(And avoid buying a property with a tenant you can’t evict)
If you work in property, particularly if you are an investor, it is important that you are able to recognise a protected tenancy when you see one.
Why? Because protected tenants have long term security of tenure.
This means that you will not normally be able to evict them if you want vacant possession. Not unless you are able to provide another property for them to live in. And even then, only if it is considered ‘suitable’.
What is a protected tenancy?
A protected tenancy is one which is regulated by the statutory code set up by the Rent Act 1977.
This applies to most tenancies which started before 15 January 1989 (when the new code set up by the Housing Act 1988 came into force).
The main effects of this are:
- The tenant can register a ‘fair rent’ which is then the only rent the landlord is allowed to charge
- The tenant can normally only be evicted if he is in arrears of rent (sometimes) or if the landlord is able to provide ‘suitable alternative accommodation’, and
- If the tenant has a spouse or family member living with them at the time or their death, they will inherit either another protected tenancy (if they are a spouse) or an assured tenancy (which also has long term security of tenure!)
The effect of all this is that you are stuck with a tenant who you cannot evict and who is usually entitled to pay a rent which is considerably lower than the market rent you could have charged had the property been an AST.
So how can you recognise when a property is being sold with a protected tenant?
Here are three tips for recognising protected tenancies
1. The property is being sold for a low price
If a property is being sold at an unusually low price, this is normally a sign that there is some sort of problem. Often this means there is protected tenant.
This should alert you, and prompt you to do some careful checking
2. No tenancy agreement is available
If the vendors are unable to provide a copy of the tenancy agreement, warning lights should flash in your brain.
This may mean that the tenancy started so long ago that it has been lost in the mists of time!
3. Check the Valuation Office rent register
If the tenant has a ‘fair rent’ registered, then if this was reviewed in or after 2003, you should be able to find it in the electronic rent register maintained by the Valuation office (the government department which sets the fair rents).
This is not a complete guide as not all protected tenants have registered rents and some rents may not have been reviewed since 2003. But is it somewhere to start.
The page also has a help desk email which you can use to ask for more information.
If you are involved in buying the property, you should then get your solicitors to do some relevant enquiries before contract, to find out more.
Remember, if you don’t ask, they may not tell!