The law now provides considerable encouragement to the landlord letting out part of his home. This type of landlord is given more protection than the average landlord letting under assured tenancies.
There are also beneficial tax breaks that apply in many cases under the Rent-a-Room scheme, that was introduced in 1992 to encourage those that have spare furnished rooms in their own home to rent them out.
Due to the Housing Act 1988, a tenancy where there is a ‘resident landlord’ may not be an assured or assured shorthold tenancy. Such a tenancy will need to be granted as an ordinary common law tenancy or as a licence. See Licences.
The main exception to this rule is where the property is a purpose built block of flats and the landlord simply lives in one of the flats in the block. Such a landlord would not qualify for resident landlord status, so the tenant would occupy as an assured or assured shorthold tenant.
Tenant or lodger
Broadly, there are two categories of occupancy that can occur in the situation where there is a degree of communality between the landlord and his occupiers. There are:
- tenant with self-contained accommodation
To assist in this distinction, a lodger is an occupier who shares accommodation with the person who has permitted him to enter into occupation. the lodger might be occupying either under a licence or a tenancy, depending on the arrangements made between the parties. The most important factor is whether the occupier still enjoys exclusive possession of some part of the dwelling. See Licences.
Where the landlord and tenant live in the same building but each have their own ‘separate dwelling’, a tenancy will normally result.
Housing Act 1988 definition of ‘resident landlord’
Schedule 1 of the Housing Act 1988 provides, in summary, that a landlord is considered to be a resident landlord if he lives continuously in the same building (or in another dwelling which forms part of the same building) as his tenant, unless the two dwellings are contained in a purpose built block of flats.
Therefore, the landlord does not need to share any accommodation with the occupier to qualify for resident landlord status. It is enough that both the landlord and tenant live in the same building.
Provisions of the Rent Act 1977 referring to a resident landlord adopt a very similar meaning, so the case law under this Act also applies here.
Resident landlords living in purpose built blocks of flats are exempt from the Housing Act definition, and are allowed to grant both assured and assured shorthold tenancies within the same building.
‘Purpose-built block of flats’ is defined in Schedule 1 para 22; it must as constructed contain two or more flats.
The relevant date to consider is the date of construction, and a distinction is drawn between constructions of new buildings and conversions of existing buildings.
Constructions of new buildings will always be within the definition if they consist of two or more flats, whereas conversions will not be apart from in exceptional circumstances.
Status of landlord
In order for a landlord to be a resident landlord, the person who granted the tenancy and, any successive landlords who subsequently owned the property during the tenancy, must have been an individual or individuals. They cannot have been an company or institution. The landlord(s) must also have occupied another dwelling-house in the same building as his only or principal home. In the case of joint landlords, both must be an individual.
A confusion issue within the legislation is the determination of whether the dwelling-house let to the tenant forms part of the same building as the dwelling-house occupied by the landlord.
Where a granny annex has been built as a separate building beside the landlord’s house, this is unlikely to be resident landlord status and the annex can be let under an assured shorthold tenancy as it does not form part of the same building as the landlord’s dwelling-house. If the granny annex is adjoined to the landlord’s house it is more likely to be considered a resident landlord situation as the annex forms part of the same building.
However, where the landlord builds an extension onto his house for use as rental accommodation the courts will consider the proximity of the tenant’s and landlord’s accommodation to determine whether to grant resident landlord status.
Whether or not they are deemed to form part of the same building is a question of fact and degree.
However, in coming to an overall decision on this matter it is likely that the court will pay significant regard to the intention of the legislation, which was to allow the landlord to more easily remove a tenant who lives in close proximity to him.