Long term guest, lodger or more?
Over the past few years, a rise in the number of adult children living with their parents has been fuelled by an increasingly expensive housing market. With an economic downturn likely, and a potential growth in unemployment, this trend is set to continue.
Often the children in question are adults who have already left family homes, but returned due to changes in their circumstances.
Parents and carers in these situations often offer a rent-free arrangement or ask for some form of contribution towards living expenses. The word “rent” may or may not be mentioned.
In those circumstances, what is the status of the son, daughter or guest?
In the absence of a formal arrangement, where rent is not paid, or payments are not defined as rent, the chances of a tenancy being created are relatively remote. However, if the accommodation and other circumstances fall within the relevant provisions of the Housing Act 1988, a tenancy may well come into existence. This can happen without the parties either intending to create a tenancy or even realising that this has occurred.
In other circumstances, where there are no formal arrangements in place, a long-term occupant of a property may become entitled to a “proprietary” interest in that property. Take the example of an occupant who has paid for work on a property, perhaps a new kitchen or bathroom. In that situation a valuable interest in the property may be created that could make the owner liable to compensate the occupant, or even allow that person to remain in occupation of the property without the consent of the owner. It may be that one or other of the parties find they have to make an application under the Trusts of Land & Appointment of Trustees Act 1996 to determine the value of their respective interests. This can occur without the owner even realising that they were creating a situation that they were no longer fully in control of. Indeed, it often occurs in circumstances where the owner has decided to be generous to the occupant.
These may seem like fairly extreme occurrences, and indeed they are relatively rare – parties in disputes such as these can usually negotiate a satisfactory compromise. However, when negotiations fail, the letter of the law may need to be relied upon.
Of course, the best thing would be to take a few relatively straightforward measures at the outset to record what the parties agreed. That may seem awkward as between parents and children or siblings, but with an increasing number of children forced to return home because of their economic circumstances, having that discussion at the outset may save a good deal of strain further down the line.
Author: Paul Harrington, Property/Commercial Litigator