Lodger to Tenant to Lodger – or just a holiday?

by Readers Question

15:18 PM, 13th September 2016
About 2 years ago

Lodger to Tenant to Lodger – or just a holiday?

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Lodger to Tenant to Lodger – or just a holiday?

I’m asking this question on behalf of my niece.

She is in an interesting situation and I wondered if anyone could offer any advice or warnings.

She owns a flat in Glasgow that she lives in herself. She has a friend who is also a lodger.

On my advice she has a lodger agreement in place.

She is looking at working in Australia for a year and has suggested that her friend would be able to look after the flat for her until she returns. I can see several potential problems with this and wondered if anyone has experience of this type of situation.

My concerns are several

If she no longer resides at the flat the ‘lodger’ would then become a tenant (by virtue of no live in landlord). Is this correct?

How easy would it be to change the tenant status back to lodger status upon her return.

My biggest concerns are that her friend doesn’t work at present due to ill health and would fail the kind of tenancy referencing that I do for my own tenants. My understanding is that this would make it impossible to get rent guarantee or legal fees insurance.

If relations with her friend changed over the course of 12 months it might prove difficult and expensive to evict her.

Even if her friend was happy to go the council would not consider her homeless and in need of housing unless she was actually evicted (ditto expense).

Can an inventory realistically be done for the start of the tenancy if the proposed tenant is already living in the flat as a lodger?

Any advice gratefully received.

Many thanks

Fiona



Comments

Mark Alexander

15:19 PM, 13th September 2016
About 2 years ago

Hi Fiona

I am hoping that both Mandy Thomson and Charles King (Barrister-At-Law) will comment on this because I too want to add a question based on a scenario.

If your niece was to take a holiday for a week then there could be no doubt that the property would remain her home.

If she continues to pay the bills, retains the keys to the property and a room available exclusively for her own use whenever she wishes to return, I cannot see why this would change anything if by her "holiday" being extended to a year or more. She could decide she hates it there and return after just a few days. Obviously, if she does settle in Australia there must surely be some cut off point but what is it? Buying a house perhaps? Renting a property in Australia? Surely not the latter? I have rented several properties short term for holiday use only.

I might be wrong so please don't treat this as advice.
.

Charles King - Barrister-At-Law

15:48 PM, 13th September 2016
About 2 years ago

Fiona, the scenario you describe does have some dangers. Firstly and most importantly Scottish law is different from the law of England and Wales, so this advice might not be right. Under English law the likelihood is that she would be creating a tenancy in favour of the current lodger. Much would depend on the terms of the licence/lodger agreement she has, and the extent to which your neice has left belongings behind and has an intention to return which she can prove through correspondence, etc., just as Mark says. The danger is that she and the lodger/tenant will fall out during your niece's absence, and/or that the lodger may refuse to leave upon your niece's return (or even more seriously, her non-return). You will also need to consider whether and when she needs to serve an AT5 form (which I understand to be the Scottish equivalent to the old 'section 20' notices which before 1997 were a pre-requisite for an assured shorthold tenancy to exist), and whether there is a Scottish equivalent to a s.48 notice (notification of LL's address) without which no rent is payable. It might be wise to get the lodger to agree to sign a tenant's Notice to Quit, to expire on your neice's proposed return date. It might be necessary to recover possession through the courts upon your neice's return. What if the rent goes unpaid? Who will be looking after your neice's interests at home while she is away? Why not allow a relative to grant a tenancy of the property, putting their name down as landlord (thereby creating a 'tenancy by estoppel' with a 3rd party as landlord, who could enfoce the tenants obligations in the local court)? Subject to all these, and other, potentially difficult problems, it is an arrangement which might work provided the lodger is 100% trustworthy. I don't mean to be a cynic, but nobody is that trustworthy! Best of luck!

Mandy Thomson

18:06 PM, 14th September 2016
About 2 years ago

Hi Fiona

Whereas a lodger in England or Wales who rents a room and shares living accommodation with his landlord is a licencee, in Scotland such a lodger has the legal status of being a tenant albeit only a common law tenant, not with the same rights as a tenant who rents a whole self contained property (I believe mostly an assured tenant in Scotland). A common law tenant requires a months notice to quit (usually just a letter) which must be enforced by a possession order if the lodger refuses to move out on expiry of notice.

