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Short term 'letting'?

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DrFfybes
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Short term 'letting'?

#462091

Postby DrFfybes » November 30th, 2021, 3:07 pm

Background...
Mum went into a care home in August, and her friends (J&M, who we lived next to in the 1960s/70s) had agreed to buy it.

Things were progressing, then last month mum took ill and died quite quickly. Whilst the contracts etc are all ready, we cannot proceed until Probate is granted.

Word of this dealy has obviously been slow to work back down the chain, with the end result that J&M's buyer was on their doorstep eariler saying that unless they can move on the 17Dec then the chain will fall apart.

So the situation is that we have an empty flat, and J&M will be homeless with their furniture in a container.

The practical solution appears to be for them to move in as tenants and to end the tenancy when we get probate, but practical solutions aren't always that easy in practice.

Does anyone have experience of this, would we do a Licence to Occupy, or is there some other instrument we can use?


Thanks

Paul

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Re: Short term 'letting'?

#462093

Postby GoSeigen » November 30th, 2021, 3:26 pm

DrFfybes wrote:Background...
Mum went into a care home in August, and her friends (J&M, who we lived next to in the 1960s/70s) had agreed to buy it.

Things were progressing, then last month mum took ill and died quite quickly. Whilst the contracts etc are all ready, we cannot proceed until Probate is granted.

Word of this dealy has obviously been slow to work back down the chain, with the end result that J&M's buyer was on their doorstep eariler saying that unless they can move on the 17Dec then the chain will fall apart.

So the situation is that we have an empty flat, and J&M will be homeless with their furniture in a container.

The practical solution appears to be for them to move in as tenants and to end the tenancy when we get probate, but practical solutions aren't always that easy in practice.

Does anyone have experience of this, would we do a Licence to Occupy, or is there some other instrument we can use?


If they move in and it is their only home and you as landlord do not live there an assured shorthold tenancy (minimum 6 months fixed term) will be created whether you like it or not. Agreeing a licence will not get around that statutory, de jure situation. You will be liable for all the attendant obligations and they will not be obliged to leave without you obtaining a court order. So it depends how confident you are that they will co-operate and nothing will go wrong.

GS

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Re: Short term 'letting'?

#462102

Postby DrFfybes » November 30th, 2021, 4:22 pm

GoSeigen wrote:
If they move in and it is their only home and you as landlord do not live there an assured shorthold tenancy (minimum 6 months fixed term) will be created whether you like it or not. Agreeing a licence will not get around that statutory, de jure situation. You will be liable for all the attendant obligations and they will not be obliged to leave without you obtaining a court order. So it depends how confident you are that they will co-operate and nothing will go wrong.

GS


Thanks - I thought it wouldn't be simple. Can an AST be ended early by mutual agreement?

Having virtually grown up in their house I don't foresee any problems, but one never knows.

Paul

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Re: Short term 'letting'?

#462109

Postby Lootman » November 30th, 2021, 4:45 pm

Once the buyers have vacant possession they are in a stronger position. They could decide to renegotiate some aspects of the deal, knowing that you know that getting them out in that event would be more difficult.

I had an offer once by a buyer to rent the place under sale until the paperwork was complete. It was a trivially easy decision to decline the offer.

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Re: Short term 'letting'?

#462113

Postby Mike4 » November 30th, 2021, 4:49 pm

DrFfybes wrote:
Thanks - I thought it wouldn't be simple. Can an AST be ended early by mutual agreement?


I think it's more a case of if neither party intends holding the other to the terms of an AST, no-one else is going to!

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Re: Short term 'letting'?

#462135

Postby Dod101 » November 30th, 2021, 5:26 pm

DrFfybes wrote:Background...
Mum went into a care home in August, and her friends (J&M, who we lived next to in the 1960s/70s) had agreed to buy it.

Things were progressing, then last month mum took ill and died quite quickly. Whilst the contracts etc are all ready, we cannot proceed until Probate is granted.

Word of this dealy has obviously been slow to work back down the chain, with the end result that J&M's buyer was on their doorstep eariler saying that unless they can move on the 17Dec then the chain will fall apart.

