by Mark Pawlowski
In this article the author examines the requirement of residence for the purpose of the “resident landlord exclusion” under section 12 of the Rent Act 1977 and (in respect of tenancies granted on or after January 15 1989) under para 10 of the First Schedule to the Housing Act 1988.
The Rent Act 1977 has provided ample scope for the landlord to avoid full statutory protection conferred upon occupiers of residential premises. Some of the devices adopted by the landlord in this context — for example, the “company” and “holiday” lets — have received a large measure of judicial support (Estavest Investments Ltd v Commercial Express Travel Ltd [8] 2 EGLR 91; [1988] 49 EG 73; Hilton v Plustitle Ltd [1989] 1 EGLR 119; [1989] 05 EG 94 and Buchmann v May (1976) 240 EG 49), while others, such as the “non-exclusive flat-sharing agreement”, have met with only modest success (A G Securities v Vaughan; Antoniades v Villiers [1988] 2 EGLR 78; [1988] 47 EG 193; and Aslan v Murphy (nos 1 & 2); Wynne v Duke [1989] 2 EGLR 57; [1989] 38 EG 109).
Recently, in Otter v Norman [8] 2 EGLR 128; [1988] 39 EG 79, the House of Lords, following Wilkes v Goodwin [1923] 2 KB 86, sanctioned the use of the “continental breakfast” as a method of avoiding the full protection of the 1977 Act on the basis that the same constituted “board” (subject only to the de minimis rule) within the meaning of section 7(1) of the Act. Other less-known methods of avoidance — for example, the provision in a tenancy agreement permitting the landlord unilaterally to reduce the rent to a level at which Rent Act protection is removed (see The Conveyancer and Property Lawyer’s Precedents for the Conveyancer at p 2949) — remain untested by the courts.
This article focuses primarily on the “resident landlord” under the 1977 Act, who is in the semi-privileged position of enjoying the benefit of reduced security of tenure and a limited measure of rent control for his tenants. What has been the scope for avoidance of full Rent Act protection under this well-recognised head of exclusion? What is the current position (in respect of tenancies granted on or after January 15 1989) under the Housing Act 1988?
Section 12 of the Rent Act 1977 sets out four preconditions for the operation of the resident landlord exclusion. These may be summarised as follows:
(i) The tenancy (whether furnished or unfurnished) must have been granted on or after August 14 1974. There are transitional provisions contained in para 6 of Schedule 24 to the 1977 Act which permit the operation of the exclusion in respect of a tenancy granted before this date but, in these circumstances, the tenancy must be furnished (see Woodward v Docherty [4] 2 All ER 844) and the requirement of residence must be satisfied as at August 14 1974 and at all material times thereafter.
(ii) The tenancy must be of a dwelling-house forming part of a building or flat and which, in the former case, is not a “purpose-built block of flats”. This phrase is defined in para 4 of Schedule 2 to the Act as being a building which “as constructed it contained, and it contains, 2 or more flats”: see Barnes v Gorsuch (1982) 263 EG 253. A “flat” is itself defined as a dwelling-house which forms part only of a building and is separated horizontally from another dwelling-house which forms part of the same building.
(iii) The tenancy was granted by a person who, at the time when he granted it, occupied as his residence another dwelling-house which forms part of the flat or building, as the case may be.
(iv) At all times since the tenancy was granted, the interest of the landlord under the tenancy has belonged to a person who, at the time he owned that interest, occupied as his residence another dwelling-house which also formed part of the flat or building, as the case may be.
Where the section operates, the tenancy is classified as a “restricted contract” under section 19 of the Act (see section 20) with the consequence that the tenant has no security of tenure other than: (i) protection from harassment and unlawful eviction under the Protection from Eviction Act 1977 (as amended by section 29 of the Housing Act 1988); (ii) the right to apply to a rent tribunal for deferment of a notice to quit for up to six months at a time in respect of a tenancy granted before November 28 1980 or, alternatively, to apply to the court for deferment of the order for possession for up to three months subject to the imposition of conditions with regard to payment by the tenant of arrears of rent (if any) and rent or mesne profits, in respect of tenancies granted on or after November 28 1980: see section 69 of the Housing Act 1980 inserting a new section 106A into the Rent Act 1977.