However, as the landlord, your niece, is proposing to stay away long term, this could at least temporarily promote the lodger's rental status.

In England, if there is no resident landlord living at the property temporarily, the licencee is promoted to a common law tenant until the resident landlord moves back in (or his or her successor, provided the lodger has been properly notified). However, as a Scottish lodger is already a common law tenant, this means the lodger will become an assured or even a secure tenant.

The property remains the landlord's home if they are still resident there, but are simply staying away. However, it's my understanding that there is no definitive test of residency, and in practical terms, how likely is the lodger to allow your niece to move back in as resident landlord and revert to just being a lodger again? If nothing else, I could see the friends falling out over this, as the lodger is likely to resent giving up her new found space, even if she is a reasonable person.

If your niece were to move out, as opposed to simply staying away, leaving her friend in situ, she would have granted her a more secure tenancy by default, and would not be able to move back in until her friend gave her vacant possession.

You can't get rent guarantee insurance for a lodger, but there are some companies who will consider "DSS" tenants such as Rentguard https://www.rentguard.co.uk/insurance/rent-guarantee.html

To conclude, I think we've answered the question of what happens when a Scottish resident landlord moves out, but the real question here is would your niece be deemed to be moving out, or simply staying away from the property, but maintaining residency there?

Mark Alexander

18:34 PM, 14th September 2016
About 2 years ago

Reply to the comment left by "Mandy Thomson" at "14/09/2016 - 18:06":

Thank you also to Charles.

What you have both said, far more eloquently than I did, is pretty much as I thought originally. If I was the homeowner I certainly wouldn't want to become a "test case" on something as important as this and I that basis I'd err on the side of caution.
.

Romain Garcin

20:44 PM, 14th September 2016
About 2 years ago

In England, a 'lodger' may be either a (common law) tenant or a licensee depending on the agreement and the facts. This isn't affected when the resident landlord is temporally away as long as the property remains his principal residence.

The tenant/licensee would be excluded from the Protection from Eviction Act 1977 so I don't think that a court order will ever be legally required to evict.

Mandy Thomson

23:43 PM, 14th September 2016
About 2 years ago

Reply to the comment left by "Romain Garcin" at "14/09/2016 - 20:44":

You're right regarding lodgers in England and Wales but in Scotland there are few (if any) licence agreements relating to residential property.

In Scotland, nearly all lodgers renting a room and sharing living accommodation with their landlord have exclusive possession of their rooms by law, whereas in England and Wales they do not, meaning Scottish lodgers are common law tenants but English/Welsh lodgers are licencees.

Lisa Notner

9:57 AM, 15th September 2016
About 2 years ago

Thank-you for all your comments.
Mandy, I really appreciate the distinction you make between English and Welsh law and Scottish law. I will discuss this with my niece.

Mandy Thomson

12:37 PM, 16th September 2016
About 2 years ago

I've being looking further into this residence/domicile question, and since I did my research and published my website for live in landlords and lodgers, HMRC have introduced their statutory residence test, and the habitual residence test has been introduced for benefits and public housing purposes. Note that these tests are guidelines and a rule for certain purposes, not a law. There remains no absolute legal definition of UK domicility.

However, IMHO it could be argued that these tests both reflect what a reasonable person would say was a sufficient test of someone's place of residence. I believe that if your niece leaves plenty of her possessions (including clothes) in the flat, maintains her bedroom, has mail going there, remains registered with her GP, and last but not least, can spend at least a month of that year living back at her flat, I believe she would have a very good argument that the flat remains her permanent residence and she therefore remains the resident landlord.

There are many live in landlords who have jobs that take them away for weeks, even months at a time, but because the property remains their main home, they maintain their resident landlord status.

However, as has been mentioned, there is still a risk for your niece here, if only that her friend could take legal action against her if she wanted to prove she was a tenant, whether or not this would be successful. You niece needs to balance this against falling out with her friend by asking her to move out, particularly given that she is likely to struggle to find alternate accommodation.

Mandy Thomson

13:03 PM, 16th September 2016
About 2 years ago

Reply to the comment left by "Mandy Thomson" at "16/09/2016 - 12:37":

Correction to my post above: "However, as has been mentioned, there is still a risk for your niece here, if only that her friend could take legal action against her if she wanted to prove she was a tenant, whether or not this would be successful." should read "an assured tenant".


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