Here is a question to the blog clinic fast track from Nick (not his real name), who is a landlord.
We rented out our property on an AST to a family friend who later took in three lodgers without our knowledge (he had our consent for one).
The tenant gave us notice to quit in August, and eventually left the property in November after the two-month notice period was up. However, the lodgers did not leave the property, and our tenant did not take any action to evict them. The tenant also stopped engaging with us.
After the tenant left in November, we received one last rent payment (for December) from them but no further payments.
We discussed taking the lodgers on as tenants, but we were not allowed due to HMO rules, and we never received any rent from them.
We did not call the police but continued to encourage them to leave the property. We were unsure whether we could legally change the locks because they were present every time we attended the property and their status was unclear to us. To start the legal process, we issued a S21 notice against the original tenant.. We were under the impression that our tenant was the landlord of the tenants so kept directing the lodgers back to the tenant for information.
Eventually, the lodgers moved out in February, but we lost four months of rent.
It is unclear whether the lodgers were subtenants of our tenant after their notice was up, or whether they were trespassers.
As lodgers, they were not on an AST, and it was not a surrender so I understand we were never responsible for them.
Could you confirm whether we should be submitting a claim against our tenant for negligence by not evicting his tenants OR should we be submitting a claim against the lodgers for lost rent while they trespassed in our property OR are we completely wrong, and were they fact our tenants.
Could the fact that we mistakenly told the lodgers that they were the subtenants of our tenant invalidate our claim? Would the fact that we spend time considering them for a tenancy work against us?
Answer
First – be grateful that the lodgers have moved out and you now have vacant possession! At least you are not faced with the prospect of having to evict them.
Let’s now take a look at the law.
What is the legal situation of the lodgers?
The problem of someone remaining in a rented property after the tenant has moved out is a tricky one. What is the legal situation? The answer will depend on what type of occupation the person remaining had and the circumstances under which the tenant vacated.
If the person remaining was a lodger, then they would have normally been a licensee and so cannot acquire the rights of a tenant. Unless if, in some situations, you accept rent from them. However, from what you say, all payments were made to you by the tenant, so this problem will not arise.
When the tenant served a notice to quit on you and then left pursuant to the notice to quit, this will have ended their tenancy.
What was the legal status of the lodgers then? They will have become trespassers, and so if they had remained could have been evicted under the special court procedure for evicting squatters.
This, though, tends to be expensive when done by solicitors (Landlord Action have a service which, at the time of writing, costs £2,500). So at least you have been spared this.
How can you recover your losses?
As a result of the lodgers remaining in the property, you have lost four potential months’ worth of rent. Can you recover this, and if so, how?
Rent under the tenancy
If there is any rent due from the tenant up to the date he vacated the property when it ended under his Notice to Quit, then presuming this has not been covered by any deposit, can be claimed by bringing a claim in the County Court in the normal way (most people use the online procedure). There is government guidance here.
However, what about the period of time between the tenancy ending and the lodgers vacating? Here I think you are on shaky ground.
Claiming from the lodgers
You cannot claim ‘rent’ from the lodgers as they were not your lodgers; their contract was with your tenant.
You may be able to bring a claim for what is known as ‘mense profits’ or an occupation payment. However, this would not be an easy claim to bring. If you decide to do this, you should ideally use specialist landlord and tenant solicitors and get them to advise first.
Claiming against the tenant
Presumably, your tenancy agreement prohibited any lodgers other than the one authorised lodger. In which case, the tenant was in breach of his contract by renting to the additional lodgers.
So it could be arguable that your loss of rent flows from the tenant’s breach of contract and is therefore recoverable from him. However, this would depend on whether the tenancy agreement either expressly or impliedly provided for the tenant to give vacant possession at the end of his tenancy.
You would need to take a look at your tenancy agreement and see what it says. However, I think it is normally accepted that landlords are entitled to expect vacant possession when tenants leave at the end of the tenancy, and this is probably the case here.
The other problem, though, is that if such a claim was brought, the tenant could argue that it is not certain that you would have been able to re-let the property. Or indeed that you would have relet the property anyway. And that you cannot claim compensation for rent that might never have been incurred.
If you had a tenant waiting to rent the property from you, who was delayed or put off by the lodgers remaining, AND if the tenant knew about this AND was obliged to provide vacant possession, you would probably have a good claim for the lost rent. Otherwise, your claim is shaky.
If you were to bring a claim, you would probably get something (after all, the tenant was in breach of contract), but I doubt you would recover all four months’ worth of rent and the award could be quite small.
