The key legal question in this case was whether non-monetary services provided by a tenant constituted “rent” for the purposes of the Housing Act 1988 (‘the 1988 Act’).
This was important because, if it was found that they did, the tenancy (and therefore the tenant) benefitted from protection under the 1988 Act.
The decision will be of interest to owners, landlords and occupiers of residential property in England and Wales.
The tenancy
In January 2023 Mr and Mrs Phillips granted Ms Garraway a short-term six month rolling tenancy of a property in Kent.
Rather than paying conventional rent, the Tenancy required Ms Garraway to provide a minimum of two days’ work per week on Mr and Mrs Phillips’ estate.
Due to limited work being performed, a notice to quit was served on Ms Garraway and possession proceedings were brought when she failed to vacate.
Were services deemed “rent”?
Ms Garraway argued that the services rendered had a monetary value and thus qualified as rent under the 1988 Act. This meant that an assured shorthold tenancy had been created, one which could not be terminated by a mere notice to quit.
The courts at every level disagreed.
The Court of Appeal concluded that the word ‘rent’ in the 1988 Act should be given the same meaning as it had been given by judicial decision for the purpose of the Rent Acts. “Rent” was therefore limited to the payment of money or the provision of goods or services to which the parties have attributed a value. The fact that the court would be able to determine such a value for itself if necessary was irrelevant.
The court determined that the parties had not attributed a monetary value to the services in this case, and as such the Tenancy fell within one of the statutory exclusion in the 1988 Act and did not amount to an assured tenancy agreement.
Key takeaways:
- Tenant provided services can count as rent under the Rents Act and the 1988 Act only if the monetary value is agreed between the parties – if in doubt, seek clarification early
- Where rent is not quantified by a monetary value, or is nominal the tenancy may fall outside the protection of the 1988 Act
- The fact that the court could determine a value for itself is irrelevant
- Tenancies for non-monetary consideration may be relatively rare but, where they do arise, this decision has provided helpful clarification of the approach that should be taken when seeking to determine whether the tenancy is protected by the 1988 Act
- The decision reinforces the importance of clear, quantifiable rent agreements to ensure statutory protections for tenants
For further information, please contact:
Catherine Detalle, Partner, Eversheds Sutherland
catherinedetalle@eversheds-sutherland.com