It can be seen that the requirement of residence under section 12 is relevant at two distinct periods in time, namely (a) at the time when the tenancy is granted (or as at August 14 1974 where the transitional provisions apply) and (b) at all times since the grant of the tenancy. The test as to what constitutes residence for these purposes is the same as that for statutory tenants under the Act. Para 5 of Schedule 2 provides:
For the purposes of section 12, a person shall be treated as occupying a dwelling-house as his residence if, so far as the nature of the case allows, he fulfils the same conditions as, by virtue of section 2(3) of this Act, are required to be fulfilled by a statutory tenant of a dwelling-house.
This provision was recently considered by the Court of Appeal in Jackson v Pekic [9] 2 EGLR 104; [1989] 47 EG 141, where the landlord let a flat in October 1973 to the two appellants by way of a weekly tenancy. Although she retained possession of one furnished room in the property, she did not reside there between October 1973 and September 1977, a period of some four years. When she died, her personal representative claimed possession of the flat on the ground that the landlord satisfied the qualifications of residence for the purposes of section 12 of the 1977 Act and the tenancy was not protected. The tenants contended that the third condition referred to above had not been satisfied in so far as the landlord was not in residence on August 14 1974: see the transitional provisions contained in para 6 of Schedule 24 to the Act. The Court of Appeal, applying the cases concerned with establishing residential occupation on the part of a statutory tenant, held that the landlord had to show either actual occupation of the room on the material date (ie August 14 1974) or an intention to return (animus revertendi) on that date coupled with some visible sign of occupation in the interim (corpus possessionis). The retention of furniture in the room, not being of a personal nature, was held insufficient for this purpose and the landlord’s overall conduct (she had let the room on several occasions) was considered to be more consistent with an intention not to reside. In the course of his judgment, Ralph Gibson LJ said:
Whether Mrs Jovanka occupied that front room as her residence is to be decided by the same test as that relevant to whether a person is a statutory tenant: see para 5 of Schedule 2 to the 1977 Act…
The reference to the phrase “so far as the nature of the case allows” [in para 5] prompted the suggestion by Mr Gordon (who has appeared for the plaintiff/respondent) that it was intended to admit some degree of discretion if the operation of the rule was seen in a particular case to work harshly. For my part, I understand the words to be an acknowledgement by the draftsman that some allowance or adjustment may have to be made in applying to the concept of a resident landlord, who is given by Parliament exemption from full protection for his tenants, principles developed in the concept of a resident tenant, who is given by Parliament protection in his occupation of his residence.
With the benefit, therefore, of statutory (and judicial) recognition that the test of residence for landlords under section 12 of the 1977 Act is the same (subject to adjustment or allowance in appropriate cases) as that for statutory tenants, there has been considerable scope for relying (by way of analogy) upon established case-law in the statutory tenant context, with a view to maximising the utility of section 12 as an anti-avoidance measure for landlords. For example, although it is clear that a statutory tenant must be in either actual or personal occupation of the dwelling-house to qualify for protection, it is equally well established that, notwithstanding this basic rule, a tenant can claim the benefit of the 1977 Act by virtue of his wife’s occupation, owing to the special position of a wife.
In Brown v Draper [4] 1 KB 309, a husband was the tenant of a house on a weekly tenancy. After occupying the house for some months, he left it owing to disputes with his wife, but he left her and his child in occupation with the use of his furniture and continued to pay the rent. Having received notice to quit from his landlords, the husband stopped paying the rent but he did not revoke his leave to the wife to reside in the house nor did he remove his furniture. In proceedings brought by the landlords against the wife for trespass, the Court of Appeal held that the wife’s possession had to be regarded as that of the husband and could not be treated as unlawful so long as the husband had the right to claim the protection of the Rent Restriction Acts.
