Joint Occupancy - a review of the statute and case law in this area

Lettings to sharers are not always straight-forward.  The type of tenancy that can be granted in such cases will depend on a number of factors. Some tenants occupy rented property as individuals but many more occupy as joint tenants, tenants in common or licensees.  Married or cohabiting couples are frequently joint tenants, but so, also, are groups of friends.  Whether they occupy as tenants or licencees, it is important to understand the differences between them, since each has its own set of characteristics and rules which will apply when it comes to granting renewal or termination.

Types of co-tenancy

There are only two types of co-tenancy, or tenancies where there are occupiers who share the tenancy of a property.  These are:

• tenancy in common
• joint tenancy

Tenants in common
Tenants in common simply hold separate tenancies for their particular parts of the property that they occupy, but often share other parts - the common areas.  The tenancies may frequently be granted at different times, for different rents and for different terms of occupation.  An example of tenants in common might be a student house in which the individual rooms have let to different student on a separate tenancy agreements.

Joint tenancy
A joint tenancy is the more common form of co-tenancy where the tenancy is granted to a group of sharers as a single transaction.  The principle behind the joint tenancy is that, although the rights granted by the landlord are, in fact, granted to a group of people, this group is treated by the law in many respects as if it was a single person. 
For a sharing arrangement to be considered a joint tenancy, it is necessary that the individuals who make up the group are associated, such that it must be possible to demonstrate or satisfy four unities(1).
The four unities are:

• unity of possession
• unity of title
• unity of time
• unity of interest

Unity of possession
A joint tenancy satisfies the 'unity of possession' test if all tenants are jointly entitled to possession of the whole property and can decide between themselves how any of the individual rooms are allocated.  The occupants of a joint tenancy will have a collective form of exclusive possession of the whole house or flat.  Compare this with the situation where a landlord lets out individual rooms and decides which occupiers may occupy any individual room.

Unity of title
Unity of title means that joint tenants enter in the tenancy as a single transaction, and would normally hold title under one tenancy agreement or document.

Unity of time
The unity of time is an indication that the tenants begin their tenancy at the same time (as opposed to entering into individual tenancies at different times).

Unity of interest
Joint tenants take the tenancy of the property as a group at a single rent for the whole property and the interests of each sharer must be of the same nature, duration and extent - they will, therefore, have a joint and equal interest in the tenancy.  Most important and usefully from the landlord's perspective, this joint interest also extends to the liabilities or obligations under the tenancy agreement.  Thus, under a joint tenancy, if one occupier breaches the terms of the agreement, or each denies individual responsibility for damage to the property, the landlord can either claim against all of them jointly, or against one of them individually - this is the concept of  "joint and several liability".  Equally, if one of them absconds leaving rent arrears, the landlord can make the remaining tenants responsible for making up the shortfall in rent.
Where there is no joint liability for the rent, this may prevent a joint tenancy arising, and the occupiers may only be licensees or tenants in common(2).

Advantages & disadvantages

The joint tenancy is an obvious and straightforward way for the landlord to rent out his property to a group of sharers and provides advantages to both the landlord and the tenant.

Firstly, the arrangement has the benefit of simplicity; the landlord lets his property to the tenants as a single transaction, using a single tenancy agreement, specifying a single rent for the whole property. 
The tenants all hold the property equally and can organise their living arrangements between themselves; and decide who is to occupy which room.

Secondly, the landlord gains some security in that, unless the agreement states to the contrary(3), each occupier is jointly and severally liable for the rent and any of the other obligations contained in the tenancy.  Thus, if there are rent arrears and a landlord can only trace one of the tenants, then s/he will be obliged to pay any and all rent outstanding, even though s/he may subsequently be able to recover shares from any of the missing joint tenants

Equally, the concept of unity can also bring disadvantages.  If the landlord falls out with just one of the occupiers and wishes to remove that individual, there is no way of terminating that individual's tenancy in isolation (from the joint tenancy).  The landlord would first need to terminate the tenancy for all occupiers before re-granting a new tenancy.

