Understanding protected lifetime tenancy

Sallibee

I'm about to buy a maisonette as an investment. The tenants have lived in it since 1967 under a protected tenancy. They are paying just under £600 rent, this having been increased by the rent officer by £30 one year ago. The present owner applied for a rent of £920. Today's market rent would probably be £1,000.

It is a 4 bedroomed maisonette set out over 4 floors. It's a character property, with a large bay-windowed lounge, high ceilings, good size rooms with a large Victorian (?) iron construction terrace, light and spacious - and lovely. The tenants have brought up 6 children there and are now in their 70s. They are obviously well-heeled and the maisonette is tastefully decorated and full of beautiful objects. It isn't Hampstead or Chelsea but almost could be. They have a boat.

Does anyone know if such a tenancy is challengeable? I can't understand why such people should qualify for such a tenancy. They are very nice, but obviously not hard up. (One of the papers I have received today shows that they didn't qualify for free legal aid due to their savings and income.) I read somewhere that protected tenancies started under Thatcher in 1977, but this is an earlier system that seems still valid. I can't get my head around the logic and how the rent officer can find an almost half market value rent 'reasonable' for these people.

The estate agent asked them today if the protected tenancy was inheritable (my main issue) and they said that they were the last in the line and for one of their family to inherit it he/she would have to live there for 2 years prior to their death...

I've done some Google searches but haven't found any useful information. If you know anything or can point me in the right direction, I'd be very grateful. Thank you.

Annie1960

I'm not sure what you typed into Google, but there is a great deal of information about protected tenancies if you search.


http://www.landlordlawblog.co.uk/2010/11/02/let’s-hear-it-for-protected-tenancies/

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/11445/138295.pdf

Soot2006

he tenants have brought up 6 children there and are now in their 70s.

for one of their family to inherit it he/she would have to live there for 2 years prior to their death...

This alone, if true, would make it a very risky investment, surely?

Annie1960

Soot2006 wrote: »

This alone, if true, would make it a very risky investment, surely?

It's not a suitable investment for a private investor. Long-term investors such as pension companies buy these properties.

Talc1234

No doubt the price of maisonette has been discounted because of the protected tenancy and the below market rent plus the likelihood of you getting possession anytime soon will be factored into the price.

ROI will be lower than an unoccupied BTL and the property will be unmortgageable but you will never need to find a tenant, worry whether you are going to be paid or whether the property will be cared for

And before you get on your high horse about 'why such people qualifying' remember it has been their home for 46 years.

Brallaqueen

its not about the tenant, their income or their lifestyle. its about the rules around renting that were in place when they moved in. You cannot change this, you cannot convince the Rent Officer to raise their rent to a more profitable level. You get what you get - a cheap property with tenants that cannot be evicted or foced to pay more. you also get the possibility that a relative moves in for 2 years (you cannot stop this) and the cycle continues.

bouicca21

Many years ago a family of my acquaintance bought a house with such a tenant. They were able to live there as it had a separate but tiny basement flat. The tenant was in his late eighties. All they had to do was wait for him to drop off his perch and they'd have a lovely house for a fraction of its market value.

Brilliant plan. Only problem was that he up and married - and his new wife was some 30 years younger. When he died she inherited the tenancy ...

nobblyned

Sallibee wrote: »

I'm about to buy a maisonette as an investment. The tenants have lived in it since 1967 under a protected tenancy. They are paying just under £600 rent, this having been increased by the rent officer by £30 one year ago. The present owner applied for a rent of £920. Today's market rent would probably be £1,000.

It is a 4 bedroomed maisonette set out over 4 floors. It's a character property, with a large bay-windowed lounge, high ceilings, good size rooms with a large Victorian (?) iron construction terrace, light and spacious - and lovely. The tenants have brought up 6 children there and are now in their 70s. They are obviously well-heeled and the maisonette is tastefully decorated and full of beautiful objects. It isn't Hampstead or Chelsea but almost could be. They have a boat.

Does anyone know if such a tenancy is challengeable? I can't understand why such people should qualify for such a tenancy. They are very nice, but obviously not hard up. (One of the papers I have received today shows that they didn't qualify for free legal aid due to their savings and income.) I read somewhere that protected tenancies started under Thatcher in 1977, but this is an earlier system that seems still valid. I can't get my head around the logic and how the rent officer can find an almost half market value rent 'reasonable' for these people.

The estate agent asked them today if the protected tenancy was inheritable (my main issue) and they said that they were the last in the line and for one of their family to inherit it he/she would have to live there for 2 years prior to their death...

I've done some Google searches but haven't found any useful information. If you know anything or can point me in the right direction, I'd be very grateful. Thank you.

Why are you in the process of buying something you don't understand? You can't possibly be in a position to know what it's worth.

Pixie5740

OP, you're either going to have to accept that the current tenants have a protected lifetime tenancy and so won't have their rent increased to £1,000 pcm or whatever the market rate is, or you move on and buy another property that suits your business requirements better.

princeofpounds

Does anyone know if such a tenancy is challengeable? I can't understand why such people should qualify for such a tenancy. They are very nice, but obviously not hard up.

They didn't 'qualify', they were awarded one by the landlord at the time. This was many years ago when tenancy rules were different. The governments since have decided not to rip up the agreement. Generally governments tend to 'grandfather' previous arrangements when they make changes in all sorts of fields - it encourages predictability of policy and therefore stability.

Funnily enough, council tenancies did not used to be secure (in theory - in practice they were), and now are secure to the point of being inheritable in some cases.

Funny how things change.

Sallibee

Thank you for all your replies. I registered for notification of replies to the thread but didn't get them and have only just seen that there have been replies.

I've since read and understood more and I'm still going ahead. I feel that the advantages outweigh the risks for me: it's actually one of two properties being sold together (the other a shop below the maisonette) and the combined rents are a good income for me. They are both also self maintenance and repair contracts which is good as although I know tradesmen in the area now, for many years I haven't lived in Britain and maintenance at a distance would be an extra complication. The roof has been newly repaired...Other properties for the same money (so far and in the area I've been looking in) have come with other issues and less rent as well as being far less substantial.

Now hoping to resettle in Britain at least for half the time, I am (was?) very out of touch and at 57 I'm having to learn things that a lot of 20 year olds know, so I may sound naive but it's a huge learning curve and I do get there in the end (or have so far). I did my own conveyancing on the sale of the house I inherited, for example. The trouble with Google searches is that to find information you need to know the right terminology, know what you're looking for, so it took me a while to find the pages that Annie1960 gave the links to (just seen them - thank you) but I did find them.

I'm still nervous, but think I would be however straightforward it was as I've never bought property in Britain before...Who knows, I'm still not, I suppose, bound.