So the situation is that we have an empty flat, and J&M will be homeless with their furniture in a container.

The practical solution appears to be for them to move in as tenants and to end the tenancy when we get probate, but practical solutions aren't always that easy in practice.

Does anyone have experience of this, would we do a Licence to Occupy, or is there some other instrument we can use?


Thanks

Paul


I thought that J & M were going to buy the care home but it seems that they intend rather to buy the now deceased mother's flat! It is surely a seller's market at the moment so if I were the OP however much he might feel for J & M it is not his problem. These things are best handled at arm's
length.

Dod

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Re: Short term 'letting'?

#462177

Postby GoSeigen » November 30th, 2021, 9:30 pm

DrFfybes wrote:
GoSeigen wrote:
If they move in and it is their only home and you as landlord do not live there an assured shorthold tenancy (minimum 6 months fixed term) will be created whether you like it or not. Agreeing a licence will not get around that statutory, de jure situation. You will be liable for all the attendant obligations and they will not be obliged to leave without you obtaining a court order. So it depends how confident you are that they will co-operate and nothing will go wrong.

GS


Thanks - I thought it wouldn't be simple. Can an AST be ended early by mutual agreement?


Of course, anything can be done by agreement -- the problems arise mainly where there is lack of agreement... including if the tenant changes his/her mind after "agreeing"; the law still protects their tenure.

GS

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Re: Short term 'letting'?

#462180

Postby monabri » November 30th, 2021, 9:41 pm

AST ending early?

Yes, been there, got the t shirt. Tenant signed up for 12m and paid 12m upfront! After 6m , she gave 1m notice to leave. We had to return the balance of rent.

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Re: Short term 'letting'?

#462208

Postby Lootman » November 30th, 2021, 11:39 pm

monabri wrote:AST ending early?

Yes, been there, got the t shirt. Tenant signed up for 12m and paid 12m upfront! After 6m , she gave 1m notice to leave. We had to return the balance of rent.

Presumably because in that case the prepayment was for 12 months but the AST was only for 6 months. In such a case I would instead write the lease for 12 months and not 6. Then the tenant could still leave early but would forfeit the prepaid rent.

In this case another disadvantage of the buyers renting the place before exchanging contracts is that, once they are living there, they will discover 101 little things that don't work right or that annoy them. Buyers tend to operate off a certain amount of fantasy about their prospective new home. Once they move in, that changes. And they might then decide that those 101 things justify a lower purchase price.

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Re: Short term 'letting'?

#462211

Postby monabri » November 30th, 2021, 11:54 pm

Lootman wrote:
monabri wrote:AST ending early?

Yes, been there, got the t shirt. Tenant signed up for 12m and paid 12m upfront! After 6m , she gave 1m notice to leave. We had to return the balance of rent.

Presumably because in that case the prepayment was for 12 months but the AST was only for 6 months. In such a case I would isntead write the lease for 12 months and not 6. Then the tenant could still leave early but would forfeit the prepaid rent.

In this case another disadvantage of the buyers renting the place before exchanging contracts is that, once they are living there, they will discover 101 little things that don't work right or that annoy them. Buyers tend to operate off a certain amount of fantasy about their prospective new home. Once they move in, that changes. And they might decide those 101 things justify a lower purchase price.


The AST was for 12m but the advice we got is if the tenant wanted to leave early then do you want the hassle of trying to enforce them staying ? Basically, let them go ...and yes, you do have to reimburse the residual rent! The rules are skewed towards the tenant....increasingly so.

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Re: Short term 'letting'?

#462212

Postby Lootman » November 30th, 2021, 11:57 pm

monabri wrote:
Lootman wrote:
monabri wrote:AST ending early?

Yes, been there, got the t shirt. Tenant signed up for 12m and paid 12m upfront! After 6m , she gave 1m notice to leave. We had to return the balance of rent.

Presumably because in that case the prepayment was for 12 months but the AST was only for 6 months. In such a case I would isntead write the lease for 12 months and not 6. Then the tenant could still leave early but would forfeit the prepaid rent.

In this case another disadvantage of the buyers renting the place before exchanging contracts is that, once they are living there, they will discover 101 little things that don't work right or that annoy them. Buyers tend to operate off a certain amount of fantasy about their prospective new home. Once they move in, that changes. And they might decide those 101 things justify a lower purchase price.

