Who Guards the Guardians?

Written with Caroline Hunter, Professor of Law, University of York

“Property Guardians” seem to be a growth industry. Although they may not generally have been encountered by housing professionals and lawyers they raise a number of interesting and worrying housing law issues. In summary, they work by the Guardian Agency putting people into a vacant commercial or residential building to live as occupiers, effectively providing security to the owner of the building against burglary, squatting etc. The schemes have largely received a fairly uncritical press,(1) being held up as providing cheap accommodation for occupiers prepared to accept flexibility. In some instances that may indeed be how they work.

In legal terms, the way in which many of these schemes seem to operate is that the Agency takes a licence from the property owner, under which it is permitted to put occupiers in the empty premises to live and provide guardian services. There is little or no charge to the property owner for this. The Agency vets occupiers, then puts them into a property to occupy it for a lower than market rent,(2) paid to the Agency. There are sometimes other charges, for deposit, insurance and “fire safety packs”, and a number of conditions on occupation. The property can be required to be vacated at short notice and the owner is told that the occupier “cannot derive the right to remain in your property once you no longer require our services.”(3)

These Guardian Agency sites assure readers that the arrangements have been cleared by lawyers.(4) These are temporary licences, not tenancies, and various terms about non-exclusive occupation, rights for unannounced inspections and so on are mentioned. They are derived from a licence given to the Agency by the property owner. Without seeing the actual agreements and knowing the actual basis of occupation it is impossible to tell whether exclusive possession is granted to the occupiers or not. Thus if we take this at face value, and put aside any analysis in relation to Street(5) and Bruton,(6) then these may indeed be licences to occupy, rather than tenancies.

However a number of other legal issues remain. In this article we shall consider two of them: first the application of the Protection from Eviction Act 1977 and secondly the application of the Housing Act 2004.

Protection from Eviction Act 1977
Most of the websites for these firms assert that a two-week notice period can be used to terminate the occupier’s licence.(7) It is clear that these must be licences to occupy the premises as a dwelling, so it would seem on the face of it that the Protection from Eviction Act 1977 (“the 1977 Act”) is applicable. Section 1 provides:

“(1) In this section ‘residential occupier’, in relation to any premises, means a person occupying the premises as a residence, whether under a contract or by virtue of any enactment or rule of law giving him the right to remain in occupation or restricting the right of any other person to recover possession of the premises.”

Given the requirement in the Guardian licences that the guardians must reside at the premises—they seem to fall squarely within the definition of a “residential occupier”. Thus any attempt to evict out with the provisions of the 1977 Act would be an illegal eviction and a criminal offence.

The question is therefore what steps are required by the law to evict a property guardian. On an assumption that these agreements are properly licences there are no applicable security of tenure provisions. However, under the 1977 Act two requirements are imposed in relation to residential premises without any other form of statutory security. These are first the giving of notice (s.5) and secondly the obtaining of a court order (s.3).

Section 5 provides that:

“(1A) Subject to subsection (1B) below, no notice by a licensor or a licensee to determine a periodic licence to occupy premises as a dwelling (whether the licence was granted before or after the passing of this Act ) shall be valid unless-
(a) it is in writing and contains such information as may be prescribed, and
(b) it is given not less than 4 weeks before the date on which it is to take effect.

(1B) Nothing in subsection (1) or subsection (1A) above applies to-
(a) premises let on an excluded tenancy which is entered into on or after the date on which the Housing Act 1988 came into force unless it is entered
into pursuant to a contract made before that date; or
(b) premises occupied under an excluded licence.”

Given the flexibility required it seems likely that these licences are periodic rather than fixed term so that this requirement is fulfilled. As we have noted above—Guardians are required to reside at the premises. Further, given that the premises are required to be lived in we would argue that they must be dwellings. Accordingly any licence should be regarded as one “to occupy premises as a dwelling”. We shall return to the issue of “excluded licences” below.

