Letting and Young People

Background:

There has been an increase in the amount of young persons who are independent and do not live in the family home. This can cause problems in respect of housing law, as English law generally prevents such persons holding property under a tenancy, or entering into a contract with the liabilities that this might entail. The English law strives to protect individuals whom it regards as having lesser capabilities than those that people are ordinarily assumed to possess.

In law a person under the age of 18 is termed a ‘minor.’ A minor cannot hold a legal estate in land so, when letting to families with children, any children under the age of 18 would not normally be included on the tenancy agreement as they cannot enter into a tenancy or be legally bound by a contract.

It is not possible under s.1(6) Law of Property Act 1925 for a person under the age of 18 to hold an estate in land. By virtue of paragraph 1(1) of Schedule 1 to the Trusts of Land and Appointment of Trustees Act 1996 any purported grant of a legal estate to a minor will not be effective to pass the legal estate, but it will operate as a declaration that the premises are held in trust for the minor.

There are legal complications associated with the grant of a tenancy to a minor because the minor cannot hold a legal estate in land. Letting agreements are not generally binding on persons under the age of 18 years, except in circumstances where the minor is emancipated from their parents.

Letting to families:

Of course, minors also form part of whole families who may wish to rent accommodation. The normal practice followed by landlords in this situation is that only persons over the age of 18 (at the time of execution of the tenancy agreement) would be listed on the tenancy agreement itself. The parents (and any other adults that comprise the household) would hold the legal tenancy.

What then is the legal status of any children occupying as part of a family? In law, being minors, they would not occupy as tenants in their own right until they reach the age of majority (i.e. 18 years old). Until such time, they are simply licencees in the property, and even in the event of taking possession proceedings, only the actual tenants in the property need to be cited in any notices and proceedings.

When the children reach the age of 18 the tenancy agreement should be renewed and they should be added to the tenancy agreement as tenants in their own right. It would be advisable to make a diary note of the child’s 18th birthday to ensure that the tenancy is renewed on or shortly after this date.

As the accommodation is a pre-requisite of the employment for the au-pair to better carry out his/her duties, she (or he) is a service occupier or licencee (Norris v Checksfield, 1991). S/he may have exclusive possession of the accommodation, but no tenancy is created, and therefore there is no requirement that the au-pair is listed on the tenancy agreement. Although not a requirement, the landlord may wish to make provision in the tenancy agreement for a service occupier to occupy accommodation within the property for the duration of his/her employment or until expiry of the lease, whichever is the earliest.

Letting to individual minors:

Contract
Generally, a minor cannot enter into a contract unless it is a contract for necessaries and he/she understands the contract. Accommodation is a necessary and a contract for accommodation is therefore enforceable. Landlords can recover any unpaid rent (provided that it is not an excessive rent) through the courts. This means that there is no legal necessity for landlords to seek a guarantor when letting to a 16 or 17 year old, although it would be advisable to ensure that the landlord can recover any obligations under the tenancy agreement.

The Trust of Land and Appointment of Trustees Act 1996 (TOLATA)
The Trust of Land and Appointment of Trustees Act 1996 provides that any attempt to grant a legal estate to a minor will result in the person granting the legal estate, holding the land on trust for the minor. However, this can cause problems as the landlord will hold the land in trust for the minor as trustee and could not, without committing a fundamental breach of trust, serve a notice to quit determining the subject matter of the trust. The notice to quit has to be validly served on both the trustee and the beneficiary meaning that the landlord would need to serve the notice on himself! It is therefore advisable not to create a trust in land and to use one of the options below.

Authority of a guardian
A tenancy can be granted to a parent/guardian on behalf of the minor and the parent/guardian would then be the trustee and hold the interest on behalf of the young person. Any notices and other documents could then be served on the guardian or parent, which would avoid the problem encountered in the case of Alexander-David v London Borough of Hammersmith & Fulham [2009] where the court held that the local authority was unable to evict a 16 year old tenant because it had granted a tenancy using its standard form of adult tenancy agreement and the agreement operated as a declaration by the local authority to hold the premises in trust for the16 year old.

A new tenancy can be granted to the young person on reaching the age of 18. Whilst, from a legal perspective, this is probably the best course of action, there may be practical difficulties in identifying someone who is prepared to enter into the tenancy on behalf of the young person.

Equitable tenancy
One way of attempting to avoid the situation above is to create an equitable agreement whereby there is no actual grant of tenancy to a minor just an agreement to grant one. The landlord retains the legal title on trust for the benefit of the minor, and the minor holds the tenancy in equity. A joint tenancy can be granted if the minor will be living with someone who is over 18; the older tenant will hold the tenancy in trust. In all cases where a trust is implied, the tenancy will be held in trust until the minor reaches 18. It would be advisable to take further legal advice before drafting an equitable agreement.

Tenancies and Licences
Where the requirements of a tenancy are not met i.e. no exclusive possession, a licence can be granted to a minor. A licence is a personal permission to occupy and not an estate in land; Street v Mountford [1985].

A minor will have the right to shared occupation but will not have exclusive possession of the property. The landlord would need to provide support and assistance (such as provision of bed linen, window cleaning etc) meaning that they exercise extensive rights over the property throughout the duration of the occupancy. A landlord can occupy one room in the house resulting in the minor not having exclusive possession of the property.

However where the conditions of the tenancy are met any purported grant of licence should take effect as the grant of tenancy with an implied trust.

Guarantor agreements
If letting directly to persons under 18 then a guarantor agreement should be taken to cover not only all the financial obligations but also the other obligations in the tenancy agreement. The guarantor will undertake to ensure that tenants under the age of 18 comply with the terms of the tenancy, and the guarantor agrees to underwrite any rent arrears or money owing to the landlord.  Due to the difficulties of bringing actions against minors, it is important to obtain a guarantor when letting to a person under the age of 18.

Sources for further information:

• Tenancies for Minors – Guidance by Shelter Housing http://england.shelter.org.uk
• Letting Factsheet No. 44 – Licences www.letlink.co.uk