Other problems
Finally, even if you have a 100% valid claim, and obtain a county court judgement, there is no guarantee your judgement debtor will pay it.
Around 30% of all judgements go unpaid, and sadly, court enforcement procedures tend to be expensive and ineffective. I discuss this in my blog post here.
So before bringing any claim, you should always check to see if your proposed defendant has the resources to pay any claim you bring. Using solicitors and getting a CCJ does not mean you will get your money (and you will still have to pay the solicitors).
There is also the fact that you cannot bring any claim at all unless you have a current address for the defendant. Do you know where the tenant and the lodgers are living now?
Your other questions
You also ask ‘Could the fact that we mistakenly told the lodgers that they were the subtenants of our tenant invalidate our claim? Would the fact that we spend time considering them for a tenancy work against us?’
If you do have a claim, it will last (under the limitation rules) for at least six years, so taking time to think about your options is not a problem.
I can’t see how telling the lodgers that you are not their landlord will prejudice any claim you may have. As for telling them that they were subtenants, I suspect the Judge would be more interested in determining what the legal situation actually was than your interpretation of the facts, particularly as you were not in a position to know the full details of any arrangements between the tenant and the lodgers.
And finally
The trouble is that you are, in effect, saying that as a landlord, you are entitled as of right to receive £X rent every month, and that if you don’t get it, someone should compensate you for this.
However, being a landlord is a business. Businesses cannot count on getting an income. As a landlord, you cannot expect to be immune from all risk.
It may be possible that one of the options I have outlined above could succeed. My view overall, though, is that your chances of recovering compensation for all (or perhaps any) of the post-tenancy period are low.
However, if you decide you do want to have a go, Landlord Action have a debt collecting department and may be able to assist. You never know, you could get lucky.
Finally, I think it is unlikely that this situation is something covered by your insurance, but there is no harm in asking your insurance company or broker.
Interesting case. How can a landlord protect themselves from this happening?
Seem far to easy for a tenant to allow a family member/friend (children etc) to move in as lodger, then end their notice and allow this person to live rent free until they move out.
Also have to wonder who is responsible for council tax? utilities etc?
Would it be an unlawful clause to specify notice to quit would only be accepted should the property be returned fully vacant?
This situation is ridiculous.
it will deter LL from allowing tenants to have lodgers.
Many tenants would use such a facility to assist in this COLC.
Any squatter may be removed or arrested by Police if occupying a home.
However this isn’t the case for Commercial premises and I’m guessing that a residential rental property is considered to be a Commercial one.
The LL would then be faced with very expensive and length legal process to remove the squatters which is what the lodgers would be.
With such circumstances possible it can be seen that LL will reasonably refuse to allow any lodgers.
That situation doesn’t help anyone!
Its not even clear if breach of contract would work.
There must be a better solution such as mesne profits against the trespassers but the original tenant must bear some responsibility for the situation.
Its a shame Tess hasnt offered solutions that could prevent such a situation
I would have thought that the tenant was responsible for providing vacant possession at the end of a tenancy. Surely that is strongly implied in any tenancy without it being written into the AST? If the tenant hasn’t given the property back VACANT then I would have thought they would be guilty of ‘holding over’. They are the legally responsible party regardless of whether it is themselves who fails to vacate, or any one else they have permitted to live there. Surely it is up to the legal tenant to ensure that any action needed to remove any other resident is taken prior to the legal end of the tenancy? I understand that the law is rarely black and white, but I’m quite surprised that this hasn’t even been suggested as a possible option.
Whilst I am aware that the legal view is that loss must be shown to have taken place, hence your comments about the likelihood of the property being immediately let following the vacation of the original tenant, however I would argue the following two points:
1) The sub-tenant has received a material advantage in that they lived rent-free in the property. The landlord is entitled to receive the mesne rent (potentially at the double charge for holding over).
2) The time the property was not vacant was time that the landlord was not able to commence any repairs and maintenance and then marketing, so the final rental period was delayed by the time the property wasn’t vacant. Therefore it isn’t that the property had to be let instantly to cause a valid loss, but it wasn’t available to be let and so the commencement of the income was delayed by this period and was therefore lost, on top of whatever period it then took to prepare and relet the property. It isn’t as though the landlord could have had a tenant waiting to take the property when they had no way of knowing when they might receive vacant possession, or even what condition the property might be in at this unknown time in the future.
Obviously, I agree that receiving recompense from the ex-tenant is anything but a given. But I don’t see that it should be so complicated to attempt. In a reasonable world you should be able to raise a money claim online with some hopes of success? I guess my naivety is showing.