Section 3(1) and (2) apply to premises “let as a dwelling under a tenancy”. Where the tenancy has come to an end it prohibits the eviction of any occupiers lawfully residing in the premises “otherwise than by proceedings in the court”. The protection is extended to licensees by subs. (2B):

“Subsections (1) and (2) above apply in relation to any premises occupied as a dwelling under a licence, other than an excluded licence, as they apply in relation to premises let as a dwelling under a tenancy, and in those subsections the expressions ‘let’ and ‘tenancy’ shall be construed accordingly.”

It has been held under this subsection that the very transient residence of families placed in accommodation as licensees by local authorities under their interim homelessness duties(8) do not fall within this provision.(9) It seems unlikely that the decision in those cases would be extended to a situation which fell outside the provision of licences to the statutorily homeless, nor is there necessarily anything particularly transient about the licences given to guardians.(10)

As with the notice requirements, those relating to eviction without due process also make an exception for excluded licences which fall under s.3A. Can these Guardian licences fall into any of the categories of excluded licence set out in s.3A? It seems unlikely. There is no resident landlord or member of landlord’s family (or licensor or licensor’s family).(11) The licence is not provided as a temporary expedient to a trespasser,(12) nor is it a holiday let.(13) It does not fit within any of the other categories relating to provision of accommodation for asylum-seekers and the like and in hostels provided by various social landlords.(14)

Accordingly, there appears to be little reason to think that the 1977 Act does not apply. Notice to determine the licence must give four weeks’ notice in writing with the prescribed information, and eviction can only be by way of court order-meaning by possession proceedings. It appears that while the Guardian firms have taken some care to exclude the possibility of a tenancy (though this remains to be tested in practice), the provisions of the 1977 Act have not received the same attention. It is certainly arguable that a two-week notice period cannot be valid and it appears that the Guardian Agencies that rely on a two-week notice period are at risk of unlawful eviction claims (and committing a criminal offence) if they rely on that two-week notice period. It also means that the assurances that the Guardian agencies give to the property owners-of vacant possession of their property in a little over two weeks—may also be difficult to sustain.

Housing Act 2004
In relation to the Housing Act 2004 (“the 2004 Act”) two key Parts may potentially come into play; first Pt 1 which contains the provisions relating to housing standards and secondly Pt 2 which relates to the licensing of houses in multiple occupation.

Part 1 applies to “residential premises”.(15) Residential premises are divided into a number of different types. For these purposes two will be relevant: dwellings and houses in multiple occupation. A “dwelling” is defined as: “a building or part of a building occupied or intended to be occupied as a separate dwelling”.(16) A dwelling is somewhere in which all the major activities of life, such as sleeping, cooking and feeding, are carried out.(17) It will not be separate if it involves
sharing of living accommodation.(18)

Where living accommodation is shared the residential premises are likely to fall within the definition of a house in multiple occupation. A house in multiple occupation is defined by reference to the same provisions as apply to Pt 2. This definition is not simple or straightforward(19) but the “standard test”(20) is most likely to come into play:

“A building or a part of a building meets the standard test if-
(a) it consists of one or more units of living accommodation not consisting of a self-contained flat or flats;
(b) the living accommodation is occupied by persons who do not form a single household;
(c) the living accommodation is occupied by those persons as their only or main residence or they are to be treated as so occupying it;
(d) their occupation of the living accommodation constitutes the only use of that accommodation;
(e) rents are payable or other consideration is to be provided in respect of at least one of those persons’ occupation of the living accommodation; and
(f) two or more of the households who occupy the living accommodation share one or more basic amenities or the living accommodation is lacking in one or more basic amenities.”

Taking these two definitions together it seems likely that any building occupied by Guardians will fall within one or other-at least that part which is residentially occupied, if not the whole building. In most cases at least two Guardians are put into occupation. If they are e.g. a couple they will form a single household(21) and the premises will be a separate dwelling. If they do not form a single household but are individuals with no family relationships, then the premises are likely to be a house in multiple occupation.

If this is so then, under Part 1 local authorities will have powers and in some cases the duty(22) to take action if the premises are hazardous. This could e.g. mean that if they were hazardous because of their poor state of repair the authority could serve a prohibition order(23) preventing any occupation and thus defeating the whole point of the Guardianship.

