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Guardian Lettings – is the end in sight?

August 30, 2018 by Ben Reeve-Lewis

The Law in Property

Not for the first time I was called in this week to advise a man who was being told to leave his property Guardian letting, with little in the way of an official ‘By your leave’ other than an email.

So what are these new and questionable set-ups that are becoming more numerous by the day?

Imagine you are a council, a housing association or just a very large portfolio landlord and you have a house, an office, a disused library, earmarked for demolition or conversion.

Work doesn’t start the day the last person leaves and while they are sitting there empty they attract squatters, particularly the commercial properties, ever since squatting residential premises has become an offence.

New letting concept

This can create legal problems and delays for the owners, so jumping on a bandwagon originally started in Scandinavia a few years back, several companies have sprung up managing these buildings and renting them out, mainly to young singletons, usually working, who can’t afford market rents and are prepared to put up with shabby conditions and weird sharing arrangements as a trade-off.

They still aren’t what you would call cheap in the great scheme of things, just ‘cheap –ER’. The occupiers referred to throughout as ‘Guardians’ instead of ‘Tenants’.

But what legal magic allows them to avoid creating tenancies?

What indeed. The law is not overridden just because a guardian company decides it is an inconvenience. The same rules have to be considered in the creation of all lettings.

The 1986 case of Street v. Mountford put that one to bed. If an occupier pays rent, for a clearly identifiable term and enjoys exclusive possession of what they rent, then a tenancy is what it shall be, no matter how many times a landlord or agent insists that it isn’t.

Is it possible for a guardian company to create a genuine licence?

Yes it is but as with all matters relating to security of tenure, whether you are cuddly old Fergus Henderson or Birmingham City Council it would depend on the facts and circumstances of the individual letting itself, not simply waving around a piece of paper exempting guardian companies from a century of legislation because they are special case and

“Well everyone hates squatters don’t they?”

This thorny issue has been getting a lot of unwanted attention in recent years and in May 2018 the Ministry for Housing Communities & Local Government felt duty bound to publish a factsheet, finally providing information for individual guardians or those considering becoming one.

Said factsheet helpfully gets very quickly down to business as early as the third paragraph:-

“The government does not endorse or encourage the use of property guardianship schemes as a form of housing tenure.”

Unhelpfully the same factsheet then goes on to say:-

“A guardian has no right to exclusive possession of the property.”

I disagree…

As did the Bristol courts last year in the case of Camelot Guardian Management Ltd v. Roynon ably reported on by Nearly Legal where Mr Roynon holding a guardian’s licence agreement, was found by the courts to actually be an Assured Shorthold Tenant because the factual circumstances and conditions of the letting satisfied the hallmarks of a tenancy. Read it here.

I have seen enough of these guardian contracts to know that the guardian companies insist like a mantra on virtually on every page, that the occupier doesn’t enjoy exclusive possession but a constant repetition of an untruth is a world away from legal definitions and it isn’t helpful for the government factsheet to shore up that view, given the authority with which such guidance would understandably be taken by someone looking for a heads up on their rights.

The man I was working with this week reported poor property conditions, no smoke or fire alarms, all breaches of statutory requirements.

Normally I would refer such problems to his local authority EHOs but what seemed apparent was that the head landlord/owner was, in fact, that very local authority, using a guardian company as an intermediary.

So who would their EHOs serve works notices on?

In addition, this was not originally residential property but a commercial establishment and therefore, permitted development aside, potentially in breach of planning regulations prohibiting a change of use without permission, carrying quite large penalties for breaching but again, who would planning enforcement officers serve notices on?

Who would the council fine? Themselves?

If, as was the case with Mr Roynon in Bristol if it is established that a tenancy is in force rather than a licence then the occupier can’t be lawfully evicted unless the landlord obtains a possession order.  Yet the guardian agreements always refute this, again using that hoary old mantra “It’s a licence”.

It is worth bearing in mind that even many licensees need to be evicted by court order unless they are on the list of ‘Excluded Occupiers’ set out in Section 3A of the Protection from Eviction Act 1977.  Which is (paraphrasing):-

  • Lodgers
  • Lettings otherwise than for money’s worth
  • Temporary expedient to a former trespasser
  • Holiday lets
  • Lettings created pursuant to certain immigration legislation
  • Hostels

Property guardianships are nowhere to be seen in that list and even the government fact sheet also points out:-

“If the guardian does not leave at the end of the notice period or when a fixed term agreement expires the property guardian company or building owner must apply to the court for a possession order, which the court must grant”.

