Licence to Occupy - is it valid?

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    Licence to Occupy - is it valid?

    We have a small property that we initially bought for our son to live in. Whist he was living there, he rented out a room under the 'rent a room' scheme as a live in landlord.

    He then got a job in London and moved out. Rightly or wrongly, we used a similar 'rent a room' style contract (or licence to occupy) to rent out the part of the property that he was living in, so we effectively had a couple of 'bed sit' type properties both rented out under a licence to occupy type contract. (but no live in landlord).

    The property is unusual in that it has an outside door available from the bedroom, so that both 'bedsits' have their own access, and only a shared laundry room is needed for joint use. There is however only one central heating system, and power system. We pay all the bills and charge them an all inclusive rate.

    We now have a new tenant that applied for housing benefit without our knowledge, and he has been advised by the council that our contract is not legal as it must be an assured shorthold tenancy, and we have not lodged the bond with a deposit protection scheme. Without giving us chance to explain or discuss, he has instigated immediate court proceedings to claim 3x the cost of the bond off us.

    I am finding it very difficult to get clear advice as to whether out licence to occupy contract can still be valid under the current circumstances. If it is valid, then the requirements for bond protection should not apply (so I conclude).

    Please can anyone offer any advice on this tricky issue?

    #2
    You have inadvertently created two AST's (one for each tenant).

    You need to get both deposits protected immediately, use the DPS, it's free and allows you to protect the deposits late. Then supply each tenant with the prescribed information. That should be a defence against your tenant's claim.

    I suggest then that you read the 'sticky' at the top of this forum.

    If you don't understand it come back and ask.
    I offer no guarantee that anything I say is correct. wysiwyg

    Comment


      #3
      Originally posted by humberdean View Post
      We now have a new tenant that applied for housing benefit without our knowledge, and he has been advised by the council that our contract is not legal as it must be an assured shorthold tenancy, and we have not lodged the bond with a deposit protection scheme. Without giving us chance to explain or discuss, he has instigated immediate court proceedings to claim 3x the cost of the bond off us.

      I am finding it very difficult to get clear advice as to whether out licence to occupy contract can still be valid under the current circumstances. If it is valid, then the requirements for bond protection should not apply (so I conclude).
      Assuming the property is in England/Wales, the two tenants have, by default, individual assured shorthold tenancies. Makes absolutely no difference what name you give to the contract; and the council is wrong in saying the contract is 'not legal' - the contract is perfectly valid/enforceable in terms of the basic terms of the tenancy such as rent payable, etc (though some of its provisions may be overridden by Housing Act 1988). It just isn't a 'licence to occupy' but an AST.

      As such, you must protect the deposit, and provide T with the prescribed information. Use the DPS (http://www.depositprotection.com/ ) as not only is it the only scheme which will accept late protection, but it also means you will defeat the T's claim for 3x deposit. There was a high court case earlier this year, Draycott v Hannells, which ruled that the 3x deposit sanction does not apply if the LL protects the deposit late with the DPS. The ruling is binding on lower courts. You must cite this case in your defence to the claim.

      See this other thread for further info on the Draycott v Hannells case.
      http://www.landlordzone.co.uk/forums...ad.php?t=32080

      Comment


        #4
        Thanks

        Thanks very much for the prompt and useful advice.

        I am taking the necessary steps to protect the bonds asap.

        Comment


          #5
          Council's internal rules probably say they must see a valid AST for this sort of HB/LHA claim... (they are kinda right, one can understand where they are coming from..) ... Probably won't get that rule overturned before the claimant/claim gets up to the head of housing...

          so, you have some interesting choices..

          a) Hold out against council's demand for an AST and have T getting more&more&more into arrears (but you can get them out the S8 route after 2 months rent outstanding... ) or..
          b) Grant a new AST and thereby set the clock ticking again, you'll have them in for a minimum of 6 months before you can get them ou the S21 route, but at least you will be getting HB/LHA..
          c) Then again, with you "incorrect" license to occupy if you tried to evict either tenant the judge (if they don't go quietly) might decide to clamp down on a wicked/ignorant landlord at LL had used incorrect paperwork..

          Dunno what to recommend:

          Cheers!

