What are property guardians?
Although there is no statutory or official definition of a property guardian, it is widely used to mean a private individual who occupies otherwise vacant premises (residential or commercial) usually with a view to offering protection against squatting or vandalism. Occupiers usually pay a lower sum to occupy than on the “open market”. Protection against squatters is particularly important in commercial premises where, unlike residential premises, squatting is not considered a criminal offence.
Lease v Licence
Property owners must be clear whether they are offering a lease or a licence to the property guardians. This is particularly important, even where guardians are to be granted security of tenure, to ensure that possession will be forthcoming against an assured shorthold tenancy (where claims need to evidence the prior service of certain documents). A licence, on the other hand, is merely a right to occupy and does not confer any property rights.
It is of course well established that it does not matter what the document is termed, but its effect, and where the following elements exist, this will indicate that a lease has been granted: exclusive possession, for a fixed or periodic term; and at a rent.
Global 100 Limited v Lavela [2021]
Here, a number of property guardians, including Ms Lavela, entered into a “temporary licence agreement”, where they were required to pay a weekly licence fee for use and occupation of a designated, lockable, space at a former NHS centre. The agreement required the guardians to share “amicably and peacefully”. More importantly, the agreement gave Global 100 the right to alter the extent and location of the guardians’ living space, and the agreement stated that the guardians had “non-exclusive occupation” of the whole property, not any particular part of it.
When Global 100 sought to retake possession, Laleva resisted and argued that she had an assured shorthold tenancy. She argued that she had been designated her own private, lockable room, of which she had exclusive possession and for which she paid a weekly rent. The Court of Appeal (“the CA”) held that exclusive possession of a designated space does not conclusively determine whether a tenancy has been created.
The CA considered the rights of the Global 100 to alter the extent and location of the space, and found that Lavela did not have a realistic prospect of establishing that she had a tenancy.
Moreover, the purpose of allowing Ms Lavela into occupation was to provide guardian services, and not to create a tenancy. In order to fulfil that purpose, it was vital that Global 100 should be able to give back the property as and when NHS Property Services required it. The case demonstrates the possibility of disputes arising in circumstances where occupiers claim that their agreement amounts to a tenancy, because they have exclusive possession.
Global 100 Ltd v Jimenez & Ors [2022]
Here, the main issue was whether the property, occupied by 10 and 12 property guardians under short-term licences, was a house in multiple occupation (HMO).The guardians here were:
- required to sleep on the premises five out of seven night;
- required to report any damage or unauthorised entry;
- not permitted to leave the property empty; and
- not permitted to conduct a business or hold meetings on the premises.
Whilst the case focused on the need for a HMO licence, the Upper Tribunal held that the presence of the guardians meant that the use of the property was for living accommodation only and that they were only there to have a roof over their heads. The UT referred to the fact that the licence agreement forbade the property guardians from using the property for business purposes, which supported the argument that the only use of the building was residential.
The UT also stated that “use” and “purpose” have two different meanings. It noted that a side effect of the guardians’ presence was to deter trespass or damage, and that the deterrent services were merely a consequence of their use of the living accommodation as their main residence. The guardians were not expected to take any action to prevent entry and trespass.
Future implications
The Jimenez case is likely to have significant ramifications on the use of property guardians. Property owners, looking to use guardians, should first consider the occupation agreement, to ensure that they are not unintentionally creating a tenancy. They should then carefully consider the judgement in Global 100 vs Jimenez, as a failure to obtain a HMO licence, where one is required, can result in a criminal conviction, fines and rent repayment orders. Non-compliance with either set of requirements will have cost implications for the owners of vacant buildings (including increased insurance costs) – and may also impact on availability of short term accommodation provision for those unwilling to enter the private rental market.