Emma Chadwick explores an increasingly popular solution to the problem of squatters
Securing and protecting vacant property, pending development or during longer void periods, presents a problem for owners of both commercial and residential premises. There is a well-established network of professional squatters who share information online and by word of mouth about vacant properties, especially in inner city areas, making it easy for property to become unlawfully occupied. Although recent changes to the law have made it easier to prevent squatting in residential property, the changes do not apply to commercial property.
While it is not always necessary to obtain a court order to secure possession from squatters if possession can be obtained peaceably, most property owners will opt to do so rather than risk an argument that they have acted unlawfully in evicting occupiers. The process for obtaining a possession order can sometimes take a few weeks and may not prevent future trespassing.
The costs associated with dealing with squatting and any damage to the property and contents can be high and the practical impact of not being able to start a development on time a real problem. Owners may prefer to install security measures on site while the land is prepared for development, but given that this period can extend to many months, this can be very expensive.
Property guardians may present a potential solution to the problem and their use has become increasingly common and visible on development sites.
What are property guardians?
Property guardians occupy premises with the owner’s permission on a short-term basis. They are usually young and employed, often key workers who prefer to live centrally but cannot afford significant rents. Their role is to occupy the premises (daily, but accepting they do work) and report any damage or attempts to occupy by squatters to the property owner, in order to deter unlawful occupation. They will typically enter into a licence agreement, rather than a tenancy, with the licence terminable on relatively short notice for periods between six and nine months. Premises are usually offered unfurnished and with only a power supply and basic washing and cleaning facilities, however the benefit of such an arrangement for a property guardian is the much reduced “rent” that is payable.
Property guardians may enter into a direct agreement with the landowner, or the landowner may agree with an intermediary company to permit the premises to be used by guardians. Typically, they are, or are close to, cost-neutral for the landowner.
Extent of guardians’ rights
The use of property guardians relies heavily on trust. A licence agreement does not provide any security of tenure for the guardian, and may be for as little as a few months. However, once the landowner is ready to develop the site and the licence is terminated, the principle requires the guardian to leave voluntarily. If they do not, it is likely that the landowner will need to obtain an order for possession from the court. Although property guardians are unlikely to be tenants, they will still qualify as residential occupiers for the purposes of the Protection from Eviction Act 1977, and therefore cannot be evicted without such an order.
Where a guardian resists attempts to take peaceful occupation, a landowner risks a claim for unlawful eviction under the 1977 Act by proceeding without a court order for possession. The penalty under this Act is a fine and a claim for damages but in practical terms, this could cause delay to a development timetable.
The licence agreement also needs careful drafting to ensure that the property guardian does not inadvertently receive a tenancy which may afford them greater statutory protection. Perhaps most importantly, the landowner needs to reserve the right to enter onto the premises. In practical terms this is important, so that any surveys, inspections or enabling works for the development can be carried out, but also it ensures that, in legal terms, the tenant does not have exclusive possession of some or all of the property, and so does not have a lease rather than a licence.
In addition, it is recommended that guardians are moved within the premises at least every six months, in order to ensure that the occupation meets the requirements for a licence not a lease.
Landowner’s obligations
The landowner or the intermediary guardian company will make the premises habitable, which means creating secure areas to be occupied, installing sufficient toilets, washing facilities and power. For the period of any licence agreement, the landowner must also make sure that the premises are available to occupy, and so will not be able to terminate the licence and regain possession without giving an agreed period of notice, which will usually be one month.
The premises will also need to be in a condition fit for occupation, and any serious disrepair which undermines this will need to be resolved.
It is also possible that occupation by guardians will require planning permission for residential use or a licence from the local authority for use of the premises as a house in multiple occupation (“HMO”) if there are five or more guardians occupying premises over three or more floors, and the relevant local authority has an HMO licensing regime in place. The advantage of an intermediary company is that the responsibility for compliance with planning or licensing requirements can rest with them, or an indemnity against non-compliance can be obtained.
Landowners also need to carefully manage the agreements they enter into with property guardians directly or with intermediary companies. It is essential to have written agreements in place establishing the terms of occupation and, most importantly, the period and procedure to terminate those rights.
Full-time guardians
For property owners seeking additional protection, some firms offer a more organised solution. One such company, Vigilance Properties, is a security firm that works with ex-armed forces personnel to provide caretaking services, mainly in commercial and high-end residential property. Rather than operate a traditional property guardian service, it provides uniformed full-time occupiers (often former members of the Gurkha regiment) rather than guardians who may be at work during the day, and places up to four personnel in premises so that HMO legislation is not triggered. It will also install welfare facilities to make buildings habitable.
According to Ian Lyons, Vigilance’s commercial director, the firm is experiencing increasing demand for its services, on sites including a large industrial site in East London, where its caretakers resolved the issues previously experienced by the owner of squatting, fly tipping, and asset stripping, which had resulted in an insurance claim in excess of £1m. Similarly, in a west London retail site, which had been subject to repeated squatting, no further incidents took place after Vigilance’s caretakers began occupation.
For the company’s personnel, Lyons says the advantage is a job and accommodation for a period of typically between six to 12 months while they reintegrate into civilian life after leaving the armed forces. They may accept one or successive assignments which allows them time to transition to a new career or, for Gurkhas, breathing space to decide whether to remain in the UK or return home.
Mutually beneficial
With the shortage of affordable accommodation in the capital and other inner city areas, a guardianship arrangement can benefit both the occupier and the landowner. It discourages squatting and allows control over the premises without the need for security guarding costs. It can also provide basic but necessary housing or employment options, especially for those who need to live close to work but cannot afford market rents, or who are saving for a deposit and welcome the opportunity to reduce outlay. These benefits are no doubt the reason why the number of property guardianship companies has grown so significantly in recent years, with some reports putting this at an increase of 40-50%.
However, landowners should be cautious about entering into guardianship arrangements without seeking legal advice and carefully managing those arrangements. A failure to do so may mean that they fall victim to the very problem they are seeking to avoid, causing significant delay to the development timetable.
Emma Chadwick is a partner at Winckworth Sherwood LLP
• Learn about graduate property surveyor Tim Lowe’s experiences as a property guardian at www.estatesgazette.com/lowecostliving
