Lodger or AST?

[jackieandwayne]

Hi chaps. I'm a bit rusty with housing issues these days - leastways as in depth as this little problem!

 

Well, my mate has a three bed house, fully occupied by her and two kids. She had the garage underneath converted into an annexe years ago when her mum was still alive. (With planning permission) Hubby walked out on her and left her in the mire, so, she decided to take in a lodger in the basement. Several lodgers down the line she has finally encountered a problem one, and we want to make sure we are dealing correctly with this.

 

This little flat is fully self contained, and entered by its own doorway, no access direct from the house. However, the electricity is metered from the house, and there is no seperate meter in the flat. Also washing machine and tumble dryer are shared in an outbuilding.

 

The rent is £200 deposit, then £110 a week. The rent includes all bills, full use of garden, and lodgers can have pets within reason (mate is an animal rescuer! - a few more don't hurt). There is no separate address for the flat, and all post goes to the house and mates hands it over every day. This tenant has been allowed to pay monthly, and until now has not let my mate down. Mate keeps it all recorded in a book which lodger may have at anytime but asked mate to keep it safe for her.

 

Lodger has text friend to say so sorry can't pay last month;s rent, said she would pay up 8-5-11. Then she changes her mind and says she can't pay anything at all, so sorry. And by the way I am leaving 19-5-11. She began to lodge here 8--8-10.

 

Can anyone tell me if my friend has actually created an AST here or whether this can be classed as lodgings since the electricity and some facilities are shared.

 

I am sure, depending on the correct tenancy status, there will be further questions - like tenancy deposit schemes, lack of so on and so forth - but hey, just for this weekend we'd like to know what sort of a mess my mate has got herself into if anyone could help please!

[jackieandwayne]

bump

[Steve__M]

I don't know, but I was looking at A G Securities -v- Vaughan; Antoniades -v- Villiers and Bridger, and http://en.wikipedia.org/wiki/Street_v_Mountford to get an idea of how it works.

 

I can imagine this one may be a grey area that would depend on the judge's inclination! I assume there is no contract?

[raydetinu]

I think AST or Assoured Tennancy is the default position in absence of anything else.

Check with shelter or on Direct.gov. site.

Also Landlordzone is useful

[Ed999]

My advice is applicable only if the rented premises are entirely within England and Wales, and only if the landlord and tenant were over 18 years of age when the tenancy was granted.

 

 

If there is a tenancy, there are two ways for the tenant to end it if it is a weekly periodic tenancy: the tenant can give a minimum of 4 weeks notice in writing, expiring on a rent day; or the landlord and tenant can agree an immediate surrender, by a document signed by them both. In this situation, the tenant's liability to pay the rent ends when the notice period ends, or on the date the surrender document specifies, respectively.

 

 

The distinction between a tenancy and a mere licence is whether the tenant was granted exclusive use of essential living accomodation, including a bedroom, kitchen and bathroom; i.e. whether the accomodation was self-contained. If the tenant was sharing any of those facilities - sleeping, eating or washing - with the landlord, it is probably not a tenancy, and the 'tenant' is then merely a lodger.

 

The court will look at the reality of the situation, and will ignore artificial labels which the parties have attached to themselves in the contract, such as 'landlord' or 'tenant'. In the famous words of the House of Lords, in the leading case of Street v Mountford (1976), a five-pronged impliment for digging is still a fork - whatever the parties might choose to call it!

 

There has been much to-ing and fro-ing as to what amounts to 'a dwelling'. If a self-contained unit is let by a single agreement, a detatched house, a semi-detached house, a terraced house, even a flat, maybe even a 'granny annex', will be a 'dwelling', if it is self-contained: e.g. if the occupier has a seperate kitchen and a seperate bathroom and a seperate front door. In your case, there appears to be a sharing of laundry facilities.

 

It was in the leading case of Street v Mountford, decided by the House of Lords in 1976, that it was decided that a residential tenancy can only exist if the occupier is granted exclusive occupation of a dwelling.

 

In every case it is a question of fact: the court which tries the case has to decide, on the actual facts of the case, whether or not exclusive possession of a dwelling was granted by the landlord.

