Regulated tenancies: Not just a thing of the past
For this week’s trainee solicitor blog, the team caught up with Heather McLoughlin. Heather has been investigating regulated tenancies. These will not have featured in your Land Law lectures, but you may come across them in your property seat. Read on to find out more…
Introduction to regulated tenancies
First of all, you are probably thinking ‘what is a regulated tenancy’?
A regulated tenancy is created under the Rent Act 1977 (“RA 1977”). The tenant is a ‘protected tenant’ during the contractual term. Once that term ends, the tenant becomes a ‘statutory tenant’, provided the dwelling-house is occupied as the tenant’s residence. a statutory tenancy is not a tenancy in the usual sense, but a personal status of irremoveability which belongs to the tenant.
Regulated tenancies are also known as rent act tenancies, protected tenancies and statutory tenancies.
A regulated tenant benefits from the following rights:
- Security of tenure: the landlord cannot evict the tenant without a possession order from the courts.
- Fair rent: the tenant can apply to the rent officer to register a fair rent. This is the maximum rent the landlord can charge until it is reviewed or cancelled.
- Succession: If the original tenant dies, their spouse can take over the regulated tenancy. If the original tenant dies and has no spouse, a family member who has been residing at the dwelling-house can take over an assured tenancy.
Most residential tenancies were regulated by the RA 1977 until 15 January 1989, when Part 1 of the Housing Act 1988 (“HA 1988”) came into force and amended the RA 1977. After this date, most tenancies were assured tenancies or assured shorthold tenancies.
While the RA 1977 was amended by the HA 1988, this only means that new protected tenancies cannot be created. It does not mean that existing protected tenancies came to an end. Further, succession rights continue under protected tenancies (discussed below).
Security of tenure
Despite the original tenancy agreement coming to an end, a landlord will have to get a possession order from the court before making a statutory tenant vacate. There are grounds for possession, which are either discretionary or mandatory. Parts I and II of the RA 1977 contain all 19 grounds.
While it is possible to remove a regulated tenant by applying to the court this will depend on the facts of each situation and will require a considerable amount of time and resources.
Fair rent is usually far below market rent. When a rent officer establishes fair rent, it is assumed that there is no shortage of properties for rent in that area. If a fair rent is registered, the landlord will be unable to increase the rent until the fair rent is reviewed or cancelled. The amount the rent can be raised by a rent officer is limited by law. Even if rent is not registered, the landlord may only increase rent in limited circumstances.
Real property is an asset and the rights of a protected tenant will adversely affect the landlord’s interest. Rent is likely to be far below market rent and the landlord may only sell the property subject to the protected tenancy. This will affect the market value of the property.
The RA 1977 provides for succession rights. If the original tenant dies, the protected tenancy can be transferred to a spouse or person akin to a spouse. In the absence of such relation, the tenancy can be passed on to a surviving member of the original tenant’s family if they resided in the dwelling-house for a period of two years before the original tenant’s death. This successor will not receive a protected tenancy but will obtain an assured tenancy. There can be no more than two successions.
Regulated tenancies are not just a thing of the past. If a tenant or successor of an original tenant has been so lucky (or more likely, strategic) as to remain in occupation of a dwelling-house subject to a protected tenancy, their status of irremoveability may continue for many more years.