Am I Legally A Landlord Even If I Don’t Charge Rent?

Am I A Landlord Even If I Don't Charge Rent?

Am I a Landlord even if I don’t charge rent?

I’ve been asked this question a lot recently, particularly by parents that allow their children to live in a property rent-free.

Blimey, maybe it’s time I traded my folks’ in (Mum, dad… I love you, but I feel like I’ve been lumbered with a raw deal here)!

In reality, when anyone asks the question, what they’re really asking is, “did I create an assured shorthold tenancy? Am I still legally obligated to comply with all the [scary] landlord regulations that come with assured shorthold tenancies?” Is that it, is that why you’re here?

Whatever your specific case might be – whether you’re generous enough to allow your precious sweet-pea or foe to live rent-free in a property – I’m here to shed some light on the matter! Let’s get into it…

So, are you a landlord even if you don’t charge rent?

In short:

  • You are a landlord;
  • however, you didn’t create an assured shorthold tenancy, so you won’t be subject to all the regulations [that are required for an assured shorthold tenancy agreement (AST)]

Basically, if you permit someone to live in a property that you have permission to let (that isn’t your own residential home) – whether they’re blood related or otherwise – then by definition you’re a landlord, but if you do not charge rent or charge “low rent” then you will NOT be creating an assured shorthold tenancy agreement (AST), therefore are not legally obligated to comply with all the AST regulations e.g. tenancy deposit scheme, annual gas safety checks, section 8 & 21 eviction procedure etc.

Definition of “Tenancies at a low rent”

Under Schedule 1 of the Housing Act 1988:

3A. A tenancy –

(a) which is entered into on or after 1st April 1990 (otherwise than, where the dwelling-house had a rateable value on 31st March 1990, in pursuance of a contract made before 1st April 1990), and

(b) under which the rent payable for the time being is payable at a rate of, if the dwelling-house is in Greater London, £1,000 or less a year and, if it is elsewhere, £250 or less a year.

What the hell did he just say?

Yeah, I’m with you!!

Human translation: if the rent you receive is less than £1,000 per year in Greater London or less than £250 elsewhere, then you cannot create an assured shorthold tenancy.

So, my guess is, you’d have what is known as a “common law tenancy“, which is generally policed by the terms agreed between the parties.

Have you just found out you have an assured shorthold tenancy agreement (AST)?

If you’ve just found out that you’re one of those ‘orrible landlords (welcome to the club, by the way) – because your rental income exceeds the annual “low rent” amount – and you’re feeling like a dirty fish out of water, please don’t worry! Compose yourself. You can do this! It isn’t as terrifying as it seems. Maybe!

First and foremost, you should ensure if the tenancy you have is actually an assured tenancy. Besides from charging “low rent”, there are other exemptions. You can use this tenancy checker on Shelter to find out what kind of monster you have concocted.

Still have an assured shorthold tenancy agreement (AST)? Okay…

While it might be ridiculously easy to neglect your newfound obligations because you wholehearted believe that your own flesh and blood would never cause you any distress no matter how rogue you go – I urge you to have a thorough rethink!

Yes, you’re probably right, it may never come to light that you failed to comply with your obligations because your precious daughter, for example, would never grass on you. To that, I have three comments:

  • I’ve seen it happen. Believe you me.

    In fact, this blog is riddled with comments from parents’ that have been royally scorned by their first child. They never thought their sweet-pea could do it to them.

    Oh, sweet-pea did it to them alright. Hard!

  • Many of the legal requirements focus on safety, they are there to protect the occupant. The reality is, anything could happen in the property, and you don’t want that on your conscience.
  • Presumably, you will have landlord insurance in place (oh, you don’t? You should fix that!) – you could void your policy if you don’t meet certain obligations.

    For example, if you don’t provide a functioning smoke alarm (a legal requirement for landlords in England) and the house burns down, you might not be able to make a claim.

Bottom line, there are more reasons to comply than to avoid!

Want more reassurance on your status?

I recommend getting in touch with your local citizens advice – they should be able to tell you what’s what.

Further reading!

I’ve tagged specific blog posts in the “You might also like…” section below, which I believe would be useful for anyone that has just become an accidental landlord!

*drops the mic*

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