The County Court has examined the nature of a Guardianship Agreement and looked at whether an Agreement, despite being labelled as a licence, created an Assured Shorthold Tenancy (AST).
Background
Property guardianship provides low cost rooms and workspace in commercial and residential properties that would otherwise be vacant. For landlords, an empty property costs money and needs security against squatters, vandals or deterioration. For those seeking accommodation, becoming a property guardian is a way to secure cheap and unorthodox housing alternatives. Most guardianship licences require the guardian to pay a monthly fee with a provision that the guardian must be ready to vacate on notice – usually four weeks. Guardians will agree these terms and forego the safety of a traditional tenancy in order to secure budget accommodation.
Licence or Assured Shorthold Tenancy – Camelot Property Management Ltd and another v Roynon
In this ongoing dispute between Camelot Property Management and one of their guardians Greg Roynon, the County Court have examined the nature of a Guardianship Agreement and whether Mr Roynon should be entitled to the protections offered by an AST despite the fact that the agreement entered into was described as a licence.
In this case, the property was owned by Bristol City Council who engaged the services of Camelot Property Management to place guardians in the property. Mr Roynon was one of these guardians and when served with a notice to quit by Camelot, he refused to leave and possession proceedings were brought against him.
The issue for the Court was whether Mr Roynon was a licensee, or an assured shorthold tenant. In order to establish a tenancy there must be exclusive possession for a fixed or periodic term, in consideration for a premium or payments. The issue in dispute was whether Mr Roynon had exclusive possession of the rooms he occupied. The Judge followed the principle set out in the historic case of Street v Mountford where it was held that a licence was in fact a tenancy and that the substance of the agreement must be looked at irrespective of what the agreement has been labelled by the parties entering into it. The agreement entered into by the Mr Roynon and Camelot was labelled a licence and stated that Mr Roynon did not have exclusive possession of the rooms he occupied, only “permission to share the living space”. Mr Roynon argued that the reality of the situation was a different story. The evidence showed that Mr Roynon was initially given a choice of rooms of which he chose two of them, Rooms 1 and 18. No other guardians had the keys to Mr Roynon’s rooms and were only able to enter these rooms with Mr Roynon’s permission. The other guardians were not involved in determining which rooms each new guardian could choose and if a guardian wanted to change rooms, he could do so by discussing and arranging with Camelot, it was not decided between guardians where each would sleep. The reality was therefore a stark contrast to the agreement which set out that each guardian would have a shared right to occupy the property and that all other arrangements were decided between the occupiers.
The Judge then turned to look at the level of access and control Camelot exercised over the rooms. The agreement did not contain any express reservation by which Camelot could access the property and when Camelot did attend the property for inspections they did so by opening the door to each room and visually inspecting the room from the doorway. The Judge held that based on the evidence, the agreement did not reflect the reality of the situation and that Mr Roynon had exclusive possession of the two rooms and that the agreement between the parties was an AST.
Comment
The case illustrates the risks which Guardianship Schemes face when granting ‘licences’ to occupiers, when in reality they are granting exclusive possession of a property, meaning it may not be as simple as guardians vacating on notice.
It is extremely important that those landowners with Guardianship Schemes in place review all existing arrangements to ensure they are fit for purpose and will not obstruct the procedure for obtaining vacant possession when required.
If you have any questions or require further advice, please contact our Commercial Property department on 01642 356500.
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