Some practical examples

To help us understand the various options from the landlord's point of view, it helps to look at a practical example. 
John Smith is the owner of a property in Mugglesford which he wishes to rent out.  The property consists of three bedrooms, a communal lounge, a kitchen and a bathroom. 
All the washing facilities are shared and none of the rooms contain facilities for cooking or preparing food.  He advertised the property for let and a group of three people respond to his advertisement and wish to rent it.  Below, we shall consider the various ways in which he can allow the individuals to occupy the property.

Example 1: A joint tenancy
John decides to rent his property to sharers as a group.  He agrees a rent for the property and draws up a single tenancy agreement with the group, creating a tenancy for twelve months.  Under the current statutory framework, provided that the circumstances of the tenancy fulfilled the basic requirements specified under the Housing Act 1988 (let as a separate dwelling, each of the joint tenants an individual, occupation as only or principal home etc.) then the tenancy would normally be an assured shorthold tenancy held jointly by the individual sharers.  The tenants would, as a group, enjoy exclusive occupation of the property and the other implications of a joint tenancy as discussed earlier.

Example 2: A tenancy of an individual room
In contrast to the first example, John decides that he wants to let the rooms individually (or perhaps because one of the rooms is already occupied by an existing tenant).  He numbers the rooms one, two and three and places advertisements in local shops, "Rooms to let in shared house".  As a result of the advertisement, he receives several enquires from individuals who he subsequently meets at the property and takes up references. 
Over the next few weeks, he signs individual tenancy agreements with each of the new tenants in turn, and grants each of them a tenancy of an individual room, together with the right to share the common areas of the flat.
Because he is able to grant each occupier exclusive possession of his/her room, at a fixed rent, for a defined term, he may legally grant individual tenancies to each of them3.

Example 3: A licence to occupy
John again advertises his flat in the paper as individual rooms suitable for sharers, and three individuals come forward wishing to move in.  This time, he does not allocate the occupiers exclusive occupation of specific rooms, but merely provides them with an agreement to "occupy the flat in common with others who have or may from time to time be granted the like right".

Technically, this agreement is known as a licence, and the agreement would refer to the occupation in terms of a "licence" rather than a "tenancy". 
Licences once enjoyed notoriety as a mechanism for landlords to avoid granting tenants the benefits of statutory protection under the Rent Acts and a great deal of case law exists which enables a licence to be differentiated from a true tenancy.  In the current legal framework, the differences are more academic than real and the use of licences has largely fallen away.  Yet, there will be occasions where the "exclusive possession" requirement of a tenancy cannot or should not be granted and licences come into play - a good example might be that of a lodger who is granted permission to use a room in the landlord's house.
In example 3, there would be little significant advantage gained by using a licence unless the landlord wanted to retain the option to re-assign the rooms rather than grant each of the individuals exclusive possession of a specified room.

Separate dwelling

One fundamental requirement in granting an assured or assured shorthold is that the demised letting must constitute a "separate dwelling" under the Housing Act 1988.  This suggests that in co-occupancy situations the Housing Act will not allow an assured shorthold tenancy (AST) to be granted for a single room within a house, but in fact, this is not the case as we shall see - it is indeed generally possible, for example, to grant AST on a room by room basis.
In an earlier case(4) the House of Lords held that a kitchen, a dining room, a bedroom and a sitting room were all living accommodation, the sharing of which would negate the tenancy from the definition of a "separate dwelling" and thus from statutory protection.  Fortunately, in drafting the Housing Act 1988 (and the Rent Act 1977), legislators spotted this lacuna and the Housing Act 1988 provides some specific protection for those who share their accommodation with other occupiers (but not with the landlord).

Sharing and the Housing Act 1988

The common sharing arrangement is where individual tenants are granted separate tenancies of their own rooms, yet share common facilities such as the kitchen, living room, bathroom and so-on with other tenants.
Section 3 of the Housing Act 1988 allows such lettings to enjoy protection of the Act.  The section provides that, if the terms of the letting (i) grant exclusive occupation of some accommodation - here called "the separate accommodation" and (ii) include the use by the tenant in common with other persons not including the landlord of other accommodation (the "shared accommodation"), and only for this reason, the letting would not otherwise be assured, it is deemed to be let on an assured (or AST) tenancy.

