In response to the war in Ukraine, the government has introduced a new scheme in which individuals, charities and businesses can support Ukrainians by letting them stay at their home or in a separate property. Rent cannot be charged, but the government is offering a ‘thank you’ payment of £350 per month.
The scheme will provide important support in response to the humanitarian crisis caused by the war in Ukraine. We have received several enquiries from clients with empty properties who are keen to assist, but also need to ensure that they do not inadvertently create any unexpected legal rights.
Is a tenancy created?
Where a room in a home is being offered, the individual(s) staying in the room will be considered licensees and have no proprietary rights. Despite this, if the house is being rented the tenant may require permission from the landlord to ensure they are not in breach of their tenancy.
Where an entire property is being offered, the legal situation is more complex, with these arrangements likely to create a tenancy in common law.
When considering the circumstances in which a tenancy arises, the fundamental aspect is whether the tenant has exclusive possession. Exclusive possession is the right to use the premises to the exclusion of others.
If an entire home is being made available, it is probable that the individuals staying at the property will have exclusive possession. This means that even if the agreement is labelled as a license and no rent is payable it is likely that a tenancy will be created.
The type of tenancy the arrangement creates would be a common law tenancy as opposed to an assured shorthold tenancy (AST). This is because a tenancy cannot be an AST if no rent is charged. In the circumstances of the scheme, the ‘thankyou’ payment will not qualify as rent.
Right to rent
In 2014 the government introduced the ‘right to rent’ scheme which requires landlords to check a tenant’s immigration status. There are onerous penalties for landlords who fail to carry out the checks. It is likely that by offering your home to the ‘homes for Ukraine’ scheme, a tenancy will be created meaning there will be a landlord-tenant relationship.
Despite this, homeowners offering their entire home will not be required to complete any right to rent checks. This is because these checks are not required if no rent is being paid, as would be the case under the scheme.
Currently the exact legal arrangements that will be created by the government’s scheme is unclear. However, it would appear that the labelling of payments that has been proposed is to ensure (amongst other things) that ASTs are not being created and that the termination and possession processes that sit within that structure are not enacted.