25 May, 2017
Leaving your property vacant for long periods of time results in a loss of rental income combined with continuing liabilities which accrue in relation to the property. To resolve this, more and more people are using ‘guardians’.
A property owner can arrange for the property to be used for residential purposes by placing occupiers in the property. These occupiers (known as ‘guardians’) pay a rent that is usually below the market rent, therefore making it a financially viable option for them.
Companies are employed by a commercial property owner to find suitable ‘guardians’ for the property. The ‘guardians’ normally sign a licence setting out the terms of their occupation and the relevant notice period. A licence is an informal agreement and is terminable at any time by either party.
In the recent case of Camelot Property Management Ltd and another v Roynon  a licence was entered into by the guardian provider and not the property owner. Although the licence stated that exclusive possession was not granted the reality of the situation was different. A notice to quit was served and the guardian refused to vacate. The Court held that the licence was in fact an Assured Shorthold Tenancy (‘AST’) and the company granting the ‘licence’ to the guardian was in fact the landlord.
For property owners allowing guardians to take residence in their empty properties, it means that they must make sure that their actions do not negate the licence agreement entered into with the guardian and check whether an AST has been granted. If so, this grants the guardian more protection and the landlord has to comply with more onerous legislative requirements. It also means that any property owners who use this scheme need to check any existing arrangements and establish who granted any ‘licences’ and who has the authority to do so. This is important for establishing who can enforce the terms of any agreement entered into.