Why you still need to watch out for protected tenancies

What are protected tenancies?

Protected tenancies are tenancies which started before 15 January 1989 when the Rent Act 1977 was the governing legislation for tenancies.

Under these tenancies, tenants had very strong rights:

• Rent – all protected tenants can apply for a ‘fair rent’ after which the ‘fair rent’ assessed by the Valuation Office is the only rent that can be charged.  Needless to say, this is usually less than the market rent for the property
• Security of tenure – unless they fail to pay rent, most secure tenants cannot be evicted.  There is no equivalent to section 21 and even rent arrears claims are subject to the Judge’s discretion
• Succession rights – original secure tenants will pass this on to their spouse and in some circumstances, family members will inherit the right to an assured tenancy.

The strong rights for tenants under the Rent Act is one reason why there were very few rented properties in the 1970’s and 1980’s – before assured shorthold tenancies came along and the right to recover possession under section 21 persuaded people to start investing in property to rent again.

Why you need to watch out for them

Because they are still around!  Despite the fact that none have been created since January 1989 there are a lot of protected tenancies still in existence.  Secure tenants normally know when they are well off and will not willingly give their tenancies up!

Property investors need to be particularly wary.

If you are offered a property which seems to be at a very low price – this is usually because there is a protected tenant living there who cannot be evicted – meaning the property cannot be redeveloped.