The AST was for 12m but the advice we got is if the tenant wanted to leave early then do you want the hassle of trying to enforce them staying ? Basically, let them go ...and yes, you do have to reimburse the residual rent! The rules are skewed towards the tenant....increasingly so.

OK, it is a few years since I had this situation. But back then I was advised that I could keep the prepaid rent to the end of the lease term BUT that I must make every reasonable effort to find a replacement tenant, in order to mitigate the loss to the departing tenant. I could not "double dip" by collecting two sets of rent for the same time period.

Quite likely that has changed along the lines you suggest since, it seems, every recent law change is one that rewards tenants and punishes those who take risks to provide housing.

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Re: Short term 'letting'?

#462265

Postby James » December 1st, 2021, 9:41 am

GoSeigen wrote:
DrFfybes wrote:Background...
Mum went into a care home in August, and her friends (J&M, who we lived next to in the 1960s/70s) had agreed to buy it.

Things were progressing, then last month mum took ill and died quite quickly. Whilst the contracts etc are all ready, we cannot proceed until Probate is granted.

Word of this dealy has obviously been slow to work back down the chain, with the end result that J&M's buyer was on their doorstep eariler saying that unless they can move on the 17Dec then the chain will fall apart.

So the situation is that we have an empty flat, and J&M will be homeless with their furniture in a container.

The practical solution appears to be for them to move in as tenants and to end the tenancy when we get probate, but practical solutions aren't always that easy in practice.

Does anyone have experience of this, would we do a Licence to Occupy, or is there some other instrument we can use?


If they move in and it is their only home and you as landlord do not live there an assured shorthold tenancy (minimum 6 months fixed term) will be created whether you like it or not. Agreeing a licence will not get around that statutory, de jure situation. You will be liable for all the attendant obligations and they will not be obliged to leave without you obtaining a court order. So it depends how confident you are that they will co-operate and nothing will go wrong.

GS

How do the likes of AirBnB and holiday lets get around this? Is there not some way DrFfybes could couch this as a 'holiday' let?

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Re: Short term 'letting'?

#462321

Postby modellingman » December 1st, 2021, 12:46 pm

DrFfybes wrote:Background...
Mum went into a care home in August, and her friends (J&M, who we lived next to in the 1960s/70s) had agreed to buy it.

Things were progressing, then last month mum took ill and died quite quickly. Whilst the contracts etc are all ready, we cannot proceed until Probate is granted.

Word of this dealy has obviously been slow to work back down the chain, with the end result that J&M's buyer was on their doorstep eariler saying that unless they can move on the 17Dec then the chain will fall apart.

So the situation is that we have an empty flat, and J&M will be homeless with their furniture in a container.

The practical solution appears to be for them to move in as tenants and to end the tenancy when we get probate, but practical solutions aren't always that easy in practice.

Does anyone have experience of this, would we do a Licence to Occupy, or is there some other instrument we can use?


Thanks

Paul


As things were progressing, presumably a solicitor has been appointed to deal with the sale. Have you consulted the solicitor about your idea of letting out to the buyers?

It is not strictly true that the minimum term of an AST is six months. The six months is the minimum amount of time that the tenancy must have been in existence before a section 21 notice (no fault eviction notice) can take effect. (In fact it is now slightly longer than six months since landlords were prevented from issuing "precautionary" S21's at the start of a tenancy.)

You can agree whatever initial term you like or have the tenancy on a periodic basis from the outset if that is what you agree.

If you do let, there are some legal not-so-niceties that you should be aware of. Gas (if property has a supply) and electricity certification will be necessary along with an energy performance certificate at E or above. Any deposit will need to be protected in one of the statutory schemes.

If you do decide to go down the letting route a conversation with the potential buyers about your and their expectations from this would be worthwhile. For example, will any rent paid be offset against the agreed purchase price, who will organise (and pay for) any thing that is normally the landlord's responsibility eg repairing a broken boiler. Depending on your relationship with J&M I think your idea could be made to work but setting expectations on both sides about the details of the arrangement would be my priority.

