I was left a property in 1998 which has a protected tenancy tenant living in it. She currently pays £135 pcm for the property (market rental value would be around £900 pcm).
If she has one of her children or grandchildren living with her when she dies, could they take on the tenancy under these same terms or would we be able to raise the rent in line with market value?
Yes, you would be able to increase the rent.
The only time a tenant will inherit a protected tenancy (where you can only charge a ‘fair rent’ set by the Rent Officer) is if they are the spouse or partner of the original tenant.
So if your tenant got married and died then her husband would inherit the protected tenancy under the succession rules UNLESS your tenant herself had inherited the tenancy from her partner. There can only be one succession to a protected tenancy.
In the case of a second spouse, and in all other cases where someone acquires a tenancy under the succession rules, it will be to an assured tenancy (not an assured shorthold).
You can’t use section 21 for an assured tenancy but you can increase the rent to a market rent under the statutory notice procedure set out in s13 of the Housing Act 1988.