Some time ago I wrote a blog post in my ‘Urban Myths’ series about how, when a landlord lets a property to a tenant, its not his any more.
This post has been much quoted on the forums by tenants and has generally been rather popular.
However I was contacted by a reader recently who said that some people on the forums were now saying that the article was misleading.
I was quoted one comment which said
“This stuff about a tenant temporarily “owning” a property is becoming boring. If I lend someone a book, it does not temporarily belong to them. It still belongs to me (hence they could not sell it).”
What is the law?
The law is the Law of Property Act 1925 section 1. This says:
The only estates in land which are capable of subsisting or of being conveyed or created at law are—
(a) An estate in fee simple absolute in possession;
(b) A term of years absolute.
This is, as is usual with statutes, couched in difficult legal language, but what it is saying is that there are two types of legal ownership of land recognised by the law.
- The first one, the estate in fee simple, is freehold. This is the nearest you can get in this country to owning land absolutely, as all land is technically held from the Monarch.
- The second, the term of years, is leasehold. Which is what we are talking about here.
Note that the words ‘lease’ and ‘tenancy’ are strictly speaking the same thing (a ‘term of years’), but we tend to use the word ‘lease’ for long leases and ‘tenancy’ for short lets.
Owning the property
When you are granted a tenancy or a lease of land / property, during the period of the lease you ‘own’ that land / property, and this applies whether you have a long 999 year lease or just a six month AST.
Of course it is a different type of ownership to freehold. In fact for there to be a leasehold ownership, there has to be a freehold ownership first and there will continue to be a freehold owner as well as a leasehold owner throughout the period of the lease.
It is one of the fundamental concepts of land law that several people can ‘own’ legal interests in the same piece of land at the same time – for example
- Fred can own the freehold of the Blackacre Estate
- Tanya own a tenancy of a cottage on the estate under an AST
- Nigel the neighbour can own a right of way over the land (including over part of the cottage garden), and
- The Megabank can hold a mortgage over the whole estate
This is because land is different from anything else and there is special area of law, land law, to deal with it.
When he leases a property, the freehold owner retains certain rights in respect of it – such as the right to receive rent (with long leases this is known as ‘ground rent’) and the right to end the lease in certain circumstances and get the property back.
However unless this is done in the proper way – and if the tenant / leaseholder does not agree this will normally have to be via the courts – the property belongs to the tenant / leaseholder. For the duration of the lease (or tenancy)
This is why, for example, the tenant has the right to keep (with a few exceptions such as police with a search warrant) everyone out of the property – including the landlord!
The right to sell
To deal with the comment on the forum – renting a property is NOT the same as borrowing a book! Unlike a book borrower, the tenant has a legal interest in the land, and is also a party to a binding legal contract under which he pays rent.
And – the tenant DOES have the right to sell it!
Not the freehold of course, the tenant does not own the freehold, but the tenancy or lease. It is known as ‘assignment’ and is very common with long leases – if you ‘buy’ a flat, in most cases what you are actually doing is taking an assignment of a lease of the flat.
In short lets the right to assign the tenancy is still possible but in most cases is excluded under the terms of the tenancy agreement – landlords do not want to carefully screen and reference tenants only to have them assign the tenancy to an impecunious troublemaker. However in some circumstances they can still be assigned.
Why this is important
Landlords of short lets often find it very difficult to accept that they have effectively lost control over their property – witness the ferocious discussion on my post here about landlords’ inspection rights.
The feeling among some landlords is that someone who has (for example) rented their bedsit for six months or so, cannot possibly have any legal claim over it or indeed any real rights.
If you rent out a flat on a long lease of 99 years you have to accept that you have lost control of it for a very long time. However with short lets, landlords get the property back again every few months or (for longer lets) every year or so, and so the ‘transfer of legal title’ issue does not feel real to them.
The book analogy is a case in point. Renting a property is nothing like borrowing a book – the two are not directly comparable. However obviously some landlords think it is.
This psychological attitude of landlords is one of the big problems in the private rented sector and is probably at the root of many of the bad practices that go on.
What do you think?
If you are a tenant and your landlord is entering your property without your consent, find guidance and draft letters to help in my Tenant Advice Guide