Tenancies "at will": what are they and how can they protect landlords

Why are they useful?

Tenancies at will are not capable of enjoying the protection of the Landlord and Tenant Act 1954 (‘LTA 1954’).

Because they fall outside the protection of the LTA 1954, tenancies at will offer tenants no statutory right to remain in the property once the tenancy has been terminated.

The fact that tenancies at will fall outside of the LTA 1954 is beneficial for landlords, since if tenants were to have “security of tenure”, they would be entitled to the right to renew or extend an existing tenancy or an automatic right to stay in the premises after the expiry of a contractual term.

When are they used?

Commonly, tenancies at will are used as an interim arrangement, where parties are in negotiations for a lease and want to document a short term, interim arrangement pending completion of a lease. A tenancy is, in a sense, a ‘holding arrangement’.

A tenancy at will can be granted expressly in a written form, or it can arise impliedly where an individual is let into occupation of a premises before a formal tenancy is granted and the parties are negotiating terms for a new lease. An implied tenancy at will that is not recorded in writing can present potential risks.

What are the risks?

The risk, in simple terms, is that an implied tenancy at will can, in certain circumstances, cease to be a tenancy at will and become a more lasting, long term arrangement that allows the tenant to claim statutory protection under the LTA 1954. Those circumstances could arise, for example, where the parties are in negotiations for a new lease and those negotiations stall and communications between the parties break down. If the landlord in that situation does nothing to protect its position, the tenant can in due course acquire statutory protection under the LTA 1954.

A protected tenancy cannot be terminated other than by one of the ways laid down by the LTA 1954 and it will be more difficult for landlords to regain possession of their property.

It is therefore imperative that both landlords and tenants exercise caution and ensure that the intentions of parties during any period of negotiations are documented. Landlords should be wary of allowing non-protected tenants to hold over at the expiry of their lease without arranging a tenancy at will to be put in place, as there is a risk of them becoming protected tenants under the LTA 1954, benefiting from security of tenure.

Landlords and tenants considering a tenancy at will should seek legal advice to ensure the document they enter into is as they intend.

If you have any questions in relation to issues raised in this article, please contact Andrew Turner in the Property Litigation Team, at AET@hughes-paddison.co.uk or on 01242 574 244.