Various individuals and agencies have been warning for some time that conceptually speaking, property guardianships are skating on thin ice, some newspapers predicting that the Bristol case against Camelot could mark the beginning of the end of them.  See also Tessa’s post from 2013.

Trading Standards

Housing law considerations aside I think there is fertile ground for council trading standards officers to step in. Not just on the innumerable misleading clauses in contracts and God knows there are enough of those but also following the decision in Islington LB v. Green Live Estates (2017).  Here an agent was fined around £11,000 just for issuing two licence agreements which should have been tenancies.

If property guardian companies were to acknowledge basic principles of housing law and delineate between tenancies and licenses dependant upon individual circumstances, instead of a Donald Trump-like, fingers in the ear “LA LA LA” denial of reality then they might stand a chance of survival.

Whilst they adopt the position of

“We are beyond the law because we meet a housing need and are backed by social landlords”

They are simply walking around with the legal version of a target on their back.

My prediction is that in the not too distant future we will all be saying:-

“Do you remember when those guardian things were all the rage?”

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About Ben Reeve-Lewis

Ben is a founder Member of Safer Renting, an independent tenants rights advice and advocacy service working in partnership with the property licensing and enforcement teams from a number of London boroughs.

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Comments

  1. hbWelcome says

    August 30, 2018 at 9:39 AM

    The upside being (from a landlords POV), most these guardians will have to pay full market rents for residential properties instead.

    Also good news for genuine security guards who have been losing out on their minimum wage work to Yuppies.

    “whether you are cuddly old Fergus Henderson”

    He doesn’t strike me as being particularly cuddly or old, damn good chef though;

    https://en.wikipedia.org/wiki/Fergus_Henderson

    Fergus Henderson, MBE (born 31 July 1963) is an English chef

  2. Ben Reeve-Lewis says

    August 30, 2018 at 2:59 PM

    I followed your link Tessa to your 2013 article and read your comments about the possibility of the Guardian company actually employing the occupier and looked back onto a Guardianship contract I have been given which specifically cites the Private Security Industry Act 2001 expressly excluded them from this notion.

    It seems that they arent even prepared to entertain any occupation rights other than a licensee and as with your article the contract sets out on page one that the agreement has been drafted by a solicitor “Approved by legal counsel”, as if to suggest that there cant possibly be any errors in the drafting and that as a result, the occupier is out-gunned, outclassed and of no consequence from the get-go, “So dont even try”.

    Personally I dont have a problem with certain aspects of Guardianships. Young people living cheek by jowl and not too concerned with legal rights seems fine by me. I spent five of the happiest years of my life living in a stationary version of Glastonbury Festival at Sanford Housing Coop http://www.sanfordcoop.org/about-sanford/

    But even those types of accommodation comply with fire safety and the right not to be pushed around at somebody else’s whim and I dont see why guardians should fell themselves exempt, especially in a post-Grenfell world.

    I doubt we will get any commentators from guardian companies defending themselves on here however. “Noticable by their absence” is I believe the usual phrase.

  3. Tim says

    August 31, 2018 at 5:28 PM

    I have a “property guardian” set up near me – I think it’s been there for about 5-6 years.

    Back when it first opened, the firm’s website was essentially a load of disclaimers about how they have checked it out with lawyers and it’s definitely legal. Honest ‘guv. They were saying that not-tenants could be evicted at 48 hours notice but equally they could leave themselves at 48 hours notice.

    I have noticed that their website has changed its tune now and everyone gets 28 days notice and there is reference to the PFEA on the FAQ.

    I’m in two minds about this because – on the one hand – I can see why certain groups of people are looking for cheap (if slightly unusual and unappealing) ways of living. The setup near me costs about 50% of the LHA for a 1 bed house around here making it a great option if you are earning a decent wage and don’t qualify for benefits but you want to save some cash. But – on the other hand – I can see how it amounts to profiteering somewhere like London.

    I suppose it’s a bit of a Wonga situation. Yes there is some sort of legitimate market for it – but does the capacity for abuse outweigh that?

  4. Ben Reeve-Lewis says

    September 1, 2018 at 8:48 PM

    Oh yeah I agree Tim, I am also in two minds, some people’s life circumstances, whether by way of youth or getting a foothold into a city means that they aren’t too bothered by the normal niceties.