 

The role of the County Court is to enquire into the facts, and to establish on the actual facts whether exclusive occupation has been granted of enough facilities to amount to a 'dwelling', which must be self-contained and typically will comprise a bedroom, kitchen [or cooking facilities], and bathroom [or washing facilities]. The most that might be said by me, is that in your case the decision could go either way.

 

It might, or might not, be important that the unit has its own front door; or that the shared facilities are in an outhouse, not in the unit being let; or that the shared facilities are only laundry facilities [for an occupier might use a laundrette instead].

 

 

Even if the occupier is a tenant, the landlord can sue her now for possession if there are rent arrears, by a court application under section 8 of the 1988 Act, even if the six month initial period is not yet over. See -

 

- Shorthold Tenancy - posession, eviction and notice

Edited April 21, 2011 by Ed999

[jackieandwayne]

Thank you, all of you, plenty to research in that lot. I should know all this - 26 years as a Housing Officer! 2 years out of it - mind like mush but a much better place to be. Still - no, there is no contract as such, although there is a rent book. We are in England, and they are both over 18.Next time this will be done by the book, by me. Any ideas about the electricity supply being within the house and supplying the flat, and the weekly rent including all bills bar any Sky/Virgin they may have put in?l

[Ed999]

There is no legal requirement for a contract to be in writing.

 

A verbal tenancy agreement is perfectly legal, if a tenancy is intended, where the letting is a weekly or monthly let (in fact, for any period not exceeding 3 years).

 

Under the 1988 Housing Act, unless a different type of tenancy is specifically agreed on, an agreement to create a tenancy creates a shorthold tenancy. Under such a tenancy the landlord cannot give less than 2 months notice of eviction, and such a notice can't take effect until the end of the 6th month of the tenancy, if the tenant keeps to the terms of the letting; but eviction can be applied for under section 8 of the Act, even during the initial 6 months, if there are rent arrears or some other breach of the tenancy.

 

 

Although there is always a difficulty in proving the terms agreed if it is verbal, the agreement is still a valid contract: but it is then the landlord's word against the tenant's as to what the accommodation consisted of.

 

The court is used to this, and will enquire into the true nature of the arrangement.

 

It seems unlikely that the mere fact that the electricity bill has to be apportioned between the house and the 'granny annex' - if I may call it that? - is legally significant. It is the sharing of the accommodation that is significant: does the shared use of an outside washhouse prevent the granny annex being in law a self-contained dwelling?

 

In my opinion, whether the rent does, or does not, include bills is not a significant issue. All tenants pay rent, and - usually - bills; but so, typically, do licencees.

 

 

In every case it is a question of fact: the court has to decide, on the actual facts, whether or not exclusive use of a self-contained dwelling was granted to the occupier. But if it is a granny annex, of the usual type, it does have the potential to be self-contained.

 

But even if the landowner had the misfortune to create a tenancy, she can sue at once for possession for non-payment of rent and doesn't have to delay until the initial six months elapses. Read the FAQ:

 

- Shorthold Tenancy - posession, eviction and notice

 

 

I refer you to AG Securities v Vaughan for an illustration.

Edited April 23, 2011 by Ed999

[jackieandwayne]

Thank you Ed - all understood now. I was telling my mate I thought she had created a tenancy.

 

I have suggested to her that she offers the tenant the opportunity to surrender the tenancy from tomorrow - the woman has begun moving her things out but still insists she will retain her tenancy until 19-5-2011. I've told Lesley to put it thus ;"well, you are only getting more into debt, and that in turn will cause me to get more into debt, and I already have to consider taking you to court. We haven't even got started on the damages yet."

 

My overriding worry is about this Tenancy Deposit Scheme that I know Lesley should have used, albeit only for £200 (stupid piddling amount anyway). Lesley did not know about this at all. Lets just keep our fingers crossed that this woman doesn't know her rights in that respect. There will be way over £200 of damages anyway and I have told Les to get the woman to sign to say she agrees to this money being retained in lieu of the damages, and for Les just to get blooming shot of her and get the place turned around. However, I feel very strongly that Les needs to claim for the rent arrears through the Court, now, if she does go down that route (because you never know the woman might, just might, pay up!) is this lack of tenancy deposit scheme going to rear its head? If two people have agreed they don't want to use the scheme say, in law are they ok not to use it?

 

Glory be - next time it will be done properly!

