The future of property guardians

The note was slipped through the door sometime in the early morning, its contents polite but to the point. A knock at the door swiftly followed and there, while standing only in my pants, the precarious nature of life as a property guardian was laid bare.

“There are absolutely no winners with guardians being deemed as tenants.”

Doug Edwards, managing director of guardian services, VPS

Two employees from my guardian firm said we needed to move out by the end of the day. They would be “assisting” us with the move.

We had seven days of a two-week notice period left to run, but whatever was written in our contract was now worthless. It was 14 January 2014 and we had 12 hours to vacate our home.

The question of whether property guardians – temporary residents who look after vacant buildings under a licence – qualify for rights under the Landlord and Tenant Act 1985 has been a legal grey area ever since the industry was pioneered by Dutch firm Camelot Property Management more than a decade ago.

And, with the promise of cheap rent in prime locations, most guardians haven’t looked to challenge the status quo. Until now.

System in jeopardy

In February a judge at Bristol Crown Court found in favour of property guardian Greg Roynon, a resident at Bristol City Council-owned Broomhill Elderly People’s Home, run by Camelot Property Management. The company had taken him to court after he refused to honour an eviction notice on his licence contract.

“Camelot’s service is deteriorating.”

Paul Smith, cabinet member for housing, Bristol City Council

In a case which Camelot said threatened to “undermine the foundations of the guardian industry”, the court found that Mr Roynon qualified as a tenant despite his licence agreement stating otherwise.

According to the court, by living as the sole person in two rooms at the property for three years, Mr Roynon had gained exclusive possession under an assured shorthold tenancy.

The judgement reflects the 1985 Street vs Mountford case which set a legal precedent, setting out the principles of what constitutes a tenancy and a licence. Back then, the House of Lords found in favour of a tenant against a landlord, despite the former signing a licence agreement which could have disqualified her from holding a lease.

Camelot declined to comment on the Bristol case, but speaking to the local press prior to the trial, the firm’s regional director Paul Lloyd warned that it “will put the guardian system in jeopardy throughout the country”.

Others have been less surprised by the ruling. “Camelot’s service is deteriorating so I wasn’t surprised by the judgement,” says Paul Smith, Bristol City Council’s cabinet member for housing. “In terms of repairs and dealing with security it has gone down in quality. Other guardian schemes haven’t gone down that route.”

Aside from the legal challenge, guardians at Broomhill had raised issues around service levels, citing flooding, disrepair and problems with heating. A second case against Camelot, featuring claims of disrepair, is currently pending.

“We have a regular programme of visits of unannounced inspections. This is to maintain non-exclusive occupations.”

Peter Brown, chief executive, Dot Dot Dot Property

Having been a guardian for six years in my early 20s, I know the lifestyle can be exciting: living in penthouses near Leicester Square and seeing how cheap rent boosts your bank balance each month. However during that time I had to hide from the Health and Safety Executive, shower next to a builder’s toilet and stay in places where locks could be picked with a spoon.

Room with a view

On London’s Southbank, a sign on a door reads “Penthouse”. Its occupant, Alex, is still at work but his mum is visiting, so she lets us in. We’re on the ninth floor of Ludgate House, the one-time offices of the Daily Express. Where Alex’s unmade bed now sits, newspaper editors once deliberated over the next day’s front page.

Developer Native Land initially contracted VPS to look after the office for three months. Eighteen months later, Alex and his fellow guardians pay £550 a month each for a room.

Yards away, a flat at Roger Stirk Harbour & Partners’ Stirling Prize-nominated Neo Bankside is on the market for £4.35m. Only Alex and the super-rich can afford this location, and Alex’s view is better.

Doug Edwards, managing director of guardian services at VPS, is unperturbed by the Bristol case. “Lawyers have said that the licence was sound. You have to live by what you put in your licence agreements or you pay a penalty,” he says.

“That said, there are absolutely no winners with guardians being deemed as tenants. It will shrink the size of the market and everyone will lose out.”

According to Mr Edwards, VPS maintains a constant right to enter a property at any time. This right, which was in the contract not enforced by Camelot in Bristol, was crucial to Mr Roynon proving his exclusive occupancy claim.

