Whilst Assured Shorthold Tenancies (AST) are the most common type of tenancy, regulated tenancies were commonplace before 1989. Although there are few regulated tenancies left, they can pose issues for sellers if you do not know the implications. In this blog, LandlordBuyer answers the most frequently asked questions regarding regulated tenancies.

Q. What is a regulated tenancy under the Rent Act 1977?

A. With the introduction of the Rent Act 1977 came regulated tenancies. These gave tenants the right and security to remain in their home for life and to a ‘fair rent’. They were the only type of tenancy until 1989, when new tenants were given Assured or Assured Shorthold Tenancies.

Q. How long does a regulated tenancy last?

A. Regulated tenancies are for life, therefore LandlordBuyer is often asked what happens when a regulated tenant dies. Under the rules, the tenancy passes to the tenant’s spouse or partner as a statutory tenancy. If there is no spouse or partner, it would pass to a family member as an assured tenancy, providing they had lived with the tenant for at least two years before they died.

Q. Can you increase the rent on a regulated tenancy?

A. Regulated tenancies are subject to a ‘fair rent’, which is set by a Rent Officer at the Valuation Office Agency (VOA). Regulated tenancy rents can only be increased every two years, unless there are exceptional circumstances, and any rise will only be up to a maximum level set by the VOA. Rent values set by the VOA tend to be much lower than open market rental values.

Q. What makes regulated tenancies a different type of investment?

A. Owning a property with a regulated tenancy is not about making an income from rent; it is about choosing a property that might appreciate in value over time. The negative flipside is a regulated tenancy in a falling market. This can leave investors in a ‘lose-lose’ situation, where there is no profit from the rent and a property losing capital appreciation. In these situations, a landlord may consider selling the property – especially if they sail close to negative equity territory or may find it hard to meet new buy-to-let remortgaging criteria due to a poor yield.

Q. How hard is it to sell a home with a regulated tenancy?

A. Selling a property with a regulated tenancy can be very tricky. As the tenancy is protected for life. it can be almost impossible to evict a regulated tenant. Commonly, many landlords find they are stuck with a lovely tenant but one who pays a very low rent. For this reason, there is an ultra-limited pool of buyers for regulated tenancy properties. It’s almost a foregone conclusion that such homes will attract little or no attention if placed for sale on the open market with a High Street estate agent. For landlords who want to sell with a regulated tenancy, they will need a specialist buyer.

Let us help

LandlordBuyer is a specialist in buying properties from landlords where a regulated tenancy exists. There is no need for the tenant to be evicted when the sale goes through as we’ll execute a seamless takeover. A cash sale to a professional property buyer is the quickest way to dispose of your asset, so contact us today for your free cash offer. You can get a quick idea of how much a property you own is worth by requesting a free valuation but if you have a regulated tenancy, contact LandlordBuyer for more personalised advice.

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