[Ed999]

Regarding a surrender of the tenancy, this is only possible if a tenancy exists, a matter on which I am uncertain.

 

The court will look at the reality of the situation, and will ignore artificial labels which the parties have attached to themselves in the contract, such as 'licence' or 'licensee''. In the famous words of the House of Lords, in the leading case of Street v Mountford (1985), a five-pronged impliment for digging is still a fork, whatever the manufacturer might choose to call it!

 

I recommend that link to you, with its extensive illustrations of how that test works in practice.

 

 

If the occupier does sign a surrender, the liklihood is she will be deemed to be intentionally homeless, and the Council will then have no duty to rehouse her; so if there is any possibility of that occuring - i.e. if she has even a remote chance of being rehoused by the local authority - she will sit tight until a court order for eviction is obtained and the bailiff literally throws her out.

 

 

Regarding the rent deposit, no problem exists.

 

If there is no shorthold tenancy, then there is no legal requirement to protect the deposit.

 

If there is a shorthold tenancy, as the law now stands it appears the tenant cannot claim the penalty of thrice the amount of the deposit if the landlord protects it before the case comes to court. A court decision on this point is expected any day now in another case, which may change this to make the landlord immune only if the deposit is protected before the tenancy ends - so if there is a tenancy your pal may find she needs to get her act together fast. See Potts v Densley.

 

The landowner should not risk claiming rent arrears through the court unless she has properly protected the deposit, if it requires protecting. Any half decent Solicitor will encourage the tenant to counterclaim for the penalty if a tenancy exists.

 

The landowner needs expert legal advice from a Solicitor as to whether this is likely to be a tenancy or not; there is a risk it could be, if it is a typical granny flat occupied only by one person, i.e. with no sharing with other tenants. The penalty would be £600 plus the return of the deposit - i.e. £800 in all - just on the failure to protect the deposit alone.

 

But at least the occupier could then afford to pay the rent arrears.

 

 

The Act expressly states that the parties to the tenancy cannot agree not to protect the deposit. So it's futile for the landlord to raise this defence - but many still try to!

Edited April 23, 2011 by Ed999

[Perrino]

what tenancy was signed when the "tenant" was given the keys to the property. In a sitaution with a live in lodger then it will be a lodgers tenancy which are very very weak. I understand what you mean about the property being self contained however if your mates property is 123 Green street and thats also the tenants address then thats what counts, providing that the tenants address isnt 123A Green street then its a lodger situation, however if no tenancy has been signed then be very very careful as it could get very messy if it went to court. If the tenants is on DSS or HLA then claim for direct payments.

 

Any future tenants should be given lodgers agreements and thats its.

 

Source: Im a Housing Officer for Local govenment.

[Ed999]

what tenancy was signed when the "tenant" was given the keys to the property. In a sitaution with a live in lodger then it will be a lodgers tenancy which are very very weak. I understand what you mean about the property being self contained however if your mates property is 123 Green street and thats also the tenants address then thats what counts, providing that the tenants address isnt 123A Green street then its a lodger situation, however if no tenancy has been signed then be very very careful as it could get very messy if it went to court.

 

 

The distinction between a tenancy and a mere licence is whether the occupier is granted exclusive occupation of a dwelling.

 

The leading case of Street v Mountford, decided by the House of Lords in 1985, established that a residential tenancy can exist if the occupier is granted exclusive possession (i.e. exclusive occupation) of the accommodation.

 

I recommend that link to you, with its illustrations of how the test works in practice.

 

In every case it is a question of fact: the court which tries the case has to decide, on the actual facts of the case, whether or not exclusive possession of a dwelling was granted by the landlord.

 

The court will look at the reality of the situation, and will in particular ignore artificial labels which the parties have attached to themselves in the contract, such as 'licensor' and 'licensee'. In the famous words of the House of Lords, in the leading case of Street v Mountford (1985), a five-pronged impliment for digging is still a fork, whatever the manufacturer might choose to call it!

 

 

The essential element of a tenancy is that the occupier has exclusive (i.e. sole) use of the premises.

 

Where the landlord lives in the same building, it is essential to prove he is not sharing the accommodation with the landlord. If the premises has its own front door, for example, this is an important indication.

 

The court will look only at the realities of the actual situation.

