Residential property – the complications of renting to a healthcare company to enable care of an individual

A healthcare company intends to rent a residential property for permitted officers or employees to occupy, on a weekly rota basis. However, an individual who is neither an officer nor an employee of the company (but is a person who will be cared for by the officers or employees) will live at the property, together with the officers or employees who are ‘on duty’. What will be the status of the individual occupier and the employees or officers if the (non-AST) tenancy agreement is terminated?

We assume that the healthcare company (the Company) will rent residential property from a landlord (the Landlord) and will then allow the person cared for (the Service User) into occupation. During that time, officers and employees (Staff) of the Company will care for the Service User. We assume that Staff will only stay in the property when they are working, and although they may sleep or be on-call at the property, none of the time that Staff are at the property will be a ‘day off’ or ‘recreational time’ (except perhaps work breaks).

With respect to the Staff, this would not appear to be accommodation for the purposes of employment. They have their own homes, and when they attend the property, they would probably consider themselves to be ‘working’. The property is not ‘let’ to the Staff, so they do not have an assured shorthold tenancy (AST), and section 1 of the Protection from Eviction Act 1977 only applies where a person occupies the premises ‘as a residence’. It does not appear that the Staff have any right to stay at the property outside their scheduled working hours and they do not, therefore, occupy the property ‘as a residence’. They are therefore mere licensees during working hours, just like any employee visiting an employer’s premises for work. Clearly, such a licence cannot survive after the termination of the Company’s tenancy.

The position of the Service User is less straightforward. It may be that, on a proper interpretation, the property is let to the Service User, who then permits Staff to stay in the property in order to care for them. On this interpretation, the Service User has exclusive  possession, and as such may well have an AST. The fact that the person providing the property and the person supplying care are both the same—the Company—is irrelevant.
On the other hand, it may be that the property is, on a proper analysis, a care facility which is run (and therefore occupied) by the Company through its Staff. In those circumstances, the Service User would not have an AST (or a tenancy at all), because they are sharing the property with the Company and therefore do not have exclusive possession. If this is the case, the Service User is merely a licensee of the Company.

The distinction is important with respect to the Service User’s rights as against Company’s landlord. This is because, by virtue of section 18 of the Housing Act 1988 (HA 1998), any AST will continue in existence, notwithstanding the termination of the Company’s tenancy. This means that if the Service User has an AST, the landlord would have to follow the procedures under HA 1988, s 8 or HA 1988, s 21 in order to evict the Service User. On the other hand, if the Service User is a licensee of the Company, the Service User’s rights will determine upon termination of the Company’s tenancy.

As such, in order to establish whether the Service User has any rights against the Landlord, the nature of the Service User’s rights against the Company must be examined. It seems likely that the Service User is the Company’s licensee—that the property is effectively a one-client care home—but the facts need to be scrutinised. That means considering the lease/licence distinction in Street v Mountford, and the wealth of authority that followed that case.

References:
Street v Mountford [1985] 2 All ER 289

This article first appeared in LexisNexis PSL.