The Sunday Times has posted a Q&A format story in its “Hot Topics” column headed “Everything you need to know about sitting tenants: These occupants are a landlord’s nightmare — as the recent case of Evelyn Waugh’s mansion shows.” It begins by explaining the difference between tenants under the Housing Act 1988 and common law tenants and then continues:
…If a limited company rents out a property — usually for its employees — then they are also common law tenancies, as is the case with Waugh’s house, which is owned by a company called Winston’s House.
A rental agreement is also a common law tenancy if the annual rent is less than £250 (or £1,000 in London), or it is more than £100,000.
Are these tenancies rare?
“It’s not the most common form of tenancy obviously because of the rental incomes involved,” says Adam Colenso, property litigation partner at legal firm Wedlake Bell. “But the rent in very high-value properties in central London are not uncommonly over £100,000 a year. At the really low amount [of rent], it tends to be in situations where special arrangements have been put in place for the tenants. The tenant has got some connection to the landlord, such that they are content for it to be at a very low rent for whatever reason.”
So what are the main differences?
A common law tenancy is essentially a private agreement drawn up between the tenant and the landlord. Much depends on the literal wording of that agreement — and so the generosity of the landlord, or the savvy nature of the tenant depending on how you look at it.
In some ways the tenant is less protected than they would be with a modern agreement. The landlord does not have to put the deposit into an approved deposit protection scheme under a common law tenancy and they do not have to prove grounds for eviction in court under section 8 of the Housing Act or serve a section 21 “no fault” eviction notice.
Under a common law tenancy the landlord simply serves a “notice to quit” if the tenant has breached one of the terms of the agreement or when the lease term comes to an end. However, if the tenant doesn’t want to leave — as in the case of Waugh’s house — then the landlord has to get a court order and call in the bailiffs. […]
What the Q&A does not explain is how, if at all, the sale of the house by a lender to a new owner/lessor affects the tenant’s rights or what the rights of eviction or repossession of the new owner/lessor may be. You would probably need to know the terms of the loan and the lease, as well as the purchase agreement, to answer that.