If one is in the happy position of having more spare land and buildings that one can reasonably use (sadly not I), the surplus is usually let to provide income. My last article dealt with agricultural tenancies which necessarily tend to affect land, outbuildings and perhaps a farmhouse. This article deals with the other side of the coin; tenancies of houses or cottages let in their own right, rather than as part of a farm. Actually, for the sake of completeness, there is a third side of the (now triangular) coin: business tenancies, which I shall deal with in a future article.
As ever, the main point if you are purchasing property affected by tenancies is to work out on what terms each tenant is in occupation and crucially how and when you can recover possession of that property, if you should ever require it.
Most residential tenancies are of dwelling houses let to an individual, as their main or only residence and this invokes the provisions of various Acts relating to residential tenancies – these take precedence over anything to the contrary agreed by the parties, which is why it is important to have some knowledge of the legislative framework. The main exception is where a property is let as a second home, in which case the legislation will not apply and it is a simple case of seeing what has been agreed between the parties.
Residential properties are nearly always let on fixed terms. However, the various legislation underpinning residential tenancies gives the tenant different levels of right to remain in the property at the end of the fixed term and notwithstanding that it has ended. The level of this ‘security of tenure’ available to a tenant depends on when his lease started. Legislation has become gradually more landlord-friendly over the years, such that now a landlord may now usually recover possession on giving two months’ notice to the tenant, as long as the fixed term of the tenancy has already expired. Only if the tenant refuses to leave, will the landlord need to apply to the court for a possession order. This is the regime for tenancies created after 1997. Similar tenancies created before then require a court order for the landlord to get possession and may be passed on to a spouse (although controversially not a co-habitee), on death, as long as they were also living in the property for two years prior to death. Tenancies commencing before 1989 are governed by the Rent Act 1977 which gives the tenant wide security of tenure, protection on rent charged and the right to pass their tenancy on, on death, to their successor – much as for a 1986 Act agricultural tenancy. Beware if you unearth anything which looks like this: and if you do, I suggest you start negotiating for a heavily reduced purchase price!
Residential tenancies for farmworkers follow a parallel history to those above, although they have retained an overall higher level of protection than ‘normal’ residential tenants, commensurate with such tenants dependence on their landlord as employer and the fact that they frequently pay no or low rent. A farmworker is someone working full time in agriculture, although neither gamekeepers nor assistants in farm shops qualify. Again, the date the tenancy started determines the rules that apply to it. New farmworker tenancies (1997 onwards) can be terminable at the end of the fixed term, on two months’ notice, but only if the appropriate notice is served on them before the start of the tenancy to this effect. Rather a neat point that is not as commonly known as it should be. If not, you may be stuck with them until they want to go, or you can persuade them to accept suitable, alternative accommodation.
The legislation relating to residential tenancies also set out other requirements. One of most important of these, is that if you grant a tenancy for less than seven years you cannot (legally) make the tenant responsible for maintaining the structure of the property and any provision to that effect will be ineffective (although most ex-students who have lived in digs should know this). That said, there are certainly deals done where the tenant accepts a discount in the term in exchange for taking on that liability, especially if the property is in a run-down condition to start with. This is fine as long as everyone is aware that it is the tenant who would win, if it ever went to court.
It was David Lloyd George who stated that “the Landlord is a gentleman who does not earn his wealth”. I hope the contents of this article is sufficient to rebut that assertion; the proper management of let properties is a time consuming matter, requiring attention to detail and obviously, some good advice along the way … but then again, I suppose a solicitor would say that.
About Elizabeth
Despite being one who feels the cold,
Elizabeth braved a move to Northumberland and has worked there as a
solicitor with the firm of Dickinson Dees
LLP, in the Agriculture, Farms and Estates Team, where she started life
as a trainee in 2003. As part of this specialist and nationally
renowned team, she works both for a number of larger estates and trusts
on an ongoing basis and also on one-off matters, covering the range of
rural property law, including; sales and purchases, sporting
rights,rights of way, easements and tenancies, to name a few. Outside
the office, she nearly managed to get sent to the North Pole, loves the
occasional hunt with the CVNNH and continues to try and break the 4-hour
mark for a marathon. She lives with her husband, a terrier and a very
silly basset.
She can be contacted through Dickinson Dees on 0191 279 9000