    I have been that person, sharing a squat with the pre-patch wars London Hell’s Angels (which I don’t recommend if you want a quiet life haha) and I have friends at the moment who are guardians for the same reasons, their priorities being a trade-off between a place you can invite people home to and disposable income.

    But I don’t think that providers of accommodation to any market should be exempt from basic fire safety and repairing obligations, nor do I think it is right that they should be exempt from rules preventing property providers from pushing people around to suit their financial needs .

  5. Phill Warren says

    September 5, 2018 at 10:07 AM

    Another great read as always Ben, and one that rings true to me on several fronts.

    My own local authority ran a guardianship scheme a few years ago via its ALMO. After seeing the ‘licence agreement’ & hearing how they were being terminated, I then raised a number of times that they were in all likelihood issuing tenancies, and that the circumstances didnt fall under any of the excluded occupier categories offering exemption from PfEA.

    It was a needlessly hard fight to get this accepted and the practices stopped.

  6. Ben Reeve-Lewis says

    September 5, 2018 at 10:36 AM

    I can imagine they would put up a fight Phil, when you look at the money involved. I’ve got one at the moment, 5 people in a disused library, paying. £4,250 per month all told, no repairs getting done, no expensive eviction procedures?

    The way the sharing arrangements work they are likely to be licensees but still not excluded licensees and all the contracts stipulate they get 14 days notice and that’s it.

    Of course there is another way of looking at them, as the Telegraph put forward at the weekend, as a cracking opportunity for older people to socialise https://www.telegraph.co.uk/property/uk/property-guardianship-isnt-just-skint-millennials-older-people/

    I love this passage of probably unintentional humour “Today, Manacas lives in a north London church, where she has her own room, sharing a kitchen and bathroom with three others. Paying around a third of market rent, she can live comfortably – even shopping at Waitrose – This space is so special, and it is not remotely frightening, despite all the tombs buried below us.”

The Enforcement Officer's story

Ben Reeve Lewis

Ben Reeve LewisBen Reeve Lewis has worked for Local Authorities for over 20 years.

First as a Tenancy Relations Officer and now as a freelance Enforcement Officer.

He is a regular writer for the Landlord Law Blog and has also appeared on TV - for example in the first series of Channel Five's Nightmare Tenants, Slum Landlords.

In these posts, he talks about his work trying to help poor tenants in London and track down the criminal landlords who exploit them.

As well as giving his views - based on his experience as a practising enforcement officer - of government policy and practice.

The business models of criminal landlords explained

This is a short series explaining how criminal landlords operate.

  • How tenants are a crop for criminal landlords to harvest
  • Why the real rogue landlords are all about the money
  • Aliases and fake companies in the rogue landlord world
  • How Criminal landlords use dodgy contracts and misdirection
  • The Criminal business model of ‘Rent to Rent’
  • Accommodation models for Criminal Landlords
  • Tackling the problem

An interview with Ben Reeve Lewis (on 18/5/18)

Some recent Posts

(The most recent posts are at the top)
  • Court closures scandal
  • The Shocking truth about criminal letting agents today
  • Property Guardians Revisited
  • Common sense, law and the reality of renting
  • How Rent Repayment Orders work
  • Considering Housing MOTs
  • The New Rugg Report
  • Guardian lettings - is the end in sight>
  • Lessons to be learned from Nottingham Letting Agent Prosecution
  • Signatures and the Companies Act
  • Considering the New HMO Regulations
  • Select Committee Report
  • Tenant or renter
  • Police colluding with landlors in illegal evictions
  • European Renting
  • Fitness for Habitation bill
  • Tenants bins
  • Interim and Final Management Orders
  • Implied Surrender
  • Intentional Homelessness
  • The state of our County Courts
  • What homelessness units say to tenants and why
  • The emerging trend of Meter Tampering
  • Fire Safety in Micro Units
  • The Club Member Scam
  • How do we find slum properties?
  • The startling story of tenants who dare not ask for rent receipts
  • Does licensing landlords really do any good?
  • What do you really know about Rogue Landlords?
  • The Growing Problem of Cannabis Farms in Rented Properties
  • Protecting tenants whose Landlords face mortgage repossession proceedings
  • A warning to new landlords taking over existing tenancies


>> Click here for more posts by Ben.

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