Agreements With Owners and Occupants
This section looks at;
- Agreements with Owners
- Agreements with Occupants
1. Agreements Between The Project And The Owner
Once you’ve tracked down your property and persuaded the owner to let you borrow it, you’ll need to enter into some sort of agreement as to the terms and conditions on which it will be made available.
You may be offered a licence ( which is simply a “permission” to use the property ) or some form of lease (which gives you an defined “interest” in the property) by the owner. By and large a lease is preferable since it is more than simply a permission to use the property and therefore if the owner tries to go back on any undertakings you’ll have a much better chance of enforcing your rights (as per your agreement).
Key considerations are:
- The length of the agreement (the term):
A key consideration is that it must be long enough to be able to finance any repairs that are necessary. Generally speaking anything less than a year is likely to be problematic. However, it’s not uncommon for agreements to run for several years and sometimes, if plans for the property are on hold, for five, ten or even longer.
- The amount of “rent” that you are being asked to pay:
Ideally the landlord should be persuaded to accept a nominal rent ( sometimes referred to as a “peppercorn rent”) in view of the fact that the property is empty and it’s being brought back into use, usually at no cost to themselves. Whatever the case, it needs to be a small enough amount to make it financially viable to carry out any necessary repairs, without making the rent that the occupant pays unrealistic. This is something around which you may need to negotiate with the landlord.
- The amount of notice that the owner is prepared to give you in advance of wanting the property back:
This is obviously very important, since arrangements are likely to have to be made to re-house the occupants. For this reason the longer the period, the better, although it is likely to depend on the period for which the property has been made available in the first place.
Ideally this needs to be around 6 months to allow for the period of notice that needs to be given to the tenants and also for the length of time it could take to evict the tenants if they were to refuse to move.
- The responsibilities in terms of any repairs that need carrying out and any subsequent maintenance which the owner wants you to accept:
The standards to which you are required to repair the property in order to let it ( which should reflect the tenants’ right to at least minimum standards ) and the repairs and maintenance for which you will be responsible. Care needs to be taken in relation to structural repairs which could turn out to be very expensive.
- The sorts of occupancy agreements you can offer to people who are going to live in the property.
It must be possible to use the sort of tenancy or licence agreements ( see below) that are necessary to enable you to return the property when it is recalled.
The Ethical Property Foundation offers an advice service for small organisations entering into leases with landlords. http://www.ethicalproperty.org.uk for a small fee
2. Agreements Between The Project And The Occupants
It’s essential to be able to return an empty property to its owner at the end of the lease or licence and so it’s necessary to ensure that it’s possible to regain possession of the property when the owner gives notice of wanting it to be returned. This is the tricky part of short term use!
Ideally, it will be possible to re-house the residents in another property or they may be in a position to find alternative accommodation themselves, but either way if you want to secure further properties from that owner ( or others) it’s important to comply with the terms of the lease/licence with the owner.
Agreements to occupy a property take the form of a Tenancy. To terminate one of these it’s necessary to give the occupants a period of notice, after which time, if they have not moved, it will be necessary to go to the County Court to secure a possession order. This sounds very heavy handed but people are protected in law from arbitrary eviction and it’s necessary to go to court to satisfy a judge that you have the right to require the occupants to leave the property.
For this reason, it’s very important to use the right sort of agreement. That is to say, one that will provide you with the necessary grounds for possession, if the occupant contests your right to ask them to leave. (following their receipt of notice) and necessitates you going to the county court in order to get the Judge to grant a possession order.
1. Self Contained Accommodation
The above can be achieved by using an assured short hold tenancy agreement, which is widely used by projects making use of empty property.
Security: Under the terms of an assured short hold tenancy the landlord has an automatic right to possession at any time after the first 6 months, provided that they have given the tenant two months notice requiring possession.
If the occupant doesn’t leave the property at the end of the period of notice, then it will be necessary to go to court to get a possession order. This can be done as soon as the notice requiring possession expires,
Because of the nature of the tenancy, as long as the notice has been properly served, the landlord ( ie the project) will be granted possession by the court. Unlike other tenancy agreements, the landlord doesn’t have to seek possession on the basis of any particular ground.
The occupant should leave the property on the date specified in the court order. If they do not, then the landlord ( ie the project) must apply for a warrant for eviction from the court. The court will then arrange for bailiffs to carry out an eviction. .
Rent: The landlord can charge a full market rent for a shorthold enancy.
Repairs: under statute that the landlord is responsible for repairs to:
- the structure and exterior of the property;
- baths, sinks, basins and other sanitary installations;
- heating and hot water installations;
- if you are renting a flat or maisonette, other parts of the building or installations
in it which he or she owns or controls and whose disrepair would affect you.
Responsibility for other repairs depends on what you agree with the occupant.
The landlord is required to ensure that all gas appliances are maintained in good order and that an annual safety check is carried out by a registered gas engineer .
The landlord also needs to ensure that the electrical system is safe to use.
Direct Gov. publish a useful booklet setting out the position in some detail regarding shorthold tenancies
NB: Housing Co-ops
The position is different for housing co-ops that are fully mutual ( ie where all occupants are members and all members are occupants). They cannot use assured shorthold tenancies but instead use excluded contractual tenancies. In relation to security, Unless the Co-op has granted an agreement so as only to allow it to claim possession in certain circumstances (and those circumstances are not in evidence] , then, there is no discretion allowed to the Judge . He or she must grant possession.
2.Shared ( non-self contained) Accommodation
There may be circumstances in which accommodation is not let on a self-contained basis and where people don’t have exclusive use of a bedroom and share facilities such as kitchens & bathrooms. In these circumstances it will not be possible to issue a shorthold tenancy since these can only be issued in respect of self contained accommodation. However, it’ possible to issue the occupants with a “licence”.
In law a “licence” counts as simply a permission ( like a TV or driving licence) to do something and in this case it’s to occupy the property. Licences don’t have to be for any particular period, but like tenancies they still have to be terminated with a period of notice and if the occupants fail to leave the property, then it’s necessary to go to court to secure a possession order. Landlords have often used licences as scams to evict tenants and so courts do look carefully at these agreements to ensure that they are really licences before granting possession. For this reason, it doesn’t matter what the agreement is called – ie licence or tenancy agreement – the court will look at the reality of the situation.
Visit the Document Bank for examples of leases & tenancy agreements
Advice on leases with Owners
Direct Gov Booklet on Shorthold Tenancies