Although the tenant does not obtain an assured tenancy of the part of accommodation which is shared, the same effect is achieved, as the statute prohibits the court from making an order for possession of that shared accommodation while the tenant remains in possession of the separate accommodation.  Only when the court makes, or has made, a possession order relating to the separate accommodation will it have the necessary jurisdiction to order that possession of the shared accommodation be given up.

Also, any term of the tenancy terminating or modifying the tenant's right to use the shared accommodation, or allowing the landlord so to terminate or modify, is of no effect while the tenant remains in possession of his separate accommodation(5). 
Furthermore, the Housing Act 1988 provides support for joint tenancies (and also joint landlords) by a provision that states that, where two or more persons constitute the tenant (or the landlord), then any reference to the landlord or to the tenant in the Act is a reference to all the persons who jointly constitute the landlord or the tenant(6).
In summary, this means that both the landlord and tenant can treat the individual letting of a single room in all practical respects in a similar way as for a standard tenancy of a whole house, and grant the tenancy as an assured shorthold (or assured) tenancy with the similar security of tenure and provisions for termination.
In a shared house situation, the best advice, then, is to grant, as far as possible, joint tenancies for the whole property rather than single tenancies for the individual rooms.  What then, if the composition of the tenancy changes, some tenants leaving, and new tenants joining?  Under a joint tenancy, it would be necessary to surrender the existing tenancy and re-grant a new tenancy once the composition of the group of joint tenants changed - this will be explored in more detail in the following section.

Sharing with the landlord

However, one sharing situation where the landlord may not normally grant an assured (or AST) tenancy is where an occupier shares accommodation with his landlord (whether alone, or in conjunction with other occupiers).  This is because the 'resident landlord exception' applies (Housing Act 1988, sched. 1, para 10).
Also, in such arrangements, it is often the case that the landlord's use of the accommodation is so extensive that it denies the occupier "exclusive possession" - one of the principle requirements for granting a tenancy - so the occupier cannot be a tenant (the occupier in this case is more likely to be a lodger or licensee).

Granting the tenancy

When granting a joint tenancy, the tenancy agreement must contain the names of all tenants living in the property.  This may include emancipated minors who jointly share the tenancy(7) but where the occupiers are a family, this would not include children under the age of 18 who would normally be treated as licensees.
All joint tenants should sign the tenancy agreement although, in exceptional situations, it is possible for one of the co-habitees to obtain legal authority (by an appropriately worded letter of authority) to sign on behalf of a tenant who is absent when the tenancy agreement is entered into.

Variation (of sharers)

A common problem with joint tenants is that members of the group comprising the joint tenancy may change over time.
Often, one of the joint tenants wishes to leave, whether or not his place is taken by a replacement joint tenant. When there is an agreement (verbal or otherwise) to substitute or amend the tenancy in this way, this act will, in law, operate to surrender the original tenancy and, by the ame process, grant a new tenancy to the reconstituted group (often referred to as "surrender and re-grant")(8).

The parties may decide to formally enter into a new written agreement, or more simply to record the change in composition of tenancy by an agreement or deed of variation (signed by all parties).  Both methods are equally valid and will serve to confirm the existence of a new joint tenancy. 
The exception to this rule is where there is an agreement adding a new person as a joint tenant - this may simply be treated as an agreement to vary the existing contract(9), although, clearly, the safest course is, as in the other cases, to enter into a new written agreement that includes all the parties in the new tenancy.

Previously, this implied change of tenancy used to involve further complication since the landlord was required to grant a new term of at least six months under the replacement tenancy (whether or not the joint tenants all wished to remain on at the property for this long).  Since the amendments introduced by the Housing Act 1996, this requirement of a minimum term of six months has, of course, been deleted, but the resulting replacement joint tenancy will still be affected by the substituted provision which prevents the landlord regaining possession of the property in the first six months of the (replacement) tenancy - something to warn landlords and tenants prior to agreeing to such variations.