In relation to the specific provisions of Part 2 of the 2004 Act relating to the licensing of houses in multiple occupation, the obligations on the landlord and the duties and powers of the local authority will come into play if the premises are of three or more stories and contain five or more guardians.(24) It will also come into play if the local authority have designated an area in which other houses in multiple occupation require licensing. If Part 2 is applicable the person having control of or managing the premises(25) would be guilty of an offence if they are unlicensed.(26) Further the occupiers could seek a rent repayment order.(27)

Even if the premises are not subject to mandatory licensing there are other provisions within the 2004 Act which may be applicable. In particular the management regulations for houses in multiple occupation may impose duties on the manager of the house.(28)

Conclusion
Undoubtedly there are other legal issues which could arise-e.g. liability under the Defective Premises Act 1972. It would seem, however, that for all their website references to watertight legal agreements the application of statutory provisions regulating the eviction of occupiers and the standard of their accommodation may not have been considered in great depth. These Guardian Agencies have become a significant business sector. The rents and fees charged to the occupiers are not insignificant. It is about time that their operation received some legal scrutiny as providers of accommodation.

1 See e.g. J. Lewis, “What housing can learn from profit-driven property guardians”, The Guardian, available at https://www.guardian.co
.uk/housing-network/2012/feb/03/housing-profit-property-guardian-industry?INTCMP=SRCH[Accessed November 24, 2012] where they
are touted as a partial answer to the empty homes crisis.
2 Lewis, “What housing can learn from profit-driven property guardians” quotes one example of 80 per cent of market rent.
3 This claim is made on the website of one on the market leaders, Camelot Europe: https://uk.cameloteurope.com/727/1/f.a.qs/faqs
.html#faq26 [Accessed November 24, 2012].
4 See: https://adhoc.eu/great-britain/property-owners/legal-structure/, https://uk.cameloteurope.com/727/1/f.a.qs/faqs.html#faq30 and
https://www.global-guardians.co.uk/Legal%20Framework.htm [Accessed November 24, 2012].
5 Street v Mountford [1985] A.C. 809; [1985] 2 W.L.R. 877; [1985] 2 All E.R. 289.
6 Bruton v London & Quadrant Housing Trust [2000] 1 A.C. 406.
[2013] J.H.L., Issue 1 © 2013 Thomson Reuters (Professional) UK Limited 13
See e.g. https://www.propertyguardians.com/guardians/, https://www.global-guardians.co.uk/legal%20obligations.htm and https://adhoc
.eu/great-britain/property-guardian/faqs/ [Accessed November 24, 2012]. 7 See e.g. https://www.propertyguardians.com/guardians/, https://www.global-guardians.co.uk/legal%20obligations.htm and https://adhoc
.eu/great-britain/property-guardian/faqs/ [Accessed November 24, 2012].
8 I.e. under Housing Act 1996, s.188.
9 Mohamed v Manek (1995) 27 H.L.R. 439; 94 L.G.R. 211; Desnousse v Newham LBC [2006] EWCA Civ 547; [2006] QB 831; [2006]
H.L.R. 38.
10 One website notes that the company generally keep buildings for around eight months, but that they have had some for over 10
years: https://adhoc.eu/great-britain/property-guardian/faqs/ [Accessed November 24, 2012].
11 1977 Act, s.3A(2)–(5).
12 1977 Act, s.3A(6).
13 1977 Act, s.3A(7).
14 1977 Ac, s.3A(7a)–(9).
15 2004 Act, s.1.
16 2004 Act, s.1(5).
17 Wright v Howell (1947) 92 S.J. 26; Curl v Angelo [1948] 2 All E.R. 189; [1948] L.J.R. 1756; (1948) 92 S.J. 513; Metropolitan Properties
Co (FCG) v Barder [1968] 1 All E.R. 536; [1968] 1 W.L.R. 286.
18 See e.g. Curl v Angelo [1948] 2 All E.R. 189.

This article was published in Journal of Housing Law, January 2013.

Giles Peaker is a solicitor in Anthony Gold’s Housing & Public Law department. For further information email Giles or call 020 7940 4060.

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*