It would seem, therefore, that while a landlord could place no reliance on constructive occupation through a manager/caretaker (see Lyons v Caffery [2] 5 HLR 63, when occupation by the landlord’s mother was held to be sufficient) or a limited company (the latter, by definition, is incapable of residence, Carter v S U Carburetter Co [1942] 2 KB 288), nevertheless, he may be entitled to occupy through his wife by direct analogy with case-law applied to tenants seeking protection under the Act. It may be that this would permit a landlord to be effectively resident in two buildings (one occupied by himself and the other by his wife) for the purposes of avoiding protection under section 12: see Fowell v Radford (1969) 21 P&CR 99, where the Court of Appeal accepted the argument that, in the context of the Leasehold Reform Act 1967, there was nothing to prevent each spouse having his/her own different main residence for the purposes of enfranchisement under the Act. It is unclear, however, to what extent occupation by the husband should now be treated as the occupation by a female tenant: see section 1(6) of the Matrimonial Homes Act 1983 which refers to spouses generally.
“Two-homes” man
It is clear that a tenant who is a genuine “two-homes” man (in that he uses each property alternately as a home in the full sense of that word) may claim statutory protection in respect of both properties under the 1977 Act. The classic example is that of a man who has a flat in town and also a house in the country. It is evident, however, that occupation merely as a convenience for occasional visits (for example, for a holiday or as a temporary retreat) will not be classified as occupation so as to entitle the tenant to protection under the Act. In the words of Sir Raymond Evershed MR in Beck v Scholz [3] 1 QB 570:
…I cannot see that it is in accordance with the main principle and purpose of the rent restriction legislation to hold that a man may have statutory protection for any premises to which he may occasionally find it convenient to resort, and in which he may keep furniture and install a caretaker, when in no true sense of the term are those premises his “home” e.g. where they are merely used as a matter of convenience for occasional visits.
The case of Walker v Ogilvy (1975) 23 EG 279 is a good example of the application of the above principles. In that case a flat was let to a doctor who owned a house a considerable distance away from where he resided and conducted his surgery. The flat was used very infrequently (only three out of four weekends in the summer and once a fortnight in the winter). The two properties were 1 hour 40 minutes’ car drive apart. The Court of Appeal found no difficulty in holding that the tenant did not use the flat as his residence, particularly when he visited it only occasionally and sometimes not for months at a time. Similarly, in Regalian Securities Ltd v Scheuer (1982) 263 EG 973, the tenant occupied a house and, at the same time, irregularly used a rented flat some 2 or 3 miles away in which he kept his personal belongings and furniture. The Court of Appeal agreed with the trial judge’s finding that it would be artificial to say that the tenant occupied two homes which were in such close proximity to each other. The flat was temporary accommodation in the winter and virtually unused in the summer.
By contrast, in Langford Property Co Ltd v Tureman [9] 1 KB 29, the tenant occupied a country house and also lived in the flat whenever he required to do so for the purpose of his business (on average two nights a week). The Court of Appeal held that the tenant was in personal occupation of the flat. Tucker LJ said (at p 34):
… In my view, there is nothing in the Rent Restrictions Acts to prevent a man having more than one home. His business may require him at different times in the week or different times in the month to be in different parts of the country, and there is nothing to prevent him having a home in those different places.
It is arguable, therefore, that a merchant seaman’s (or travelling salesman’s) irregular occupation of several premises in different parts of the country, necessitated by the nature of their respective occupations, might be protected, although the only reported attempt by a three-home man to claim the protection of the Act did not succeed: Alex Cowan & Sons Ltd v Acton 1952 SC 73.
In the author’s view, the foregoing authorities are of general application in the Rent Act context, so that it is possible for a landlord to have more than one home which he occupies as his residence for the purposes of the 1977 Act.
Indeed, this has recently been judicially recognised by the Court of Appeal in Wolff v Waddington [9] 2 EGLR 108; [1989] 47 EG 148. In that case, the respondent landlord came over from America to nurse her mother, who occupied the ground-floor flat of a building but died shortly after the respondent’s arrival. Thereafter, the respondent lived in the flat except for two visits of one month to America. In due course, she sought to sell the building and, on the basis that she was a resident landlord, gave notice to quit to the tenant of the first-floor flat. The tenant argued, inter alia, that the respondent was not a resident landlord because she regarded America as her home and intended to return there after the sale of the house.
The Court of Appeal held that it was possible for a person to have more than one home which he occupies as his residence for the purposes of the Rent Act 1977, and this applied not only to a statutory tenant but also to a resident landlord. In the instant case, the court concluded that, since the respondent had occupied the ground-floor flat for 13 months before deciding to sell it, she had, as a matter of fact, occupied it as her residence.
