The Court of Appeal has ruled that residential tenants paying rent by way of services which have not been assigned a monetary value are not deemed to be paying a rent and do not have an assured tenancy.
Facts
Mr and Mrs Phillips (the Landlords) and Ms Garraway (the Tenant) entered into a simple tenancy agreement under which the Tenant was to occupy on a six month rolling basis, in return for 2 days of work per week on the estate. The agreement contained a provision allowing either party to terminate the agreement with one months' notice.
The Landlord sought to terminate the agreement but the Tenant did not give up possession, resulting in possession proceedings being issued.
The Tenant's case was that she was occupying under an assured tenancy under the Housing Act 1988 and therefore the Landlord needed to rely on one of the grounds of possession within Schedule 2 of the Act or the requirements of section 21.
The Landlord's position was that the agreement did not constitute an assured tenancy under the Act as no rent was payable under the agreement and therefore it was excluded from being an assured tenancy by virtue of Schedule 1, Paragraph 3 of the Act.
Court of Appeal's Decision
The Court of Appeal dismissed the appeal and upheld the decision of the previous Courts.
This decision turned on the Judge's interpretation of "rent" in the context of the Housing Act 1988.
In common law, the definition of rent is a broad one. Woodfall states:
"Although a rent is usually money there is no need for it to be. Rent may be in delivery of hens, capons, roses, spurs, bows…Rent may also take the form of services. Thus, the rent may consist of cleaning a church or a synagogue, performing teamwork with horse and cart…"
This position is adopted in the Law of Property Act 1925 where rent is defined as:
"a rent service or a rent charge, or other rent, toll, duty, royalty or annual or periodical payment in money or money's worth, reserved or issuing out of or charged upon land."
However, in other statutes, in particular in the Rent Acts, rent had been defined differently. The Judge relied on a series of case law which showed that, for the purposes of the Rent Act, rent can be non-pecuniary, but it must have been given a monetary value in the contract.
It was held that there was no reason to think that the legislature intended rent to have a different definition in the Housing Act 1988 than in the Rent Acts. This was based on a variety of reasons, primarily that the broader definition of rent wouldn't make sense in the context of the Housing Act 1988. In particular, the Judge said:
"numerous provisions of the 1988 Act refer to rent being ‘paid’ or ‘payable’, or to ‘the amount of the rent’, while the provisions which limit the scope of the Act to tenancies where the rent is between £250 and £100,000 strongly suggest that rent must be quantified in monetary terms."
The Court concluded that the tenant therefore did not have an assured tenancy as no rent was payable under her tenancy agreement for the purposes of the Act.
The Court has made clear that the definition of "rent" in the context of the Housing Act 1988 is not to be interpreted in line with the broad, common law definition but rather in line with the narrower definition established by case law in the context of the Rent Acts. This means that any tenants holding under tenancy agreements where rent is paid by way of goods and services that are not given a specific monetary value in the agreement, are not capable of holding an assured tenancy. The landlord does therefore not need to comply with the specific requirements for obtaining possession in the Housing Act 1988, which are of course about to be made significantly more onerous upon landlords when the Renters Rights Act 2025 comes into force on 1 May.