Termination by landlord

Practitioners will be familiar with the standard routes for recovering possession of tenancies under the Housing Act 1988 (principally sections 8 and 21).  The position with sharers or joint tenants is no different except that any such notice under these sections should be addressed to all the tenants jointly and also sent to, or served on, each tenant individually.

Termination by tenants

Where the joint tenancy held by two or more joint tenants has become a periodic tenancy, the tenancy may be determined by a notice to quit from any one of the joint tenants without the concurrence of the others, unless the terms of the tenancy provide otherwise(10). 
In all other cases, (e.g. tenants exercising a break clause within a fixed term tenancy) notice is required from ALL tenants unless the tenancy agreement expressly provides for it to be determined by one of them(11).  If all the tenants must give notice but the notice is signed by only one of them, this will only be valid if that tenant has the other tenants' authority to give notice as their agent (and the landlord, in such a case, would be well-advised to verify with the other joint tenants that such authority had been given).

Guarantors

Joint tenancies can pose problems to guarantors.  Since, by default, each individual tenant will be jointly and severally liable for the obligations under the tenancy, the guarantor can, in turn, become liable, not just for the individual whose obligations he presumes to be underwriting, but for any default of any of the other joint tenants living in the property.
The prudent guarantor will not normally wish to extend his liability beyond the specified individual tenant.  Commonly adopted solutions are for the guarantor to limit the guarantee to a pre-agreed limit, or to a set proportion of the total rent arrears (or damage claim). An elegant solution, recently encountered, aimed to limit the guarantor's liability to a particular  individual's share of any rent arrears plus an equitable share of any other claim arising from the tenancy; i.e. those damages, losses or expenses attributable to the specified individual.

Succession

If a sole tenant under an assured periodic tenancy dies, there can be a transmission of his tenancy to his spouse, but different succession rules apply in the case of joint tenants.  If there are, for example, three or four joint tenants and one of them dies, the others retain the interest at common law and their respective interest in the property, therefore, increases - the succession provisions in the Housing Act 1988 have no effect.  Where there are only two joint tenants, the survivor similarly takes succession by survivorship, but, in doing so, s/he is treated as a "successor" under the Act and accordingly, when s/he dies, the rule that there can only be one transmission (s.17) will prevent there being any statutory transmission of their tenancy.

Disjointed

As discussed previously, one of the significant advantages to the landlord of granting a joint tenancy is the fact that each of the occupiers can be jointly and severally liable for the obligations in the tenancy.
However, there is some debate in the letting industry as to whether there is any limit to the number of joint tenants that can constitute a joint tenancy and be held jointly liable for the obligations imposed by the agreement.  One opinion, relying on a rather obscure principle in land law, suggests that a limit of four persons exists.  The author, having consulted various authoritative texts and lawyers in the field, believes that there is, in practice, no limit to the number of joint tenants that can constitute a joint tenancy and can find no case law to support this notion. 
Until the judges of the higher courts exercise their joint wisdom on the matter, lawyers will happily kick the issue around to their mutual benefit, and opinions on this aspect of residential lettings are likely to remain somewhat disjointed.


References
1. AG Securities v Vaughan [1990] 1 AC 417
2. Mikeover Ltd  v Brady [1989] MHL 1.94
3. AG Sec. etc, Garner p22. -HLE 1.94
4. Goodrich v Paisner, [1957], AC 65
5. Housing Act 1988, s3(3)
6. Housing Act 1988, s.45(3)
7.  Letting Update, Oct 2000, p15.
8.  London Borough of Tower Hamlets v Ayinde [1994]
9. Francis Perceval Saunders Dec'd Trustees v Ralph [1993] 28 EG 129, QBD
10. Hammersmith & Fulham LBC v Monk [1992] 1 All ER 1 HL
11. Re violas Indenture of Lease [1909] 1 Ch 244; Houslow London BC v Pilling [1994] 1 All ER 432, CA