POSTED 28 September 2018 Lettings

What is a Regulated Tenancy?

What is regulated tenancy?

A regulated tenancy is a form of long-term agreement between a tenant and a private landlord that offers the tenant the right to remain in a property for life. 

The agreements date back to before the 15th January 1989, the date when Part 1 of the Housing Act 1988 came into force, which made important changes to the private renting system. Tenancies made after this time are likely to be either assured or assured shorthold agreements.

Rent, eviction and succession

In addition to the right to remain in the property for life, a regulated tenant often pays rent that is far below the market average for assured shorthold tenancy. It is known as fair rent and is set by a rent officer at the Valuation Office Agency. Fair rent is the maximum that a landlord can charge a tenant.

A landlord can only raise the rent once every two years. To do so, they must apply to the Valuation Office Agency. In the event that the application is approved, the landlord must provide their tenant with official notice before introducing the new tariff. The tenant may appeal to the rent officer within 28 days if they feel the rent is too high.

A regulated tenant has a lot of legal security and can only be evicted from a property with a court order. To obtain this, a landlord must prove that there is a legal reason to remove a tenant, such as non-payment of rent.

Of course, the tenant may choose to leave the property of their own free will. They may also pass away. In the event of the latter occurring, a regulated tenancy can be inherited by the spouse, or someone living with the tenant as husband or wife at the time of their death.

In the first instance of inheritance, the tenancy remains regulated; however, if the tenancy is inherited a second time (which can sometimes happen) the tenancy then becomes assured.

The Landlord’s Responsibilities

As with a regular landlord, the landlord of a regulated tenant must:

  • Keep the structure and exterior of the property in good repair, this includes guttering, walls, windows and doors.
  • Keep any gas, electricity, heating, water and sanitation equipment in good repair.
  • Have a current gas safety certificate for any gas appliances they provide. While any furniture provided should be fire resistant.

Buying and selling a regulated tenancy property

As you have probably gathered, a regulated tenancy does not exactly equate to an immediate money spinner for a landlord. Not only is the rent you charge capped, but your tenant also has the right to remain in the property for life.

However, it’s not all gloom and doom. A regulated tenancy property is often available far below the market value. Therefore, you could end up getting a very reasonable deal on a property in a traditionally pricey area.

If you already have a regulated tenancy property on your hands and you wish to sell it, you must offer first refusal to the occupant. Failure to do so is a criminal offence punishable by a fine of up to £5,000.

Bottom line

If you’re looking for a long-term investment, and are prepared to wait (potentially a very long time) for the venture to come to fruition, a regulated tenancy can present you with a very good option.

Assured and assured shorthold tenancies

  • Assured tenants have the right to security of tenure for life. However, they are not able to apply to the Valuation Office Agency for a fair rent. Rent is instead determined by the landlord.
  • Assured shorthold tenancies are the most common type of tenancy today. It’s usually a fixed term of between 6 and 12 months and rent is determined by the landlord. Once the term is up, the landlord is entitled to possession of the property without legal reason.