Can't afford house any more - what to do with lodger/tenant?

MultiFuelBurner

This may help or hinder the OP

https://www.landlordlawblog.co.uk/2020/02/19/lodger-landlord-moves-months-will-lodger-become-tenant/?doing_wp_cron=1689627307.2766959667205810546875

_Penny_Dreadful

GDB2222 said:

_Penny_Dreadful said:

GDB2222 said:

What stops you from moving back into your house? You have your bedroom (full of stuff you haven't needed for 3 years, so probably don't need at all!!),  plus the other empty bedroom. With a bit of luck, once you are back in the house, you can then ease the tenant/lodger out.

I'm not an expert, but this may be a lodger, not a tenant, as you have retained a bedroom. People on this forum make wild statements about this sort of thing, without any legal training. I think it would be worth running this past a solicitor. 

It’s not a wild statement to claim the occupant is a tenant rather than a lodger. Read the legislation, it met all the hallmarks of an AST back in 2020 and retaining a bedroom wouldn’t make the OP a resident landlord because a resident landlord has to be, you know, resident. A question a court would ask is, “where would the landlord ordinarily be found?” Not in this property would be the answer because the OP wouldn’t have been found there for over 3 years. Taking up occupation now wouldn’t suddenly make the occupant a lodger either. 

Can you please quote a couple of cases to back this up?

I'll show you mine when you show me yours backing up a landlord, who has never been resident, having excluded occupiers or has turned tenants into lodgers by suddenly taking up residence in the property.

_Penny_Dreadful

MultiFuelBurner said:

This may help or hinder the OP

https://www.landlordlawblog.co.uk/2020/02/19/lodger-landlord-moves-months-will-lodger-become-tenant/?doing_wp_cron=1689627307.2766959667205810546875

It reaffirms what I said about a landlord not able to reverse a tenancy by moving into the property.

GDB2222

_Penny_Dreadful said:

MultiFuelBurner said:

This may help or hinder the OP

https://www.landlordlawblog.co.uk/2020/02/19/lodger-landlord-moves-months-will-lodger-become-tenant/?doing_wp_cron=1689627307.2766959667205810546875

It reaffirms what I said about a landlord not able to reverse a tenancy by moving into the property.

But, it also makes it clear that it depends on the facts of the case, including that the OP has retained a toehold in the house, and the current occupant does not have exclusive possession.

I agree that, after years abroad, the OP has an uphill struggle, but I would think it worth getting advice if the current occupant refuses to leave.

_Penny_Dreadful

GDB2222 said:

_Penny_Dreadful said:

MultiFuelBurner said:

This may help or hinder the OP

https://www.landlordlawblog.co.uk/2020/02/19/lodger-landlord-moves-months-will-lodger-become-tenant/?doing_wp_cron=1689627307.2766959667205810546875

It reaffirms what I said about a landlord not able to reverse a tenancy by moving into the property.

But, it also makes it clear that it depends on the facts of the case, including that the OP has retained a toehold in the house, and the current occupant does not have exclusive possession.

I agree that, after years abroad, the OP has an uphill struggle, but I would think it worth getting advice if the current occupant refuses to leave.

The Housing Act 1988, Schedule 1, Part 1, Clause 10(1)(b) and (c) says...

(b)that, subject to Part III of this Schedule, the tenancy was granted by an individual who, at the time when the tenancy was granted, occupied as his only or principal home another dwelling-house which,—

(i)in the case mentioned in paragraph (a) above, also forms part of the flat; or

(ii)in any other case, also forms part of the building; and

(c)that, subject to Part III of this Schedule, at all times since the tenancy was granted the interest of the landlord under the tenancy has belonged to an individual who, at the time he owned that interest, occupied as his only or principal home another dwelling-house which,—

(i)in the case mentioned in paragraph (a) above, also formed part of the flat; or

(ii)in any other case, also formed part of the building

The facts of this case are that the OP wasn't occupying the property at all, never mind as a their principal home, when these two people moved in and has never occupied the property for the whole duration of their stay.  The OP cannot be a resident landlord meaning the person remaining has an Occupation Contract.

In the Landlord Law Blog case the landlord had at least been resident for a period at the start and then moved elsewhere for a few months.  Meanwhile the OP wasn't there are the start and has been completely absent for over 3 years.  There is no toehold.

The person occupying the property doesn't have to have exclusive occupation of the whole property, just exclusive occupation of their bedroom would be sufficient to create an AST back in 2020 just the same as if it was a room in a HMO.

Street vs Mountford is the oft quoted case for licencee versus tenant.

Badger_Lady

Thanks all for the inputs. So, if I can break this down into two steps:

1. Are they lodgers or tenants? This might be disputable but likely, if someone decided to push it, they could win a case for 'tenants'.

So...

2. What happens next?

In this scenario I have a house I can't afford to pay for, with a sitting tenant who can't afford it either and is only contracted to pay one-third anyway.

It's on 100% mortgage and I have a deal with Halifax to pause payments (£1,300 a month) only until September, plus a deal with British Gas to reduce the direct debit for bills until September when they'll shoot back up to £300 a month. I can't claim single person discount on the council tax because there are two of us registered as living there, so that's another £158 a month.

I work for a non-profit in the EU which means I have to travel a lot (typically 2 countries per month) and it also means my salary is relatively modest - it covers my immediate living costs but doesn't leave anything like enough room to pay the above costs. And I have no savings at all.

What advice would you give someone in that situation?

Niv

I do feel for you @Badger_Lady your kindness and naivety in this matter could cause you a lot of distress and expense as it sounds like your tenant is looking to the council for help which makes it extremely hard to get him out.

I am not an expert like some appear to be in this thread but my suggestions are:
- Speak to him to get an idea if he is willing to find somewhere private
- If so, help him as much as you can to find a suitable place
- Quite possibly assist him with moving costs deposit etc - I know you say you have no spare cash but if you don't get him out I fear it would cost you a heck of a lot more

Failing the above I would suggest some legal assistance to make sure you get all your ducks in a row - BUT I do think this will cost significantly more than the above.

housebuyer143

You say it's on a 100% mortgage, is it worth more or less than when you bought it? 
Can you auction it? I agree that giving the tenant money to go and explaining that if they don't the house will be repossessed shortly as you can't keep up the payments and they will have to go anyway might give them the kick up the backside to find something.

Badger_Lady

housebuyer143 said:

You say it's on a 100% mortgage, is it worth more or less than when you bought it? 
Can you auction it?

It should be worth more, but the current market is tricky. Basically I bought for £145k in 2007 (100% mortgage interest-only) and now it's valued at £189k, but I've accepted an offer of £158k. I've spent well over £13k on new windows, new boiler, rewiring... when you also deduct the estate agent and conveyencing it's barely break-even.

_Penny_Dreadful

Badger_Lady said:

What advice would you give someone in that situation?

Put the property up for auction as is with a reserve price. The only other real option to to help the tenant move out by search for alternative accomodation, offering a glowing reference and a bung.