Guardian Lettings – is the end in sight?

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?”