Occasional visits
It is evident from the foregoing that a landlord may be entitled to rely upon the exclusion conferred by section 12 of the 1977 Act in respect of two properties provided that he occupies both as his home. However, if his occupation is merely a matter of convenience for occasional visits, this will clearly not suffice. Moreover, there is some doubt whether a genuine “two-home” situation can be established in circumstances where the two properties are only a few miles from each other: see Regalian Securities Ltd v Scheuer (supra). It may be possible to argue, however, that the landlord’s business requires him at different times in the week to reside at both properties for the purposes of attending to their management and providing services to his tenants (cleaning of rooms, supply of bed linen, laundry, emptying rubbish etc). In other words, the landlord may well argue successfully that the nature of his business requires him to be a resident caretaker at both the subject premises for several nights each week regardless of their apparent proximity.
It would be necessary, however, for the landlord to establish that he carried out all the activities which were essential to enable both dwelling-houses to exhibit the characteristics of a complete home. In Kavanagh v Lyroudias (1983) 269 EG 629, the tenant had been sleeping in no 23 but had been washing and eating in the adjoining house at no 21 and the Court of Appeal held that the tenancy of no 23 was not protected, since the tenant did not occupy those premises as a complete home in itself.
Similarly, in Hampstead Way Investments Ltd v Lewis-Weare [5] 1 EGLR 120; (1985) 274 EG 281, the statutory tenant of a flat who moved with his family into a house they had purchased half a mile away but who continued to occupy the flat to sleep there five times a week was held by the House of Lords not to be occupying the flat as his residence so as to retain the protection of the 1977 Act in respect of it. The evidence was that the tenant worked during the night five times a week and would sleep in the flat from 5am until the afternoon and then go to the house. He slept at the flat to avoid disturbing his wife when he returned home from work. He kept his clothes and received his post at the flat but did not eat or entertain there. On his two days a week off work, he spent all his time at the house, eating and sleeping there. While the tenant retained the limited use of one room at the flat, his adult stepson occupied the rest of the flat for all usual living activities. The tenant paid all the outgoings relating to the house and to the flat, including the rent, but excluding the cost of gas, which was paid by the stepson.
While the limited use of the flat by the tenant in the above cases was, clearly, insufficient to make the flat his second home, nevertheless one can envisage circumstances where a landlord may be able to establish the requisite quantum of activity for the purposes of satisfying the test of residence in respect of both subject premises. It is unclear, however, to what extent a landlord could successfully invoke the “two-home” concept to a greater number of properties, each of which being ostensibly occupied by him as a home in the full sense of that word for some time during the week for the purpose of effectively carrying on his business of letting accommodation therein. In this connection, it seems that occupation of premises on an average of only two nights a week (Langford Property Co Ltd v Tureman (supra)) is a sufficient exercise of a right of residence for the purpose of the 1977 Act, although it remains to be seen whether the courts would be prepared to uphold this reasoning in the context of a resident landlord.
Where the landlord is the owner of two adjoining properties it may be possible to argue that they constitute one building for the purposes of section 12 so that residence by the landlord in one will permit the operation of the exclusion in respect of tenants in occupation in the other.
In Bardrick v Haycock (1976) 31 P&CR 420, the landlord owned a large detached house which had been converted into six self-contained flats. The landlord demolished a garage, and built in its place a two-storey residential extension. This was tied structurally into the main house, but there were no internal communications between it and the main house, and it had its own front door. The landlord let out the flats in the main house but lived himself in the extension.
The Court of Appeal held that the defendants’ flats were not part of the same building as the landlord’s extension, since the two were unconnected internally and the mischief at which the exclusion was aimed, namely of that sort of social embarrassment arising out of close proximity which the landlord had accepted in the belief that he could bring it to an end at any time allowed by the contract of tenancy, was absent. Similar reasoning would, no doubt, be applied to two adjoining houses in a terrace (see Weaver v Family Housing Assoc (York) Ltd (1975) 74 LGR 255, where a terrace of eight houses built with one continuous slate roof and continuous binding of the external brickwork with no internal communication was held not to constitute one building for the purposes of the public health legislation) or a pair of semi-detached houses. The question whether the latter constitutes “a house” or “building” has also been judicially considered in the context of the Public Health Act legislation.
