Most tenants have some protection but some have more or less protection than others i.e. the protection from eviction. Some tenants also enjoy additional protection from high rent increases determined by the Valuation Office Agency.
There is a hierarchy from most to least protection as follows: Protected Tenants; ASTs and, with least protection lodgers with little more protection from eviction than a hotel guest.
Specifically a “Protected Tenant” is one whose tenancy started prior to 15 January 1989. This said, subsequent tenancies have some protection albeit significantly less. Prior to this date, letting property was not viable due to unintended consequences resulting from over regulation. Landlords owned numerous worthless empty properties at a time when prospective tenants were homeless. The government stepped in with the HA88 reducing tenant rights; whilst paradoxically successfully resulting in the intention of the act – landlords able to rent their accommodation.
However, the HA88 only applies after 15 January 1989. This has created a decreasing number of pre-existing protected tenancies. The protections afforded carry forward to any new tenancies between the same landlord(s) and tenant(s) – even tenancies created after 15 January 1989. And if the tenancy is in the name of one spouse or civil partner but not the other then the surviving spouse is also likely to be a protected tenant. Only upon death of the survivor will such tenancies cease. With the passage of time these tenancies are becoming fewer.
This has resulted in inexperienced landlords unwittingly purchasing protected tenancy properties e.g. at auction in haste, without exercising due diligence. This would establish the type of tenancy. Unaware landlords subsequently learn that their new property purchase is occupied by protected tenants. This makes the purchase a very poor deal potentially ruining the purchaser whose rental income is unlikely to cover the mortgage repayments. And, the landlord becomes responsible for the cost of running the tenancy at a loss. Now the landlord cannot evict, nor afford mortgage repayments, nor even to buy gas and electric certificates. Worst still he cannot sell and cut his loss since there are few buyers. At best the landlord can negotiate a deal with the protected tenant who now holds all the aces. Settlements of over £200,000 have been paid to protected tenants to persuade them to leave.
This also raises potential pitfalls for the inexperienced agent unaware of such matters. The acts of an agent usually bind a landlord. Failing to recognise a protected tenant can result in the wrongful eviction or increase in rent of protected tenants and in turn in fines, legal action and loss of reputation.