Tenancy types

Many people in this country own land and that still tends to be the aspiration. They say an Englishman's home is his castle. Not so in other countries, France, Germany even the USA, where leasing property has always been as much as lifestyle choice and has never meant 'second best'. People are starting to think more this way here too, especially following the credit crunch which has taken us from not being able to afford mortgages to not being able to get them in the first place.

There also massive differences in tenancy types from a posh flat in Mayfair on a 100 year lease to a six month tenancy of a bedsit. Strictly the terms leasehold and tenancy are interchangeable as both describe payment of rent for an estate in land, but in practice the term leasehold is usually reserved to cover the former type of tenancy i.e the tenant/leaseholder has a fixed term of years which they have purchased by what is called a premium and for which they pay thereafter usually a very small ground rent and a service charge for services such as cleaning, maintenance, gardening etc. Such leaseholders feel that they are owners of their premises and need to distinguish themselves from other tenants who will usually be renting from the council, a housing association or on a six month let from a private landlord.

To make the distinction more exact in law, the long leaseholder, to give him his more usual epithet, usually pays a rent which is so low that he is taken out the extra protection from eviction which it is felt other tenants need as their occupation is so much more insecure, that is the protection of the Housing Acts or previously the Rent Acts. That does not mean however that such long leaseholders cannot be evicted for non-payment of rent or service charge or other breaches of the lease. Indeed I have had several cases in my career where this has happened. Usually however if the leaseholder cannot, or more usually will not pay as a result of bloody -mindedness, the mortgage company will step in and pay instead as they have the right in law to do to avoid what is called 'forfeiture'. Such forfeiture would otherwise mean the lease disappearing for the sake of (usually) a few hundred pounds of indebtedness and the consequence that not only will the leaseholder have nothing to sell on to recoup the premium but the lender would have lost their security too. Forfeiture however is a very technical subject and I do not intend to address it more here.

Outside these long leases, tenancies divide into those in the public sector i.e. council tenancies and those in the private sector. The later include Housing Association tenancies which were classed as a type of public sector before the Housing Act 1988 but now are assured tenancies in the private sector. However it many ways it is a distinction without a difference as housing associations usually grant fully assured tenancies which give very similar security to council tenancies, including often the right to buy. Public sector and housing association landlords are both known as social landlords and this area is known as social housing. There has also been a lot of buying of council stock by Housing Associations since the 1980s, encouraged by successive governments, which has meant that in some regions a big housing association looks and feels like the council. An example is Flagship Housing which not only owns almost all the social housing stock in Suffolk Coastal who have only retained some emergency accommodation for immediately homeless people, but is the housing association who is nominated from the Housing Register and under homelessness duties. Housing association tenants, like council tenants, could only be evicted on proof of statutory grounds, the most common of which of course is rent arrears, followed by causing nuisance and annoyance to other tenants. There are however some more obscure grounds such as under-occupation and over-crowding which are only applicable to council tenancies.

In the private sector, nowadays, fully assured tenancies have to be expressly created as in the case of housing association tenancies so most tenancies go by default to the poor relation within the assured category, namely the assured shorthold. The basic idea with shortholds is that the government (in contrast to social housing) wanted to create as much letting as possible from private individuals and companies to bridge the housing shortage and therefore needed to make it fairly straightforward to get back possession, consistent with giving tenant's some notice and protection so they have time to find somewhere else. The basic concept is that possession can be initiated by giving 2 months notice on or before 6 months of the tenancy expire. There are some technical rules (as ever with the law!): if you contact my office we can send you a free guidance note on this, prepared in this case mostly from the landlord's perspective as most of my instructions on shorthold possession is to landlords.

It is worth also making the point in closure that tenancy law is an area where it is still necessary to be familiar with old law because often each new statute, whilst changing the law for granting of future tenancies - usually it has to be said in the landlord's favour to a marginal or greater extent - preserves the existing provision for tenancies then extant. Thus there are a significant number of tenancies in the private sector still pretty bulletproof under the Rent Acts, some of which date back to the 1960s or even earlier. Also there are special provisions to protect agricultural workers and others who hold tenancies in return for employment and some species e.g. where a private landlord also lives on the premises i.e. letting out a room in his house, where there is even less security than the shorthold. A technical subject indeed and one in which it pays to have a long legal memory and a reasonably high legal IQ.