“Anybody in residential occupation has the right to be evicted through court and four weeks’ notice.”

Tessa Shepperson, housing and landlord lawyer

“The guardian company has the right to enter at any time, and the building owner has the right to enter at any time. Camelot didn’t enforce it. By not enforcing it, the guardian had exclusive use,” Mr Edwards adds.

These thoughts are echoed by Peter Brown, chief executive of Dot Dot Dot Property, another guardianship company.

“We have a regular programme of visits of unannounced inspections,” he says. “This is to maintain non-exclusive occupations.”

Dot Dot Dot has worked with a number of housing associations, including Poplar Harca, Origin Housing, Red Kite, Hundred Houses and Croydon Churches Housing Association (CCHA).

Tracy Cullen, chief executive of 1,500-home CCHA, says that the ruling has not affected its relationship with the firm. “Obviously any stories that are in the press are going to make you think about your own circumstances but it did not stop us using Dot Dot Dot,” she says.

Guardian firms certainly seem keen to play down the implications of the case, stating that their own contracts are watertight. However, according to housing and landlord lawyer Tessa Shepperson, it is not protection from eviction that guardian firm’s may be most concerned about.

“Anybody in residential occupation, whether under a tenancy or a licence, has the right to be evicted through court and four weeks’ notice. However if they are proved to be in a tenancy, that will automatically bring in – unless the landlords have a court order otherwise – the Section 11 repairs covenant of the Landlord and Tenant Act.

“Property guardians can be licensees, depending on the facts. It is up to the guardian company not to be so stupid or lazy as to create a tenancy by accident.”

Giles Peaker, partner, Anthony Gold Solicitors

“If the circumstances of the letting brings it into the HMO [house of multiple occupation] category, that could bring issues, too. Any accommodation which falls under the conditions of an HMO brings in licensing provisions, and local authorities are supposed to do inspections under the housing regulations system.”

Giles Peaker, partner at Anthony Gold Solicitors, says Camelot had potentially formed an unlicensed HMO at the Bristol care home, which may need to be regulated by the Housing Act 2004.

“Property guardians can indeed be licensees, depending on the facts,” he says. “It is up to the guardian company not to be so stupid or lazy as to create a tenancy by accident.

“The broader lessons for property guardian firms should be clear: granting occupation of a specific space or room, even de facto, leaves open the risk of finding a tenancy.”

Image problem

The Bristol case comes at a time when the whole guardian industry could be on the verge of a windfall. According to VPS, changes to how business rates are charged on vacant offices has made it financially viable for companies to convert properties into accommodation, even if clients have to invest heavily to make the places habitable. Mr Edwards says that firms can reduce a business rate of around £250,000 to as little as £5,000 in council tax. But a persistent image problem may be a sticking point.

“We see property guardianship as a service and a relationship, and not a commodity.”

Peter Brown, chief executive, Dot Dot Dot Property

Bristol City Council’s Mr Smith says it has not taken on any guardian contracts since the current administration came to power in May 2016. Instead, the council is working with homelessness charity St Mungo’s to help place people in vacant properties.

Ms Shepperson adds: “I think there will be more cases coming along; I suspect that unless parliament passes an act to regulate it, it will develop in a way that guardian firms won’t like very much.”

Whether the Bristol case is the start of a trend remains to be seen, but the property guardian industry seems to be taking stock of itself in light of the judgement.

“We have to shake off the perception that there are some cowboys in it [the industry].” For its part, VPS has proposed setting up a self-regulating property guardian association to ensure quality throughout the industry,” says Mr Edwards.

Mr Brown says what the guardian model needs is a social purpose. “How the service is managed and delivered and to what standard of quality is vitally important. We see property guardianship as a service and a relationship, and not a commodity.”

Upon leaving Ludgate House I meet West End actor Mauricia. Her space on the building’s fourth floor includes a meditation zone, a green screen studio and a fitness area. Asked if she would consider ever looking for tenancy rights, she says: “Why would I make a fuss? Until I’m asked to leave, I have all this.”