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Re: Short term 'letting'?

#462322

Postby DrFfybes » December 1st, 2021, 12:53 pm

Thanks for the ideas. I think foliday let/air B&B only works if it is furnished.

The solicitor said it is doable, but wasn't their field and didn't want to get involved.

I think we'll have to bite the bullet and do and AST and get the gas/electric tests done, then scrap it at sale time. That way they can set up post, take over utilities, get a phone in, etc.

Paul

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Re: Short term 'letting'?

#462328

Postby gnawsome » December 1st, 2021, 1:26 pm

modellingman wrote:
As things were progressing, presumably a solicitor has been appointed to deal with the sale. Have you consulted the solicitor about your idea of letting out to the buyers? ...

If you do decide to go down the letting route a conversation with the potential buyers about your and their expectations from this would be worthwhile. For example, will any rent paid be offset against the agreed purchase price, who will organise (and pay for) any thing that is normally the landlord's responsibility eg repairing a broken boiler. Depending on your relationship with J&M I think your idea could be made to work but setting expectations on both sides about the details of the arrangement would be my priority.


That strikes me as original and constructive thinking to - potentially - meet both party's requirements.
Might I suggest that it be modified so that a CONTRACT FOR SALE for sale be used instead.
The contract to set a flexible (1yr hence) date for completion
The occupiers to pay an agreed monthly sum into a safeguarded account IN YOUR NAME as and until the purchase takes place whereupon the sum of those payments are credited as part of the purchaser's payment.
If the occupiers/purchasers fail to complete, the sum of those payments becomes a default payment for failure to complete.
The actual purchase price would need to be reconsidered as to individual's views on the actual anticipated value at the time of completion.
I tried this about 50 years back but the prospective purchasers took fright, so it was never tested - in the creation or fulfillment

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Re: Short term 'letting'?

#462333

Postby Lootman » December 1st, 2021, 1:40 pm

James wrote:
GoSeigen wrote:If they move in and it is their only home and you as landlord do not live there an assured shorthold tenancy (minimum 6 months fixed term) will be created whether you like it or not. Agreeing a licence will not get around that statutory, de jure situation. You will be liable for all the attendant obligations and they will not be obliged to leave without you obtaining a court order. So it depends how confident you are that they will co-operate and nothing will go wrong.

How do the likes of AirBnB and holiday lets get around this? Is there not some way DrFfybes could couch this as a 'holiday' let?

Short term lets are exempt from many tenant protections. I forget what the limit is now, and it may have changed since I did short-term lets, but as I recall the key duration was a month or 30 days.

Above that it is a full tenancy and below that the renter has many fewer protections. Obviously it would be intolerable for a landlord if they rented their holiday cottage to someone for a week, and then the renters simply could announce that they are staying.

Also the cost of short-term lets and Airbnb lets would be prohibitive. Part of the attraction of Airbnb for a landlord is the higher rent and the fact that tenants do not stick around. Such lets also tend to be furnished and equipped, whereas most longer-term renters want unfurnished.

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Re: Short term 'letting'?

#462356

Postby tjh290633 » December 1st, 2021, 3:16 pm

Just a thought. If a contract for sale is set up and the purchasers pay a 10% non-refundable deposit, so that the contract becomes effective, but the date for completion is defined by the date on which probate is granted, could the purchasers then have the right to reside there with no further payment until completion?

TJH

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Re: Short term 'letting'?

#462364

Postby gnawsome » December 1st, 2021, 4:14 pm

tjh290633 wrote:Just a thought. If a contract for sale is set up and the purchasers pay a 10% non-refundable deposit, so that the contract becomes effective, but the date for completion is defined by the date on which probate is granted, could the purchasers then have the right to reside there with no further payment until completion?

TJH


It does seem to be a situation where a bit of thought could be helpful for all concerned.
Does the date for completion really need to be so set?
I bought a house where the date for completion was defined (roughly) as at any time 6 months either side of a named date - to be decided by the seller at 30 days notice.
This was to allow the seller to emigrate, take up a position and locate a new home in USA. The benefit to me was £500 reduction in price and a fix in price when I believed prices were likely to be rising - 1980. I paid £15.5k

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Re: Short term 'letting'?