In Hedley v Webb [1] 2 Ch 126, for example, a pair of semi-detached houses in single ownership was held by Cozens-Hardy J to constitute “one building only” within the meaning of section 4 of the Public Health Act 1875. In Humphrey v Young [1903] 1 KB 44, the two houses in question had gardens in the front and rear separated by fences and were occupied by separate tenants. On this evidence, the court held that the two houses were two separate buildings not within the same curtilage, emphasising that no general rule could be laid down as to whether a pair of “semis” fell to be classified as one building (even though they be under one continuous roof), the matter being in each case a question of fact and degree: see also Cook v Minion 1978 37 P&CR 58.
Social embarrassment
The position is equally unclear in regard to two maisonettes (ground and top floor) under cover of a single roof but with separate entrances. Applying the notion of “social embarrassment”, it would seem that such a structure would permit the landlord of, say, the lower part, to live a separate life without embarrassment from the tenant of the upper part (even though physically both were in close proximity to one another). It may be pertinent to recall the words of Cairns LJ, in the Bardrick case (supra), at p 425:
When an Act of Parliament uses the word “building” without defining it there must be some structures or pairs of structures which as a matter of law could be said to be two buildings within the meaning of the Act and some which as a matter of law could be said to be one building. If a judge held, for example, that two quite separate houses constituted one building, he might be said to have erred in law. On the other hand, if a judge held that two floors in the same house constituted separate buildings that might be said to be erroneous in law.
(Emphasis supplied)
There is also the separate question of whether such a building constitutes a “purpose-built block of flats” for the purposes of section 12(1)(a) of the 1977 Act. Although the two maisonettes are divided horizontally from each other and, therefore, on a strict reading, fall within the definition of a “block of flats” under para 4 of Schedule 2 to the 1977 Act, nevertheless, they may also be divided diagonally from each other by means of an internal staircase and, as such, fall outside the definition which excludes only horizontal divisions but not vertical ones.
Where the two structures are linked by means of internal communications, the legal position is more clear cut. For example, in Guppy v O’Donnell (1979) 129 New LJ 930 (Westminster County Court), the plaintiff was the owner of nos 4-6 Moreton Street, SW1. These premises were erected at the same time but as two separate shops. Each half of the premises consisted of a basement, a ground floor with shopfront and door on to the street and living accommodation on the first floor. At some time in the past, a hole had been made in the wall dividing the two basements, and most of the wall dividing the ground-floor rooms had been demolished, so that one large room was formed spanning both parts. A doorway had been made connecting the flat on the first floor at no 4 with that at no 6. The plaintiff lived in the flat at no 4. The door connecting his flat and no 6 was locked and partly sealed up. He used the ground floor and basement of both parts of the premises as a potter’s studio and showroom. In May 1975, the flat at no 6 was let to the defendant who claimed to be a protected tenant. The county court judge held that the flat formed part of a single building in which the plaintiff also resided: see also Luganda v Service Hotels Ltd [9] 2 Ch 209, where four houses had been knocked into one hotel, which was held to constitute “a house” for Rent Act purposes.
Even where there is no internal communication, the courts have been prepared to uphold the landlord’s contention that the structures form part of a single building. In Griffiths v English (1981) 261 EG 257, the building in question had two single-storey extensions on both sides, with no internal connection, with the centre portion forming the main house. One of the extensions was occupied by the landlord and the other by the tenant. The sole issue was whether the tenant’s extension formed part of a building also occupied by the landlord. The Court of Appeal held that the appearance of the structure was that of one building and, moreover, that there was in this case the necessary element of close proximity which the exclusion was designed to avoid.
The most recent judicial exposition of the subject is to be found in Wolff v Waddington (supra), where the tenant’s first-floor flat was part of an extension, the roof line of which being somewhat lower than the roof line of the rest of the house. His kitchen, on the first floor, was above the landlord’s utility room. There was an alleyway at ground level between the two parts of the house and separate entrances to the two flats. The Court of Appeal held that the two flats were, clearly, part of the same building and rejected the tenant’s contention that the two parties were able to live separate lives without embarrassment even though they were physically in close proximity to each other.
