“Protecting London’s Property Guardians”

In this article we will look at the recent report “Protecting London’s property guardians” by the Housing Committee of the London Assembly (chaired by Sian Berry).

The report makes 11 recommendations which we will look at below.

It is important to bear in mind the status of this report: 

1. It is only advisory – it does not change or even clarify the existing law;
2. Its primary audience is the London Assembly and London councils as well as the Minister for Housing, Communities and Local Government;
3. It would be up to Parliament to make new legislation in this area.

We also note that this document is not written by or intended for lawyers – its effect is more ‘political’ than ‘legal’ (In fact it often appears to be legally illiterate). That being said, the political effect should not be under-estimated.

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PART 1 – Background

Part 1 is an overview of the history/growth of the sector, particularly in London. The factual elements are taken mainly from evidence provided by Caroline Hunter. No specific recommendations are made in Part 1 but it concludes: “Our investigation has found that property guardianship is not always the ‘win-win’ scenario it is commonly promoted as. The relationship between property owners, the companies that work for them and the guardians is unbalanced. Property guardians can live a precarious existence. They are not protected by legislation or standard practices in the same way that tenants in the private rented or social rented sector are. This must be reviewed to ensure property guardians are adequately protected.”

This sets the tone for the rest of the report.

Part 2 – The Property Guardians

In Part 2, it is claimed that “the current legal status of guardians is unclear”. The law regarding the status of licensees (as opposed to tenants) is in fact reasonably clear and has been since at least 1985 (Street v Mountford). But, of course, the legal status depends on the facts of each individual case and these are often not so clear cut. In the recent case of Camelot Guardian Management Ltd v Khoo (2018) EWHC 2296 (QB), the Court of Appeal declined the opportunity to clarify whether a Guardian who enjoyed exclusive possession nevertheless fell outside the definition of ‘tenant’ – a question that was left open in Street v Mountford.

Recommendation 1

MHCLG should review legislation and guidance (for example, the Tenant Fees Bill 2017) to see how licensees can benefit from the improvements made in the private rented sector.

The Tenant Fees Bill 2017 prohibits letting fees by landlords and/or agents. As Caroline Hunter makes clear in her evidence it already applies to both tenancies and licences (s 20). It is difficult to see what practical effect Recommendation 1 is intended to have: reviewing current legislation or guidance does not change the current law and the Tenant Fee Bill already is intended to apply in both contexts. It would of course be possible for Parliament to decide to amend the bill to introduce new legislation specifically aimed at the Guardian sector but, to our knowledge, no such amendments are tabled.

Part 2 contains 3 further recommendations:

Recommendation 2 

The Mayor and MHCLG should provide guidance about the legal rights of guardians and where guardians can access help.

Recommendation 3

The Mayor should advise councils (especially those that use property guardians) to ensure the words ‘property guardian’ are included on all local authority publicly promoted resources on raising grievances about property standards, fire safety and environmental health concerns. 

These recommendations propose that the legal rights of Guardians should be the subject of guidance. It is to be noted, however, that any such guidance could only go as far as to explain the current law, not to change it in any way.

Recommendation 4

MHCLG should require all property guardian companies to register with a recognised property agents redress scheme. This would allow guardians to raise concerns about a company in a ‘safe space’. 

Currently, ‘Estate Agents’ are obliged to belong to an approved redress scheme. This requirement is imposed by The Estate Agents (Redress Scheme) Order 2008 which is an order made under s23 of the Estate Agents Act 1979.

What this means is that, if a Guardian Company were in fact an Estate Agent as defined by the Estate Agents Act, then it would have to be registered under the order. However, if a Guardian Company is not an estate agent, then it is difficult to see how it could possibly register under this scheme. There would have to be new legislation to bring in such a requirement and, as far as we know, none is currently in the pipeline.

Part 3 – The Property Owners

Recommendation 5

The Valuation Office Agency should provide clear guidance on whether commercial properties that are temporarily occupied by guardians are entitled to a temporary revaluation from business rates to council tax. This would ensure property guardian companies and property owners are aware of the rules around business rates and council tax. 

It is hard to understand the benefit of this recommendation. Guardian companies and property owners are quite capable carrying out their own research into the tax implications of each transaction and, if necessary, of taking legal advice.

Part 4 – The Property Guardian Companies

No specific recommendation are made in this part.

Part 5 – Existing Legislation

Recommendation 6 

MHCLG should clarify whether the Housing Act 2004 is enforceable against malpractice in the property guardian sector. MHCLG should revisit the Housing Act 2004 if it is no longer protecting people effectively. 

As both Caroline Hunter and Giles Peaker made clear in their evidence to the Committe, the relevant provisions of the Housing Act 2004 do indeed apply to both tenancies and licences and therefore will apply in the Guardian context. In the light of that fact, it would appear that this recommendation is somewhat otiose.

Recommendation 7 

The Mayor should use the London Boroughs’ Private Rented Sector Partnership to share best practice and lessons learned by local authorities. 

If the Mayor so wishes, he can do so, of course.

Recommendation 8 

MHCLG should provide statutory guidance for environmental health officers and the London Fire Brigade on how to effectively deal with buildings occupied by property guardians, like guidance provided for bedsits and shared accommodation. 

If the MHCLG wishes to provide guidance, it can do so.

Recommendation 9 

The Mayor and MHCLG must provide clarity on how local authority planning departments should handle commercial properties occupied by property guardians. 

Local authority planning departments are obliged to follow all current planning laws and their local planning policies. The report does not identify the mechanism by which the Mayor or the MHCLG might override these.

Recommendation 10

The Mayor and MHCLG should set out best practice guidance for local authorities when procuring property guardian services. Guidance should include a standardised contract between building owners and guardian companies, which contains a minimum length of tenure, licence fee setting if applicable, and clear guidance on repairs and maintenance responsibilities. This guidance could also form part of the ‘A fairer deal for private renters and leaseholders’ section of the Mayor’s Housing Strategy.

If the building owner is a private entity, it is difficult to see how the Mayor or even the MHCLG (without new legislation) could impose standard contractual terms. Even in the case of local authority buildings, given the inherent ‘bespoke’ nature of many of these agreements, we would have thought it was essential that the parties be free to contract as they see fit on a case-by-case basis. It is already highly likely that there contracts will set out the “repairs and maintenance responsibilities”.

Recommendation 11 

Efforts by guardian companies to introduce common standards are welcome, but it is important all companies follow them if they are to be effective. Therefore, the Mayor and Government, as well as councils who use guardian companies, should look at what can be done to ensure new standards are applied more widely. 

Government and Local Government can of course ensure that they contract solely with Companies that comply with voluntary standards. However, the rest of the sector is not currently specifically regulated. As this report illustrates, however, if this sector continues to flourish, it is increasing likely that pressure will grow for Parliament to introduce specific regulation in this sector.