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Cash settlement of £1.8 million enables rent act tenant to secure dream home for future generations

12th November 2020 By Arman Khosravi

Senior partner and statutory tenancies expert Russell Conway rescues rent act tenant from a deal with hidden costs, to secure a £1.8 million cash settlement for her small one-bedroom flat.

Regulated tenancies

The client in question had a regulated tenancy under the Rent Act 1977, which entitled her to the following protections:

  • Regulated tenants pay a ‘fair rent’ which is often substantially lower than market value;
  • Regulated tenants can only be evicted by court order, and a legal reason for eviction must be proved (such as rent arrears).

Due to the one succession rule, the number of regulated tenancies in the UK is dwindling; there are less than 75,000 remaining. Rent act tenants often live in areas with high property values, paying rents that are substantially below the market value. This can make them targets for landlords and developers who may wish to evict rent act tenants to maximise profit on a property, or to vacate a building in order to develop it.

Background to the case

Such was the case in this situation. The client had resided in her small one-bedroom flat in central London for 44 years, and despite being an exemplary tenant, the landlord had been seeking her eviction for almost a decade.

The landlord was a developer with approved plans for a multi-million-pound development of the block in which the client lived, with construction due to start in a matter of months. As such, the landlord was under pressure to vacate the building as quickly as possible. They offered to find and purchase a suitable alternative flat, and either put the flat in the client’s name or transfer the client’s existing rent act tenancy onto the new property.

The client had no desire to move. The small flat had been her home for over forty years; it was the backdrop to many cherished family memories. If she was going to move, she wanted to have a property in her own name which would be an appreciating asset she could pass on to her children.

Negotiating a settlement

It was at this stage that the client sought legal advice from Oliver Fisher’s senior partner and statutory tenancies expert, Russell Conway. Mr Conway has practised in the field of landlord tenant disputes since 1976. He has been involved in numerous high-profile cases, including Ghaidan-v- Godin-Mendoza, decided by the House of Lords in 2004, which gave same-sex partners the same rights of succession as heterosexual partners.

In this case, Mr Conway was able to alert the client as to the poisoned chalice she was poised to accept. Should she have accepted the landlord’s offer of buying a property in her name, she would have become responsible for a high service charge and spiralling ground rent, which could over time total more than £20,000 per year, which the client would have been unable to afford.

As a life-long renter, the client had not been aware of the extent of these costs, and the landlord’s representatives had made no effort to explain them to her.

Successful outcome

In place of this offer, Mr Conway was able to negotiate a cash settlement totalling £1.8 million. This settlement enabled the client to buy a property they really liked, free of service charges. It also covered the costs of staying in a hotel while a property was found, and all the costs to move. Oliver Fisher’s conveyancing team were able to assist the client with every step of the purchasing process.

With this outcome, the client avoided costly court proceedings which could have resulted in her being placed in a flat she did not like. Instead, she has transitioned from a rent act tenancy which she could not pass on to her children, to owning outright prime real estate in central London which will appreciate in value and prove an invaluable asset she can pass on to future generations.

“I have worked for rent act tenants for over forty years” says Russell Conway. “I have been lucky in that Kensington has a great many rent act tenants. The work is challenging but ultimately, as in this case, very rewarding.”

If you would like to find out more about how Oliver Fisher could help you with a landlord and tenant dispute, click here.

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