 

There is obviously a genuine risk that this accommodation, described by you, is self-contained - hence there is a real risk that the arrangment has created a tenancy.

[Perrino]

Self contained or not if the property is listed under the same address and is not divided into two property's I.e 123a and 123b green street then it doesn't matter if you share a kitchen or entrance etc. If I was to convert my self contained garage into a flat with it's own kitchen etc the resident would still live at my address and would therefore be a lodger. In the case of council "bed sits" the property's would for example be divided into ABCD etc and therefore are classed as different Property's and the residents not classed as flat sharers even though they do share some facilities, same going for student halls.

[jackieandwayne]

Thank you guys. What a pickle!

 

Ok, no tenancy agreement has been signed, but there is a rent book, both parties have free access to this at any time.

 

Perrino (me too - social housing officer for 26 years and now 2.5 yrs out of it - brain like mush!), it is exactly how you describe. A former basement garage converted to lounge/bedroom, shower room/loo and kitchenette. Originally for elderly mother no longer with us. Planning permission granted back along in the early 90's. Separate door into accommodation, but to reach it tenant goes through mates front garden, through outbuilding which is the laundry room, down back steps and there you are. It has never had a separate address, post goes to house and mate hands it out. This tenant is a single woman, she has an excess of animals, but no children! Under 60 as well. Unless she is ill then I doubt she would be given any priority for rehousing at all.

 

Ed999 - your point is the one that was giving me nightmares! However,should the worst come to the worst, at least I know the deposit can be protected swiflty.

 

Here's what I think we will do: Les to allow tenant to stay until 19th as requested - we can't force the money out of her, and no court action is going to take effect in three weeks anyway.

 

In the meantime, Les to put in writing that she wishes to do an exit inspection, with tenant present, and get stuck into the damages. Photo's, date stamped etc, tenant to sign. At the same time Les to give letter stating financial position and what is owed. Tenant to sign for receipt of. Must get forwarding address (I already know as i followed her in my car yesterday! but lets do it properly). At least if the address is different from what I know then we'll have an understanding of how this is all going to pan out won;t we?

 

Fingers crossed she goes 19-5-11. Bonus if she pays up.

 

Now, once we have this all sorted, obviously we want to get it right next time. This may involve Les not letting the flat at all. Can anyone point me to some guidance on the "rent a room scheme" as opposed to actually letting a flat on an AST and all the tax implications etc.

 

It really makes me mad in this case; my friend is so kind and chose this woman over everyone else as otherwise she would have had to give up her pets. Les is so easy going and friendly, and how many people do we know would jump at the chance of a little flat like this, with garden and pets allowed?

 

Thanks so much for your help, I think my brain is waking up - at least I was quick enough to follow the woman to her new address yesterday!

[raydetinu]

you are quite right to keep it low key and see how it goes. Avoid court action if at all possible, just stress.

if it does got to court, deposit, damages etc be carefull as I am pretty sure an AST would be the default and its conditions would apply. ( same address makes no difference as she has excluse use of rooms, i.e. dwelling )

deposit protection is not optional under that contract.

Also what was the position regarding paying council tax, did she pay her own, or a proportion incl in the rent?

you know what they say no good deed goes unpunished

[Ed999]

In my opinion, the county court would be likely to decide that a shorthold tenancy has been granted. In practice they frequently bend over backwards to make that finding, because the Housing Act is biased in favour of the tenant.

 

Don't make the mistake of suing unless the rent deposit had been properly protected before the tenancy ended.

 

To sue for arrears of rent and/or for disrepair caused by the tenant, first be sure that the tenant can pay any judgement debt - otherwise it will be a Phyric victory.

 

Your local Inland Revenue office will give you a leaflet on the rent-a-room scheme, that explains the rules. Income is not taxed under certain weekly limits, subject to conditions.

 

In my opinion, your friend will struggle to avoid creating a tenancy in the situation you have described. A granny annex is a classic form of self-contained accommodation. The rent-a-room scheme means what it says: it rents one room only, to a lodger, with shared kitchen, shared bathroom, shared facilities: a licence, not a tenancy, because there is sharing. There is no sharing in the case of a granny-annex: it is a seperate, self-contained flat.

Edited April 29, 2011 by Ed999