As the UK emerges from lockdown into warmer weather and with foreign travel looking unlikely this year for most, UK holiday homes are in demand.
Genuine holiday lets understandably benefit from exclusions from security of tenure. There are, though, holidaymakers who unexpectedly claim that they have acquired rights under the Housing Act 1988.
Recent national press reports tell of difficulties for one Gloucestershire holiday home owner in evicting a guest who refuses to leave or pay rent. He claims to be a tenant after first being granted permission to stay at the property for two weeks. The owner’s plans to spend summer in her holiday home are on hold while she awaits the expiry of a six-month notice before commencing a claim.
It’s not just tenants who attempt to exploit ambiguities in the law concerning holiday lets. A new breed of rogue landlord is reported to be on the rise in London. They seek to avoid deposit protections and the need for possession proceedings by inducing occupiers to enter into holiday licence agreements instead of assured shorthold tenancy agreements. The number of landlords adopting such tactics is likely to be a reaction to lengthy delays in residential possession claims as the courts work through a backlog, being short-staffed and hampered by Covid-19 restraints, both physical and procedural.
So how do you spot a fake holiday licence or evict a holiday guest? The starting point is to look at how you define a holiday let, as this affects the possession procedure to be followed.
How to define a ‘holiday let’ in this homeworking era?
The pandemic has led to the blurring of the lines between leisure and work time. Outside of lockdown, many are seeking to leverage the benefits of remote working and Zoom meetings by taking the opportunity to set up a “home office” in holiday homes around the world.
Determining if a let is a holiday let is ultimately, in each case, a question of fact, but here are some factors to consider.
There is no definition of “holiday” in the 1988 Act or any related statute. The main case authority is Buchmann v May [1976] 2 EGLR 57, in which the broad definition of “holiday” in the Oxford English Dictionary was adopted: “a period of cessation of work, or a period of recreation”. So, any break from work or study to enjoy any leisure pursuits might be caught by the definition.
It is unclear whether you need to refrain from work throughout your stay for it to qualify as a holiday. Section 3A(7)(a) of the Protection from Eviction Act 1977 states that a tenancy or licence is excluded if “it confers on the tenant or licensee the right to occupy the premises for a holiday only”. The use of the word “only” here suggests that if the guest is using the property partly for work then it does not fall under this exception.
In Buchmann, a term of the agreement defining the purpose of the let as being for a holiday was held to be conclusive evidence that it was a true holiday let unless the guest could discharge the heavy burden of showing that such expressed purpose was false – for example, the landlord knew the occupiers were students. What, though, is the position if the landlord knew that the occupier had brought along his laptop with the intention of keeping on top of his inbox during his holiday?
Duration of stay
A stay of less than three months is more likely to constitute a holiday within the ordinary meaning of the word. The longer the term, the more difficult it will be to claim that the purpose is for a holiday.
This is supported by the Home Office Code of Practice on Right to Rent, which states that bookings of three months or more may indicate that a person is not using the property as a holiday let. In Spielplatz Ltd v Pearson [2015] EWCA Civ 804; [2015] PLSCS 239, the Court of Appeal held that the chalet the defendants had built and were entitled to occupy all year round for “habitual use” on a naturist resort was not occupied for holiday use.
Somewhere else to call home
To qualify as a holiday let, the guest must have an alternative place to call home. When a guest resides at multiple properties, the principal home will be the property where they live their settled day-to-day life, with personal, legal or family ties to the address. This point is particularly important if a guest asks to stay longer owing to moving house/renovation works, as the holiday let could then be considered their principal home.
Recovering possession from holiday guests
Different eviction procedures apply depending on whether the occupier is staying for the purposes of a holiday or not. The Protection from Eviction Act 1977 makes it unlawful for landlords to evict qualifying residential occupiers without obtaining a court order, but holiday lets are excluded. Accordingly, a licensor of a holiday home does not have to obtain a court order and could instead regain possession by self-help means, including changing the locks provided that no violence is used if someone in the property is opposed to the landlord’s entry (section 6 of the Criminal Law Act 1977). Self-help can be high risk and great care should be taken.
Alternatively, trespass proceedings can be brought seeking an immediate possession order. Trespasser claims are excluded from Covid-19 procedural changes and in practice appear not to be subject to the same delays in obtaining hearings.
Most holidaymakers staying for a short fixed term will be licensees. If, unusually, the occupier has a tenancy for holiday purposes then it will be excluded from the 1988 Act (Schedule 1) and cannot be an assured or assured shorthold tenancy. Rather, it will be a common law tenancy terminable by notice to quit (a much shorter process than serving notices under the 1988 Act).
Recovering possession from a tenant without a court order is high risk as they may claim that the term has not expired or allege either a breach of the covenant for quiet enjoyment or harassment.
Recovering possession from non-holiday guests
Complications arise when a genuine holiday licensee starts working. If this occurs, either during or after the fixed term, the fact of having exclusive possession and payment of rent may result in an assured tenancy or AST, no matter what the form of the written agreement (Street v Mountford [1985] 1 EGLR 128). In this situation, the 1988 Act and Protection from Eviction Act 1977 would apply and the tenancy is terminated by notice under section 8 or section 21 of the 1988 Act.
Currently, the Coronavirus Act 2020 extends the notice period for both section 8 and section 21 notices, save for a few exceptions, to six months until 31 March 2021 and is likely to be extended further.
A final point to note is the useful but less well-known mandatory ground 3 under Schedule 2 of the 1988 Act. This applies where a property has been let in the past 12 months for holiday purposes, is let afresh for holiday purposes for a term of not more than eight months and a prior notice is given to the tenant. Unfortunately, if relying on this ground, the 2020 Act now requires a six-month section 8 notice and not two weeks as before.
Tips for holiday home owners
- Record in the agreement the use of the property as a holiday let
- Ensure that the guest has a principal residence
- Limit the holiday term to less than three months
- Consider offering services such as cleaning/gardening as this is more akin to a licence arrangement
- Sign a new licence on renewal on expiry of fixed term
- Be wary of relying solely on an intermediary’s terms of engagement
In part two, next week, we review the restrictions on owners renting out properties for short-term lets, with a particular focus on covenants in long leases
David Eminton is a partner and Nicola Davies is an associate at Paris Smith LLP