          Artful
          I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

          Comment


            #6
            OP, you didn't say what the timescale has been between the new tenant moving in and making his benefit claim. Tenants are still allowed to to claim housing benefit for 'rent a room' tenancies, albeit at a lower rate and, if the tenant in question is under 25, that is all you will get.

            The council might accept a letter of sworn testimony from you regarding the date the tenant moved in, and/or they might also accept your license agreement. It seems you have little to lose but to try.

            Comment


              #7
              Originally posted by theartfullodger View Post
              c) Then again, with you "incorrect" license to occupy if you tried to evict either tenant the judge (if they don't go quietly) might decide to clamp down on a wicked/ignorant landlord at LL had used incorrect paperwork..
              Might be an idea perhaps to get a solicitor to draft an addendum to the existing contract clarifying that the tenancy falls under Housing Act 1988 etc.

              Comment


                #8
                Protecting Deposit immediately is good
                Getting legal advice would be a sensible option.

                Similar to post above, I take would be to issue a statement of terms and conditions of the tenancy to each occupant so they know where they stand; stating that they have an AST etc and the date the tenancy started. Almost like a tenancy agreement except they do not have to sign it because the tenancy started when they moved in or when your son moved out.

                IT would include any terms on their license agreement and the basic stuff that is implied by any oral assured shorthold tenancy. It would also include reference to the deposit of £x being protected in the DPS scheme and what the money can be used for. A solicitor who knows about tenancy law would be best person to do this.
                All posts in good faith, but do not rely on them

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                  #9
                  Originally posted by westminster View Post
                  Might be an idea perhaps to get a solicitor to draft an addendum to the existing contract clarifying that the tenancy falls under Housing Act 1988 etc.
                  Would that work? How, in the absence of contractual consideration?
                  JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                  1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                  2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                  3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                  4. *- Contact info: click on my name (blue-highlight link).

                  Comment


                    #10
                    Originally posted by jeffrey View Post
                    Would that work? How, in the absence of contractual consideration?
                    You tell us. Would it have to be a deed?

                    I do know that existing contracts can be varied if the parties agree, but I'm not proposing that the 'addendum' varies the terms, just that it clarifies that the so-called licence to occupy is in fact an AST contract under HA1988, and perhaps formally provides T with an address for serving notices, etc. Surely not beyond the power of a solicitor to figure out how this should be executed.

                    Comment


                      #11
                      I disagree. If it's already an AST, the addendum would have no effect. If it's not, the addendum would have no effect.
                      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                      4. *- Contact info: click on my name (blue-highlight link).

                      Comment


                        #12
                        Originally posted by westminster View Post
                        Might be an idea perhaps to get a solicitor to draft an addendum to the existing contract clarifying that the tenancy falls under Housing Act 1988 etc.
                        Whether or not a tenancy is for the time being an assured tenancy depends entirely on whether the statutory conditions are met and not at all on the wishes or intentions of the parties, expressed or not.

                        Comment


                          #13
                          Originally posted by jeffrey View Post
                          I disagree. If it's already an AST, the addendum would have no effect. If it's not, the addendum would have no effect.
                          Originally posted by Lawcruncher View Post
                          Whether or not a tenancy is for the time being an assured tenancy depends entirely on whether the statutory conditions are met and not at all on the wishes or intentions of the parties, expressed or not.
                          Yes, but the problem OP has is that housing benefit will not accept that the current contract is valid/an AST because it is headed 'licence to occupy' (see below).

                          So unless OP sorts something out, OP won't get their rent.

                          Originally posted by humberdean View Post
                          We now have a new tenant that applied for housing benefit without our knowledge, and he has been advised by the council that our contract is not legal as it must be an assured shorthold tenancy, and we have not lodged the bond with a deposit protection scheme.

                          Comment


                            #14
                            So the only way for T to maintain a claim is to persuade L that:
                            a. the existing letting (whatever it is) be surrendered by agreement; and
                            b. a new letting (drawn correctly, as an AST this time) be granted.

                            T should pay all L's costs, as this exercise is purely for T's benefit (and Benefits!)
                            JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                            1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                            2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                            3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                            4. *- Contact info: click on my name (blue-highlight link).

                            Comment


                              #15
                              Originally posted by jeffrey View Post

                              T should pay all L's costs, as this exercise is purely for T's benefit (and Benefits!)
                              Wise if eviction ever gets to court, the original error being LL's???
                              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

                              Comment

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