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Short Lets After 1 October

We have recently come across another unanticipated issue which may become a problem after 1 October. A number of properties in London are let on ‘short lets’ to individuals working or holidaying in London. In the past the high rents charged on these properties meant that they were excluded from the Housing Act 1988. However, with the increased rent threshold this exception will apply to far fewer of these properties.

Premises being let for the purposes of a holiday in London will still fall outside the Housing Act 1988 and these will not present a problem. However, properties being let to individuals who are working in the UK for a short period and where the rent is below £100,000 per annum (pro rata) will now fall under the Housing Act 1988. This of course means that the tenant is entitled to 6 months security of tenure in the property.

To clarify, there is no requirement that a property which falls under the Housing Act 1988 is let for 6 months as is sometimes believed. It is perfectly possible to let such a property for a shorter term. However, a Court is simply not empowered to give possession on a section 21 notice any sooner than 6 months from the start of the initial tenancy. Therefore letting a property for a shorter period is a calculated risk on the part of the landlord as he is at risk of the tenant continuing to pay the rent and simply staying for 6 months with little or no recourse.

What options does the landlord have? If the landlord has resided in the property before as his main residence then he can give a notice before the tenancy begins under ground 1 of Schedule 2 to the Housing Act 1988. This would allow a section 8 notice to be given at any stage giving the tenant 2 months notice to vacate provided that the landlord wishes to reside in the property again as their main home. Otherwise the only option will be to avoid creating a tenancy at all. If a landlord wishes to do this then they will need to provide some services as a part of the agreement which will require access to the property. A landlord who was providing regular cleaning and fresh towels and linen as a part of the agreement should be able to argue that he has not created a tenancy at all but has only created a licence and so the provisions of the Housing Act 1988 will not apply at all. Of course, this will involve a lot more organisation on the part of the landlord but it may be worth it if it is necessary to be sure that vacant possession of the property can be obtained.

4 Comments

  • chris 3rd September 2010 at 12:57 pm

    Correct me if I’m wrong, but even if the landlord creates a license by providing a service will he still not need to serve (reasonable) notice and obtian a possession order (PEA 1977)?

    • PainSmith 3rd September 2010 at 1:22 pm

      Yes, the Protection From Eviction Act will still apply and there will still be a need to go to Court.

  • kjetilniki 6th September 2010 at 12:12 pm

    i seem to recall that cleaning of demised premises porterage and provision of towels and linen amount to attendances for the purposes of the Rent Acts and the Rent acts only applied to tenancies
    accordingly there is still a strong risk it will be held to be a tenancy

    • PainSmith 6th September 2010 at 12:29 pm

      Well, in Marchant v Charters the landlord provided daily cleaning and clean linen and this was enough to hold that there was a licence. However, you are right in that it may not be easy to show.

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