It has long been common practice amongst landlords operating in the shadow private rented sector, to refuse to provide written documentation proving occupation or receipts for rent.
Laziness? No not at all, not even just ignorance. The reasons are a little more perverse.
First of all there is the common urban myth, held by many landlords and tenants, that if you don’t have a written tenancy agreement, you wont be a tenant, followed quickly by a second urban myth, that if you don’t create a tenancy, you don’t need a possession order to evict someone.
All of which is built upon yet another urban myth, that a landlord gets to choose whether to grant a tenancy or a licence.
These daft building blocks of fantasy weave their way into so much mischief and misery further down the line which I shall get to but first lets dispel the myths.
In law you don’t need a written contract to create a tenancy, unless the letting is to be more than 3 years from the outset, in which case it has to be in writing and lodged with Land Registry.
I don’t think I have ever seen a 3 year tenancy in all my years.
Section 54 of the Law of Property Act 1925 deals with this issue and points out that in tenancies of a lesser period and the absence of a written contract, a tenancy will still exist by virtue of the legal doctrine of “Parol”.
This principal was nicely enshrined in 1986 in the case of Street v. Mountford, which helpfully provided everyone with the 3 hallmarks of a tenancy:-
· Rent or service provided.
· For a clear term, ie weekly or monthly.
· Exclusive possession, of at least one room.
So in the absence of a written contract, if the 3 hallmarks of a tenancy are satisfied, then a tenancy is what you have, not a licence and no amount of calling a “Tenancy” a “License” will make it one.
To quote Lord Templeman in Street v. Mountford:-
“The manufacture of a 5 pronged implement for manual digging, results in a fork, even if the manufacturer insists he has made a spade”
Or as I Iike to put it less articulately on training courses, “If it’s a cow it goes Moo, if it’s a pig it goes Oink”.
Whether a tenancy or a license exists is a matter of fact or degree, not the label a landlord decides to give it.
So now, what about the ramifications of all this myth-making? What happens when a landlord refuses to give a person a tenancy agreement or any receipts for rent?
Why would they do this? Well part of the answer lies in the avoidance of any paper trail that might lead officialdom to their door, such as local authority licensing teams, to avoid having to license and EHOs to avoid repairs and management conditions.
Also, the big one for them, being HMRC because if you are a criminal landlord the last thing you want is to be paying tax on the rental income. The business model breaks down if you have to pay out any money, the aim being to bring in as much as possible, whilst spending as little as you can to maintain profit levels.
These types of landlords and agents, Safer Renting’s “Usual suspects”, make sure that they get paid in cash as well, no bank transfers for them, for the same reasons already set out. It is a very common scenario where a tenant is working and paying cash and at some point find themselves jobless and in need of benefits to meet the rent, which in turn requires proof of tenancy and rent level which those same usual suspects will not provide and will work at harassing the tenant out or simply changing the locks, adding homelessness to unemployment.
In addition the absence of documentation provides a handy back-up for the oft heard argument “I’ve never seen these people before. They’re squatters”. Something that is very effective with police officers attending an illegal eviction who will often ask for proof of residence, which the person might not have.
Taking another angle, proof of a tenancy can raise awkward evidential issues when it comes to property licensing enforcement. Are there really 8 people here or just 2? Last year we dealt with a case where there were 7 occupants, making an HMO requiring a mandatory license but only 3 people were named on the tenancy agreement.
The landlord made much of this and accused the tenants of bringing in extra people but what he didnt know, was that we had a copy of an email from the agents to the tenants telling them that they would only put three names on the contract because “It would be quicker and cheaper for them”.
The landlord was also MD of the agency.
When these subjects come up in conversation outside of housing colleagues people look mystified, wondering why anyone would put up with this. You get a receipt when you buy a bag of sweets, why would you not expect one when handing over £1.000?
The people unfortunate enough to have to rent off these crooks aren’t stupid. They know what is going on, same as they know that if they insist on a contract or rent receipts they will be thrown out. These practices are common at the bottom end of renting, which is occupied by people on very low incomes, people who have little choice in where they live or how many people they have to share with.
They also themselves often believe that no documentation means no legal case but does it?
There are other proofs that can evidence occupancy and even a tenancy. We know that contracts and receipts for rent aren’t conclusive and will often build our case through other records. Bank statements, council tax records, medical correspondence, anything that shows actual occupation, which then begs the question, ‘if the person has proof of occupation for the past year, why would the landlord for the property allow this to go on if he wasnt receiving rent?’ If he replies that they are squatters, it then begs another question ‘Why have you let this trespassing go on for so long without doing anything about it?’.
Landlords also need to be aware of some other flaws in their approach.
If they do want to claw money back from people, either through possession proceedings or a money claim then they have to provide evidence that the money was owed. Difficult thing without a contract. The burden of proof in such actions is on the claimant and absence of rent receipts is not evidence of non-payment. The sword cuts both ways.
Also, an assured shorthold tenancy, which as we’ve already seen will exist even without a written contract, obliges the landlord to protect the deposit upon pain of a penalty of up to three times the amount of the deposit but the landlord cant demand any deductions on that deposit because that is a contractual matter. If you don’t have a contract explaining what the deposit will be used for you haven’t got a case.
Absence of a written tenancy agreement also takes away the landlord’s ability to obtain possession through the accelerated process without a court hearing, although having said that, such cases form only a small part of our caseload, illegal eviction eviction being the preferred method.
So those are the myths and pitfalls of landlords refusing to provide contracts or rent receipts. It does create problems but it isn’t a one-way street either.
The most depressing part of this is not just the renters have no choice but that they “Know” they have no choice. They know they are being ripped off and set up for future problems but they are powerless to do anything about it. The response being “If you don’t like it find somewhere else” except they know they cant because their low income and sometimes disenfranchisement from mainstream life, isolated perhaps by English as a second language or health problems means they are stuck in this rental gutter where the parasites rule like Kings.
I remember chatting to a guy paying £1,500 a month to house his family who told me that each month someone different would come from the letting agents and he would pay them. No receipt given of course and he didn’t even know who these visitors were but he knew if he didn’t pay, things would get nasty.
I asked him why he handed over such large sums of cash to people he didn’t even know. He just shrugged, smiled resignedly and said “What can you do?”
by Ben Reeve Lewis
