Rent Act 1977 Tenancies
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"I don’t have a written tenancy agreement with the tenant, but I know they have been in the property since the 1980s…"
This sentence by a landlord (or one along similar lines) should trigger alarm bells for any property advisor.
Security of Tenure
Nearly all residential tenancies granted before 15 January 1989 are likely to have the protection of the statutory code imposed by the Rent Act 1977, and are known as 'regulated', 'protected' or 'secure' tenancies. The Rent Act was introduced after the Second World War to consolidate the existing regulation, which was originally intended to be a temporary measure to protect the housing of workers needed for the war effort. The Rent Act was therefore designed to provide tenants with long-term security of tenure. However, the result is that a Rent Act tenant's occupation is often so 'secure' that a protected tenant who is reluctant to leave a premises, can be very difficult to evict.
It is not just the original Rent Act tenant who benefits from the statutory protection; if the Rent Act tenant was living with his/her spouse or civil partner at the time of their death, their protected tenancy will pass to their husband/wife/partner, who will continue to benefit from the original tenant's protections under the Rent Act. If the Rent Act tenant was living with a family member in the two years prior to their death, who was not a spouse, that family member will inherit an assured tenancy by succession. An assured tenancy still offers a high level of protection of tenure, but not quite to the extent of a regulated tenancy.
Rent payable by a Rent Act Tenant
The rent that is payable by a Rent Act tenant is determined by the register of fair rent, and not the market rent. This is the only rent that a landlord is permitted to charge, and means that the rent payable by a Rent Act tenant is often substantially lower than if the tenancy were an Assured Shorthold Tenancy (AST). The fair rent is calculated by the Valuation Office Agency according to a formula known as the Maximum Fair Rent calculation. The register can be found here.
A landlord or a tenant can apply to have the rent re-calculated every two years, or sooner if there are major changes to a property, such as repairs, improvements to furniture or rebuilding works. There is a prescribed form for submitting requests to have the fair rent reassessed.
Evicting a Rent Act Tenant
As stated above, this is difficult. It should first be established whether the Rent Act tenant is a contractual or statutory tenant. A contractual tenancy means that the tenancy is still within the term set out in the original tenancy document; a landlord cannot obtain a possession order against a contractual tenant. If the original term has ended, then a landlord can serve a notice to quit which will end the contractual tenancy and shift the tenant into statutory protection. Given the time since the last Rent Act tenancy could have been granted, the majority of Rent Act tenants will have reached the end of their contractual term. If the original term is still extant, a landlord could seek to negotiate a surrender or use a forfeiture provision (if there is one in the tenancy agreement).
To evict a Rent Act statutory tenant, either a discretionary or mandatory ground must apply or suitable alternative accommodation should be provided to the tenant.
The discretionary grounds are set out in Part 1 Schedule 15 of the Rent Act. The court will only make an order for possession based on a discretionary ground if it is reasonable to do so. There are 10 grounds, and examples include: rent arrears, the tenant causing nuisance or annoyance, neglect of the property and the landlord reasonably requiring the property back as occupation for himself or his family.
Likewise, if there is suitable alternative accommodation available, the court will only make a possession order if it is "reasonable" to do so.
In addition, there are 10 mandatory grounds (set out in Part 2 Schedule 15), and if one of these can be established then there is no need to convince a court that it would be reasonable to make an order or to provide alternative accommodation. These are quite specialist and for many of them, the tenant needed to have had prior notice of the landlord's intention. Examples include: that the landlord intends to use the property to retire or as a holiday let, and the tenant had received notice of this.
In summary, if the goal is vacant possession then residential properties with a tenant who has been in situ since before 1989, need to be handled with a degree of caution and specialist advice should be obtained.
If you would like any advice in relation to your Rent Act tenant then please contact the Property Litigation team.