Becoming a residential landlord

A resident landlord letting is one where the landlord and the person he or she intends to let to will live in the same property.

This includes conversions such as a basement flat in a house where the landlord and the occupier will live in different parts of the same property.

Tenancies which do not have a resident landlord are known as regulated or assured tenancies depending on whether they were granted before or from 15 January 1989.

Resident tenants who live in the same property as their landlord have more limited rights to stay there and resident landlords have greater freedom to end the arrangement.

The reason for this is that should the relationship break down between the landlord and the person they are letting to, the landlord is considered to be more vulnerable in their own home.

Before letting out your property you should check to see whether you need to obtain any consent to do so. If you own the property outright and it is a freehold property usually you do not need permission from anyone to let out part of the property to someone else.

However, if you have a mortgage on the property you must get your mortgage lender’s consent to let out the property first. Otherwise, you would be in breach of the mortgage terms.

If you own a leasehold property, you should ask your solicitor to check the terms of the lease to ensure you can let part of the property out and, if necessary, obtain the freeholder’s consent to the letting.

If the mortgage lender repossesses your property due to mortgage arrears, or the freeholder terminates the lease because you have breached one of the conditions of the lease, both your rights in the property and your occupier’s rights will come to an end.

It is important to be aware that not all resident landlord arrangements are treated in the same way. If the person you are letting part of your property to shares any accommodation with you such as lounge, kitchen, stairs, halls and storage space, etc they are less protected by legislation in terms of notice to leave and eviction.

The usual assumption is that any letting arrangement will be a tenancy. However, there may be some factors present that make the letting merely a licence to occupy which would make the arrangement easier to terminate.

The most important requirement for a letting to be a tenancy is that the occupier has their own room and you do not have any right under the agreement to enter it without permission, the letting would probably be a tenancy.

If you agree to provide some form of attendance or service such as cleaning which requires you to have unrestricted access to the occupier’s room then there is an argument that the letting is a licence to occupy. However, this is only an indication of how different arrangements might be considered and the each arrangement would be viewed on how it works in practice.

Only a court can say with any certainty whether a letting is a tenancy or a licence to occupy and if a dispute arises, the type of letting could be important.

As such, it is important that you get legal advice before you let part of your property out and to enter into a written agreement with your tenant to make it easier to sort out any disagreements that could arise. Your solicitor would also ensure that the agreement does not conflict with the obligations imposed on landlords and occupiers under legislation.

The agreement would cover matters such as how long the letting will last, the amount of rent, any deposit and how much notice each party will give to the other to end the letting.

For more information on the issues raised by this article, please get in touch.