Property Guardians – Just Another Tenant?

April 20, 2017

There has been a great deal of interest since the recession among commercial property owners in placing ‘Guardians’ in empty premises. Guardians are usually solvent individuals seeking somewhere a little unusual to rent, possibly in an area than may not otherwise be able to afford. There are even companies which will source willing people.

The Guardians ordinarily take a small part of the building and, in theory, act as a deterrent to thieves, vandals and squatters by being in occupation. They frequently have responsibilities to perform regular checks as part of the agreement.

Obviously they also provide an income stream for the landlord, but this is small fry compared to the amount a commercial tenant would pay; the main pay back being in terms of the landlord not having an extensive and expensive dilapidations list to attend to before a new lease is agreed.

Win Win?

It appears there are no downsides but, as ever, there are unpleasant surprises for the unwary landlord willing to enter into such an agreement.

For example, it there may be planning or fire safety requirements for residential use, licences may be required if the property falls under the HMO category, and there may be breaches of lending or lease terms. All of these could have serious consequences for a landlord in breach.

The arrangements also came in for judicial scrutiny in Camelot Property Management Ltd and another v Roynon. Guardians only occupy the property under licences meaning, among other things, they can be removed at very short notice. However, in Camelot Property, the court held the licence was in fact a full Assured Shorthold Tenancy (AST).

This meant that in addition to further legal obligations placed on the landlord, the agreement could not be terminated at short notice. The landlord could potentially lose out on a new long term commercial tenant, as well as being stuck with the cost of bringing eviction proceedings.

Worth the Risk?

It is far from clear whether this judgement affects all agreements with Guardians, but the water is further muddied where a company has provided the tenants and the licence. Who does the landlord have recourse against?
Property Guardians can still be an attractive proposition, but landlords will need to ensure they are adequately protected by taking professional legal advice.

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