#462366

Postby monabri » December 1st, 2021, 4:19 pm

tjh290633 wrote:Just a thought. If a contract for sale is set up and the purchasers pay a 10% non-refundable deposit, so that the contract becomes effective, but the date for completion is defined by the date on which probate is granted, could the purchasers then have the right to reside there with no further payment until completion?

TJH


I'd say "no" because until probate has been granted, how does one know who is legally the new owner of the asset? Once probate has been granted, then transfer of ownership of a property can be done through Land Registry.

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Re: Short term 'letting'?

#469304

Postby Clitheroekid » December 30th, 2021, 9:40 pm

Firstly, sorry for not posting earlier - if it had been on the Legal board I'd have seen it and done so, but I hardly ever visit this board. I realise it's probably too late in this situation, but it may be useful to post for anyone else facing a similar problem, and also to correct some misunderstandings.

GoSeigen wrote:If they move in and it is their only home and you as landlord do not live there an assured shorthold tenancy (minimum 6 months fixed term) will be created whether you like it or not. Agreeing a licence will not get around that statutory, de jure situation. You will be liable for all the attendant obligations and they will not be obliged to leave without you obtaining a court order. So it depends how confident you are that they will co-operate and nothing will go wrong.

I'm afraid this is completely wrong. An assured shorthold tenancy would not be created in that situation, and the correct way of dealing with it would be to grant a licence to occupy, which gives no security of tenure or any other tenancy rights.

James wrote:How do the likes of AirBnB and holiday lets get around this? Is there not some way DrFfybes could couch this as a 'holiday' let?

The worst thing you can do in letting is to try and pretend it's something it's not. One of the best known cases in property law is Street -v- Mountford, where a rogue landlord granted `licences' to people who were actually tenants, hoping to deprive them of their tenant rights. It went to the House of Lords, and I'm pleased to say the landlord lost. The court said that the licence was a sham, and that they could look behind the paper document to see the real relationship.

So to describe this as a holiday let when it clearly isn't would run the same risk. The court would look at the substance of the agreement rather than the form, and might well decide it was a shorthold tenancy.

I appreciate that the individuals in this case are friends, but (a) circumstances can change and friends can fall out; and (b) it's important for other people to know about this.

DrFfybes wrote:The solicitor said it is doable, but wasn't their field and didn't want to get involved.

This is frankly disgraceful. Any solicitor dealing in conveyancing should have enough knowledge about property law to sort this out. I suspect you may not be dealing with a solicitor, but with a `conveyancing executive' or some such term, meaning someone who has no qualifications at all. If it is a solicitor then they should be ashamed of themselves!

The best solution would be just to exchange contracts and let the buyers move into occupation. The sale contract will incorporate the Standard Conditions of Sale, and condition 5.2 covers this situation. It can be summarised as follows:

If the seller agrees to allow the buyer to occupy the property between exchange and completion then the buyer occupies under licence (no tenancy is created as this might give the buyer additional rights which are not intended) from the seller on the following terms:-

The licence cannot be transferred, that is to say the buyer cannot pass his right to occupy the property to someone else

Members of the buyer's household only may occupy the property with him

The buyer is to pay for or indemnify the seller against all outgoings and other expenses associated with the property

The buyer is to pay a fee to the seller at the same rate as interest would be charged under the contract for late completion. This fee is payable daily for every day of occupation up to completion.

The buyer must not alter the property and must maintain in the same state, except for fair wear and tear, as it was on exchange

The buyer must immediately vacate the property when the licence ends

The fee payable is comparable to rent but isn't rent, so there are no tenancy issues.

The completion date could be fixed for, say, 14 days after the seller / their solicitor receives the grant of probate.

Having said this, the standard advice from a buyer's solicitor would probably be not to exchange until the grant has been issued, as that's the easiest advice to give and they don't need to apply any thought. If so, the buyers might have to push the solicitor into looking into it.

It should be noted that this only works where a grant of probate is involved, as the executors' power is derived from the Will, not the probate. If someone dies intestate the intended administrator would have no power to exchange contracts until letters of administration were granted.


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