residentiallettings
Letting update
Short and Temporary Lettings. Following our feature
in the last issue of , Paul Ives reports
on a case concerning an informal letting.
Doing a gooD turn? important element of the original arrangement. The owners
Why an informal arrangement between sailing-club lost the ability to eject the couple immediately, which had been
acquaintances proved a costly property battle a crucial condition of the permission they had granted the
couple in allowing them to occupy the house as licensees.
This mid-1990s case involves a couple who allowed In practice, this would not have been problematic had the
acquaintances to stay in their empty house while they looked couple remained as obliging and appreciative as they were
for a purchaser, but the accidental granting of a tenancy caused initially and not stretched the limits of the original arrangement.
them a large financial loss when they were unable to ask the Unfortunately difficulties arose for the owners when they found
tenants to leave without legal proceedings. a new buyer for the house. The couple refused to leave, saying
The case began when owners of a four bedroom house in that they were interested in buying the house themselves, but
Kent arranged to sell the property to a family and agreed to needed time to make their financial arrangements. The owners
purchase a new home for themselves. However, before the house shelved the interested purchaser, offering to assist the couple in
sale had been completed, the buyers withdrew, leaving the finding a mortgage, but when this did not progress, they decided
owners in need of a large loan in order to be able to move into to find another buyer.
their new home.
The four bedroom house was left empty, the owners feeling eviction
confident that they would soon find another purchaser. As the agreement had created, by default, an Assured Shorthold
However, when fellow members of their sailing club mentioned Tenancy, possession proceedings were required in order for the
that they were without accommodation for a week, the kindly couple to be evicted. The owners were left struggling to pay costs
owners decided that it would be a friendly gesture to allow of £16,000 in loan repayments as well as £4,000 in legal fees,
this couple to use their unsold house for the week. in order to obtain vacant possession of their house. When the
The owners did not ask for any payment and the couple were couple were eventually evicted several months later, the owners
appreciative. However, after a week, the couple asked if they were still unable to sell the property as the couple had used it to
could stay on temporarily, and offered to pay rent. The owners run a mechanical repair business and had left it in an awful state.
agreed and accepted rent which they found a useful After a further two months of repairs, costing time, money and a
contribution to their loan repayments. great deal of exasperation, the owners were finally able to put the
property on the market.
the agreement What had started as a kind deed ended up costing the owners
The couple were happy to sign an agreement stating that in a total of £20,000 as well as many months of frustration, and left
addition to making rent payments they would keep the house them wondering why they had ever tried to offer assistance.
in good condition and allow prospective purchasers to view it. It also led to their resignation from the sailing club, a pastime
They then showed this agreement to the local council, in order of many years, in protest that the couple who had caused them
to claim Housing Benefit. However the couple’s application was so much aggravation were still members.
rejected by the council, which said that the agreement was not a
properly worded tenancy agreement. When the couple returned lesson
a few days later with a letter setting out the agreement in the Although, due to the implementation of the Local Housing
correct form, the council began paying Housing Benefit into the Allowance scheme, Housing Benefit is no longer generally paid
owners’ bank account. directly to the landlord but is given to the tenant, landlords
The owners accepted these payments, but were unaware of should still be careful not to accept rent from licensees if they
the letter, purportedly made between themselves and the couple, wish them to retain their informal status. While the payment of
that had provided the couple with their eligibility to claim mesne profits can be allowed without creating a tenancy, such
Housing Benefit. Despite this, the letter and the owners’ payments must be very clearly distinguished from rent in order
acceptance of Housing Benefit payments were considered to to prevent the licensee gaining the protection of the Housing Act
create a tenancy, and thus a landlord and tenant relationship. 1988 and the Protection from Eviction Act 1977. The doing of
kind deeds may otherwise work against a generous owner, as
refusal to leave advantage could be taken of their considerate nature, and a
This placed the informal and temporary agreement on a legal casual and, more significantly, revocable license replaced with
footing and eradicated the flexibility that had been such an a tenancy entailing much statutory tenant protection.
56 FEBRUARY 2010 PrOPertYdrum
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