I recently met a tenant who told me he was having a difficult time with his landlord who had made him sign a document titled ‘Lodger Agreement’. As the conversation progressed, I quickly realised that the tenant was exactly that – a ‘tenant’ and despite what this piece of paper had said, he was NOT a ‘lodger’. Landlords buying documents from WH Smiths hoping they can circumnavigate the law is a dangerous pastime.
What is a lodger?
‘Lodger’ is not a legal term. In legal language, if someone rents a property he will be either a ‘tenant’ or a ‘licensee’. There is a big difference between the two. Tenancies (where the tenant in effect owns the property for a period of time) carry with them a number of important legal rights and obligations which, if they are not written into a tenancy agreement, will be implied into it by law. However, this is not the case with a licence. A licence is simply permission to occupy property so that the person occupying is not a trespasser.
The legal status of a person’s occupation will normally depend on what actually happens. So if someone occupies a whole house or flat ( with the landlord living elsewhere) and pays rent for it, this will normally be a tenancy and the fact that the occupier has signed an agreement saying it is a licence agreement will not change this. If you are renting out a room in your house, you will not want to create a tenancy, so you would make sure that the person you are renting to only has a licence.
Important elements
When considering taking in lodgers, landlords need to ask themselves the following 5 questions:
1. Are you letting a room (or two) in your own home?
2. Will you make it clear to the person paying you rent that you have the right to enter the rented room from time to time (while respecting their privacy)?
3. Will you ensure the rented room never has a lock or anything fitted that would prevent you from accessing the room?
4. Will the person paying you rent share some living space with you? – This will generally be one or more of the kitchen, bathroom or living room.
5. Will you provide some services for the person paying you rent? E.g. clean sheets, clean towels, cleaning services or meals.
If you can answer Yes to all 5 questions, the person paying you rent will be a ‘lodger’ otherwise they will be a ‘tenant’ and that is a whole different ball-game with different legal and tax implications.
Have you got people in your property you thought were lodgers? Are you aware of the legal rights and obligations you have to lodgers and tenants and the difference between them?
Category: Landlords
Anything that may be of interest to landlords
-
Landlords do you know the difference between a tenant and a lodger?
-
Why some landlords and letting agents have got it wrong on pets
A blanket ban on pets seems to be quite common amongst landlord and letting agents here in Mid-Somerset. One local ‘kitchen table’ agent proudly advertises a ‘No pets’ clause in all his Tenancy Agreements as one of his unique selling points!
Well I have some bad news. The Office of Fair Trading considers a blanket ban on keeping pets in a property to be unfair under the Unfair Terms in Consumer Contracts Regulations 1999. Therefore landlords should not include a “No Pets” clause in their standard tenancy agreement. The Office of Fair Trading believes that a fair clause would require the tenant to get the landlord’s consent before they bring pets into the property but the landlord should not unreasonably withhold their consent. Attempting to ban people having a pet in their home probably raises some human rights issues.
Aside from the legalities, it is estimated that 43% (1) of the population currently own a pet and almost 5 million people live in privately rented accommodation in the UK (2). Do we really want to alienate so many people?
Is it the guy with the stick insect in a terranium you want to ban or the guy with the pack of hunting dogs? or both?
OK let’s suppose you manage to grill the prospective tenant and they sign the unfair contract promising never to have a pet, how are you going to stop the tenant getting a pet in the future? And what will you do if you find out the tenant has got a pet?
What are the benefits to landlords of allowing tenants to have pets? By accepting tenants with pets you can:
- Increase demand for your property – with so few properties on the market that accept tenants with pets, your property will be in high demand. Pet-friendly properties are much sought after and won’t be vacant for long
- Encourage tenants to stay for longer – pet owners know how difficult it is to find rented accommodation that allows pets so they are more likely to stay longer than tenants with no pets
- Attract responsible tenants – responsible pet owners often make the most responsible tenants. The lack of rented accommodation for pet owners also means that tenants will be less likely to do anything to jeopardise their tenancy
I believe landlords and letting agents need to take a more pragmatic approach to pets rather than blanket bans. There are many things that can be done to mitigate any perceived risk.
What are your thoughts on allowing pets in tented property?
1 Pet Food Manufacturers Association Annual Report 2008 www.pfma.org.uk
2 Figure based on data taken from www.arla.co.uk and the Office for National Statistics -
Why many landlords and letting agents break the rules on EPCs
It is not uncommon for landlords and agents not to provide tenants with an EPC (Energy Performance Certificate) for a property. The reasons for this might be a combination of the following factors:
- Landlords and agents see EPCs as another piece of costly red tape that are of no value
- The landlord or agent hopes the tenant feels the same way and won’t ask to see the EPC
- The landlord or agent would not want to advertise that the property has a low energy rating and will be costly to maintain
- Ignorance of current legislation on EPCs
Do landlords and agents have to provide tenants with an EPC? What must they provide and when?
The most recent piece of legal direction in this area is DIRECTIVE 2010/31/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 19 May 2010 on the energy performance of buildings (recast).
Article 12 states that when buildings or building units are rented out, the energy performance certificate or a copy thereof is shown to the prospective new tenant and handed over to the new tenant.
Section 22 of the same directive states that the prospective tenant of a building or building unit should, in the energy performance certificate, be given correct information about the energy performance of the building and practical advice on improving such performance.
This (Section22) would imply that simply giving the information from the first page of the EPC (the energy and environmental ratings) is not adequate.
In the UK, the most recent piece of legislation covering EPCs is The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007
Part 1 Section 3 defines that someone becomes a prospective tenant in relation to a building when he—
(a)requests any information about the building from the relevant person or his agent for the purpose of deciding whether to rent the building;
(b)makes a request to view the building for the purpose of deciding whether to rent the building; or
(c)makes an offer, whether oral or written, to rent the building.
Part 2 Section 5 of the same legislation states that the relevant person shall make available free of charge a valid energy performance certificate to any prospective buyer or tenant—
(a)at the earliest opportunity; and
(b)in any event before entering into a contract to rent out the building or, if sooner, no later than whichever is the earlier of—
(i)in the case of a person who requests information about the building, the time at which the relevant person first makes available any information in writing about the building to the person; or
(ii)in the case of a person who makes a request to view the building, the time at which the person views the building.
I think there is an issue of openess and honesty in all of this. Give tenants the information they need to make the right decision for them. On the basis of this and the above, I would say best practice may look like this:
1. When publishing information about a property in printed media (e.g. newspapers), provide the energy and environmental ratings data.
2. When providing details online provide the energy and environmental ratings graphs and a link to the full EPC.
3. Show prospective tenants a copy of the full EPC at the earliest opportunity and if they request it, provide them with their own copy.
4. If you give out written information about the property (e.g. a brochure), provide a copy of the full EPC as standard.
5. Provide new tenants with a copy of the full EPC before they sign the Tenancy Agreement – ask them to sign to say they have received it as there is a penalty for failure to meet current legislation requirements.
What do you consider best practice for provision of EPCs?