited its liability under the subleases to the time when it owned the Headlease.

Avonridge argued that due to its limitation of liability it was not responsible for the non-payment of rent. The sympathies of the trial judge and the Court of Appeal rested with the small shopkeepers and Avonridge’s arguments in those courts were rejected. The House of Lords agreed that Avonridge’s position lacked factual merit. Indeed Lord Nicholls, delivering the leading judgment, said that: “On their face the transactions have the appearance of a scam�.

Despite this, however, Lord Nicholls, together with three of the other four law lords, (viz. Lords Hoffmann and Scott and Baroness Hale) accepted that Avonridge’s argument was legally sound. Lord Nicholls pointed out that the statutory provisions: “are intended to operate to relieve tenants and landlords from a liability which would otherwise exist. They are not intended to impose a liability which otherwise would be absent. They are not intended to enlarge the liability either of a tenant or a landlord�.

Conclusion The House of Lords’ decision has given landlords a very valuable drafting tool. Any well-advised landlord when granting a lease should now limit its liability to the period when it is the landlord. This should ensure that it has no liability after parting with its interest in the premises. Suitable words will avoid the need for using the notice procedure in the Act. Moreover those landlords who since 1996 have granted leases that limited their liability to the period when they owned premises can breath easily. They now know that the limitation of liability in their leases will be effective.

MARK WARWICK Selborne Chambers

Eventually is perhaps the key word here as, not being of the highest priority on the government’s agenda at the moment, it is unlikely to receive enough attention for a speedy passing through the house.

According to the Commission “A third of the population of England and Wales – six million households – rent their homes. The law governing their relationship with their landlords is an irrationally complicated mess. This project seeks to replace it with a modernised, understandable, and just legal structure.â€?

On 5 May 2006 the Commission published its report – Renting Homes: The Final Report (Law Com No 297).

Volume 1 explains recommendations. There is an illustrative model secure contract and standard periodic contract.

Volume 2 contains the draft Rented Homes Bill.

A summary and press release are also available.

The Commission is recommending a much simplified system of housing law: basically two forms of contract for tenants: secure and standard contracts which would replace the present the present “multiplicity of tenancy and licence types�.

The Commission argues that landlords and occupiers would benefit from:

• Identical contracts for council and housing association tenants
• Improvements to council and housing association tenants’ rights;
• Government approved model contracts to make private renting easier, cheaper and more flexible.
• A clear and practical legal framework for supported housing.

The Commission’s recommendations would allow for the abolition of:
• secure tenancies
• assured tenancies
• assured shorthold tenancies
• introductory tenancies
• demoted tenancies
• various varieties of common law tenancies

Only one major existing form of tenancy would not be abolished – Rent Act tenancies, but there would be powers for the Government to do so.

You can still have your say on this important piece of proposed legislation which will no doubt have far reaching implications for landlords.

Solicitor Tessa Shepperson has now produced in association with the Law Commission an online answer form to allow landlords to respond to this easily. The form can be found either by navigating to the Law Reform section of the Landlord-Law site or via the special url www.law-reform.co.uk.

All responses will be forwarded to the Law Commission when the consultation period ends on 11 July 2006, and at that time a summary report of the responses received will be compiled and published on the Landlord-Law site.

Tom Entwistle, Editor, LandlordZONE

A friend of mine recently asked me how they should be dealt with. His friend had purchased a property and not realised the consequences of his actions. His solicitor must have been inept. He had bought the property with the promise that it could be vacated, only to learn about protected tenancies the hard way. I’m sure this is not an isolated incident.

In these days of assured shorthold tenancies, it is easy to forget that there are still a lot of tenancies around that are either regulated or statutorily protected.

If you know what you are doing these can make good reversionary investments. With a sitting tenant in place, the property, depending on its condition and the life expectancy of the occupier, is worth a fraction of its vacant possession value. But if you are prepared for a wait – and of course it’s a gamble -these investments can pay off handsomely.

TENANTS’ EXTRA

The story of private residential tenancies throughout much of the 20th century is one
of rental market decline. It’s a perfect example of how well-meaning, socially motivated legislation can have the exact opposite effect of what was intended.

Instead of protecting tenants’ interests it resulted in the virtual destruction of the market. It also detracted from the aim of a flexible, mobile workforce by creating tenants that never move.

It is hard to believe that giving security of tenure for life – and for the lives of spouses and offspring – while controlling rents through the ‘fair rents’ system, at uneconomic levels, could ever have been contemplated. No landlord in his or her right mind would buy and supply property to let under these terms.

Most tenancies before 15 January 1989 are governed by the Rent Act 1977. It is not possible to change them, unless the tenant can be persuaded without duress to move. Grounds for possession or eviction are discretionary and very limited. The protected shorthold tenancy, which kicked off the buy-to-let revival, was first introduced by the Housing Act 1980.

It applies to tenancies that were granted on or after 28 November 1980. These had to be for a fixed term of between one and five years and, before the start of the tenancy, the landlord had to give notice in a specified form that the tenancy was a protected
shorthold – a section 20 notice.

The tenant has fair rent protection as long as it does not break the terms and the landlord has the right to get its property back, provided these conditions are met. Evidence of service of the section 20 notice is critical, otherwise it is a protected tenancy.

The Housing Act 1988 introduced assured tenancies: either ‘full’ assured tenancies or assured shorthold tenancies, thereby giving landlords a choice.

Tenancies starting after 15 January 1989 gave assured tenants security of tenure but with no restriction on how much rent could be charged. Assured shortholds gave no security of tenure after an initial six months, but did provide some rent protection. Again a prescribed notice had to be served, otherwise the tenancy would default to a ‘fully’ assured one with protected status.

The legislation was changed again by the Housing Act 1996, which made the default tenancy the assured shorthold for any tenancy commencing after 28 February 1997.
Most tenancies will now fall into this latter category.

There is therefore little risk to the landlord, even if the tenancy was created without a proper written agreement, although the tenant has a right to one within 28 days.

This article by Tom Entwistle, editor of the rental property website LandlordZONE originally appeared in Property Week 5 May 2006.

See also: Directory – Sitting Tenants