Use of Property Guardians – are your arrangements still fit for purpose?

In recent years, the concept of using Property Guardians has become a popular and practical way of managing vacant property that would otherwise be at risk of hostile squatting. Amongst landowners with large property portfolios, these types of arrangement have been seen as a cost-effective and low-risk way of securing such property.

The concept is a simple one. The landowner enters into a contractual arrangement with a property guardian company – there are a number of well-known companies in the market. Under that arrangement, the guardian company is given the right to put individual 'guardians' into occupation and those guardians are allowed to live there on agreed terms. The contract will usually provide that the individual guardians must be given licences and not tenancies, and guardian companies have standard form licence agreements they issue.

For the first time, however, the English courts have had to consider the legal rights that individual guardians can acquire when being allowed to live in property that had previously been vacant. The outcome means that those who have guardian arrangements in place would be wise to review them.

The case of Camelot v Greg Roynon

Bristol City Council own a property known as Broomhill Elderly Persons Home which was previously used as (guess what) an elderly persons' home. The building fell vacant when the home ceased operating. The Council engaged Camelot in order to enter into a guardian arrangement which would involve Camelot installing guardians to live in the property and provide some security by doing so. In January 2014, Mr Roynon was one of the individual guardians that moved in pursuant to a licence agreement, and he has lived there since.

In May 2016 Camelot served a notice to quit on Mr Roynon. He refused to leave and Camelot issued possession proceedings against him. Mr Roynon claimed he was a tenant not a licensee and Bristol County Court had to decide that issue as one of the first issues in the case.

As any property law student knows, the classic case dealing with the distinction between a licence and a tenancy is Street v Mountford. In that case, the courts held that if a licence agreement grants the occupier 'exclusive occupation' of premises, for a defined period and in return for an occupation payment (whether called 'rent' or something else) it will be a tenancy not a licence. This is the case no matter what the written agreement says it is. This principle is important because in the residential and the commercial context, legislation gives a tenant considerably more rights and protections than a licensee.

As the whole Property Guardian industry is set up on the premise that individual guardians will be licensees and not tenants, the court's decision is of relevance to any landowner that has entered into a Property Guardian arrangement.

The decision

The Judge decided that Mr Roynon was a tenant not a licensee, even though he'd been granted a 'licence agreement'. This conclusion was reached  for the following reasons:-

• No matter what the occupation agreement said, the reality is that Mr Roynon has been allowed the right to enjoy exclusive occupation of Rooms 1 and 18;
• Mr Roynon has keys to both rooms and is able to lock them – no other guardians can enter without his permission;
• Camelot had no right to require Mr Roynon to move rooms should the need arise and Camelot had no practical need to do so;
• The fact that Camelot inspected the rooms fairly regularly was not material;
• Camelot was not fulfilling any statutory duty which required the grant of licences and not tenancies;
• Camelot had no permanent staff based at the property and don’t provide services to the guardians.The Court therefore concluded that Mr Roynon has a monthly periodic tenancy. As Mr Roynon was living in the property as his only or principal home, he had an assured shorthold tenancy protected by the Housing Act 1988.      
• For landowners with guardian schemes in place currently, those arrangements – both the written contracts and the practical arrangements in place on the ground - should be reviewed to make sure they are still suitable. For those landowners who have a need to sell, let or redevelop the premises in the near future, this review should be undertaken urgently to ensure that the process of obtaining vacant possession is started early enough to allow control of the premises to be retaken in line with the required timescales.The implications could be more severe for landowners whose lease prevents them from granting any tenancies of the property in question, as a guardian arrangement may have inadvertently put the landowner in breach of its lease.
• This isn’t necessarily the end of the world for landowners or guardian companies as it is still not very difficult to bring an assured shorthold tenancy to an end. However, it does take longer and so there are timing implications.
• This case was decided based on the specific facts of Mr Roynon's case. However, the decision is no surprise to us as we have thought for some time that the courts would treat these types of arrangements as creating tenancies in favour of individual guardians

Learning points

This case was decided based on the specific facts of Mr Roynon's case. However, the decision is no surprise to us as we have thought for some time that the courts would treat these types of arrangements as creating tenancies in favour of individual guardians.

This isn’t necessarily the end of the world for landowners or guardian companies as it is still not very difficult to bring an assured shorthold tenancy to an end. However, it does take longer and so there are timing implications.

The implications could be more severe for landowners whose lease prevents them from granting any tenancies of the property in question, as a guardian arrangement may have inadvertently put the landowner in breach of its lease.

For landowners with guardian schemes in place currently, those arrangements – both the written contracts and the practical arrangements in place on the ground - should be reviewed to make sure they are still suitable. For those landowners who have a need to sell, let or redevelop the premises in the near future, this review should be undertaken urgently to ensure that the process of obtaining vacant possession is started early enough to allow control of the premises to be retaken in line with the required timescales.

Want to talk about this article? Please contact Steve Eccles.