We Buy Sitting Tenants

The Rent Act 1977 governs all tenancies which commended pre-15 January 1989. These tenancies are often referred to as ‘protected tenancies’, ‘statutory tenancies’ or ‘regulated tenancies’. The crucial date is the date when the tenant first entered the property and a landlord cannot change the nature of the tenancy by giving the tenant a new tenancy agreement or by moving them into another property. A tenant is referred to as a ‘sitting tenant’ ( or a ‘protected tenant’) in cases where he or she is legally entitled to live in a property pursuant to a contractual or statutory tenancy. Due to the effluxion of time, in most cases the original contract will not be available but the determination of the type of tenancy is a matter of factual evidence.

When a tenant (sitting tenant) dies the tenancy may nevertheless still continue. If the tenant was a joint tenant, the surviving joint tenant will become the sole tenant. If a sole tenant has a spouse, that spouse (who may be a ‘same sex partner’) may succeed the tenancy as a Statutory Rent Act protected tenant provided that the deceased tenant was the original tenant and not a tenant by succession. If there is no surviving spouse or if the deceased tenant was a tenant by succession, there may be a second succession to a ‘family member’ who was living in the property at the time of the tenants’ death and for at least two years beforehand. This family member is then entitled to succeed to an assured tenancy under the Housing Act 1988 and the rent will be assessed as an ‘open market’ rent as opposed to a ‘fair rent’ which is registered by the Rent Officer. The open market rent will generally be less than the usual comparable rents because most properties that are let on market rents have been fully modernised (whereas properties let on regulated tenancies tend to be unmodernised).

Tenancies which are subject to rent control by the Rent Officer may only have the rent reviewed every two years, unless the property has been substantially improved in the meantime. The Rent Acts (Maximum Fair rent ) Order 1999 was passed to protect tenants (sitting tenant) who had until then been subjected to high rental increases compared to the tenants income. Given that many of these tenancies are likely to apply to elderly people receive ‘housing benefit’, it is perhaps not surprising that the Order was introduced to restrict the payments having to be funded by the Government.

Under the Act, tenants (sitting tenant) are given security of tenure. Thus it is extremely difficult to evict a tenant who has a tenancy regulated by the Act unless the Landlord can satisfy one of the discretionary grounds for possession. Historically judges tend to avoid making tenants homeless and therefore a Landlord faces an almost impossible task of obtaining possession as well as having to pay substantial legal costs in his attempt to do so. As tenants are more often capable of claiming legal aid, this puts the landlord at risk of having to pay these too, should he lose. Thus, a Landlord should tread carefully before commencing possession proceedings. There are, however, a few instances in which a judge must grant a landlord an order for possession. The two most significant grounds for obtaining possession are either that the tenant is in ‘arrears of rent’ or that the landlord has found ‘suitable alternative accommodation’. The former is rarely successful because on each occasion provided the tenant has paid some rent the judge will be lenient, and in cases where the property is in poor repair, a tenant may be able to claim damages to offset against the arrears. Rent Arrears claims should only be pursued if the property is in good condition without default on the part of the landlord.

‘Suitable Alternative Accommodation’ remains the only likely ground which a landlord may rely upon. The accommodation must be ‘suitable for the needs of the tenant and his family’ and thus must be within the same locality and of a similar character to the current property. The standard is that it must meet the needs of the tenant so if a married couple without children a large property of say 5 bedrooms. The replacement need not be of the same accommodation. There is however no guarantee in any proceedings due to varying case law, so a landlord should seek legal advice before commencing proceedings.

The nature of such tenancies means that it is highly likely that your capital will remain tied up in an asset whose value cannot be fully realised until such time that vacant possession is available. This means that it may be a long time before you are in a position to realise the full vacant value of the property . Furthermore, the rent is usually well below that of the market and therefore the return is poor especially given the need to deduct from such rental income the amount needed to pay for repairs, which are often costly. We therefore provide a means for your to realise some of that value now. By purchasing many such properties we increase the opportunity of vacant possession arising on any one and the chances are much greater than if only one or a limited number of such properties are held as investments.