Resident landlord who has used wrong agreement seeks advice

Here is a question to the blog clinic from John who is a landlord.

I have a self-contained annex which is part of the main building of my house where I live (it used to be a living room, utility room and conservatory). It has its own council tax banding now which I had to do after purchasing the property and its own registered address which the previous owner registered. All utilities (heating, water, electric etc) are connected to main house as when it was originally built.

From my reading, I understand that I am a resident landlord but have realised I used an assured tenancy agreement which has the heading assured shorthold tenancy. I wasn’t aware of the legal differences and just assumed all 12 months rental agreements with a 6-month break clause were called assured shorthold tenancy. I’m new to this and didn’t realise the legal quagmire around it all.

I’m trying to understand where I stand legally and how do I go about changing the tenancy?

I understand from recent reading that for example if the landlord is resident in the property, this puts the tenancy outside the provisions of the Housing Act 1988 and so the tenancy cannot be an assured or assured shorthold one and the agreement will take effect, but any clause relating to the wrong tenancy type will not be enforceable.

Another issue is then around the TDS as being a resident landlord my tenancy agreement doesn’t mention the TDS but just general conditions on the deposit, deductions from deposit, interest etc and a line that states “Subject to any rules or provisions of the deposit scheme”. As a resident landlord, I don’t need to register the deposit with a TDS but because it states AST on the document where do I stand now? We are 4 months into the tenancy with my tenant.

Answer

You are quite correct, if you live in the same building as your tenants, this cannot be an assured shorthold tenancy.  The reason is that the Housing Act 1988 which is the main statute regulating tenancies sets out in Schedule 1 the type of tenancies which cannot be assured or assured shorthold tenancies – and these include resident landlords (Schedule 1 s10).

So if you have used the wrong form, this will not affect what the tenancy is.  You will just have a tenancy agreement that contains incorrect wording which does not apply to the tenancy.  This is not good but it is not a disaster.  It is not actually illegal (as using a sham license is for example).  You will need to correct things, but this can be at renewal.  

If any issues arise though, for example, if your tenant queries why his tenancy deposit has not been protected, you may need to ‘fess up’ and explain that you used the wrong form by mistake but that you will be correcting this at renewal (assuming the tenant wants to stay on).

So far as the tenancy deposit point is concerned, again you are correct, you are not required to protect the deposit if the tenancy is not an assured shorthold tenancy.  As the deposit rules specifically confine the obligation to protect deposits to ASTs. 

The fact that you have used the wrong form will not change this.  If you are a resident landlord, it is impossible for your tenancy to be an AST and so, regardless of what your agreement says, you are not obliged to protect the deposit in a scheme.

The main result of using the wrong form is confusion and misunderstanding.  Which is clearly not something you want.  So my message to any new landlords reading this is that you need to do a bit of training before renting out property!

My Landlord Law service is specifically designed to help and support landlords so they can manage their properties themselves while complying with the law.  If you are not sure what tenancy type you have, we have a free guide here and also a free Which Tenancy Agreement guide here to help you work out what type of tenancy agreement you need.