Dear Claire- Autumn 2019

03 / 10 / 2019

DEAR CLAIRE

Perplexed by property law? Relax, Solicitor Claire Haynes is here to answer your most pressing questions…

Q.  I am the owner of a commercial office building. It is currently vacant and I am not confident of securing new office tenants in the short term. I am concerned that the building will be vulnerable to vandalism and squatters whilst it is vacant.

A contact suggested that a property guardian might be a good idea. Can you explain the pros and cons of a property guardian and how such an arrangement would work in practice? It is important that when I do secure tenants to occupy the office space I can let the offices without delay.

A.  The use of property guardians is growing. When documented properly, property guardian schemes can offer a cost effective solution to keeping a vacant building under observation and in good condition.

The usual arrangement is that a building owner, such as yourself, enters into a licence agreement with a property guardian company which acts like a letting and managing agent for the purpose of the guardian arrangement. The company will then find suitable guardians who wish to live at the property and the company will enter into an occupational licence with each of them.

Each guardian will be vetted by the property guardian company and required to comply with right to rent checks. Usually the company will seek people employed in professional jobs. The guardian will be responsible for reporting any risks, threats or defects to the property.

The guardians pay less than the market rent to live at the property, providing them with an affordable place to live and you with a source of income from an otherwise empty property. There are also potential savings on security and business rates. If the property is used for living accommodation the guardian company or the guardian may be liable to pay council tax for the property that they occupy.

As the existing use of your building is commercial offices it may be necessary for the property guardian company to make some temporary alterations so that the property is habitable, such as the installation of bathroom pods and cooking facilities. Your agreement with the company should address reinstatement at the end of the licence period and repair and maintenance obligations.

The property guardian company will usually be responsible for ensuring that all relevant health and safety and housing laws and regulations are complied with to protect the guardians. Where the property qualifies as a house in multiple occupation this will include obtaining and compliance with the conditions of a licence from the local housing authority.

The terms of the guardian licences need to be carefully worded to ensure that a tenancy is not inadvertently granted giving rights of security of tenure to the guardian. For example, the licence should not grant the guardian exclusive possession of the space. What happens in practice is also important as in the event of a dispute the court would look beyond the wording of the agreement to the nature of the occupation.

The guardian arrangement will usually be terminable on not less than 28 days’ notice. One downside to a property guardian arrangement is that if the guardian refuses to move out when served with notice a possession order would be required from court as the guardian will have the benefit of protection from eviction legislation.

Property guardianship is a new and expanding concept and the law is also evolving so I recommend that you take legal advice on terms of any agreements that you use.