Legal questions: squatters and empty offices

Property guardians

6 November 2014

Elizabeth Greaves and Shanna Davison advise on the use of property guardians to prevent squatters moving into empty offices

I have an office building that is empty and earmarked for development but I am worried about squatters moving in. Should I use a property guardian?

Since squatting in residential property was criminalised in 2012, an empty commercial building is particularly attractive to squatters. As a result, a growing number of owners are paying agencies to install 'guardians' into their empty buildings to deter squatters.

It works like this: the owner engages a guardian agency, which is cheaper than paying for 24-hour security guards. The agency grants licences to pre-vetted guardians, who stay in the property until the development is ready to proceed. The guardians pay the agency to live in the property, typically at a reduced rent, as well as covering utility bills and council tax. Sounds good, right?

However, these schemes are not without controversy. What is the legal status of guardians and what rights could they acquire over your property?

Licence terms

The agencies promote flexibility for the owner to have the property back when required. To achieve this, they need to make sure that the guardians do not have a lease.

A lease grants a right of exclusive possession for a defined period of time, in exchange for payment of rent. Tenants under a lease enjoy certain statutory rights, for example, the landlord must maintain the property in a state fit for habitation and the tenant cannot be evicted during the term except in certain circumstances.

By way of contrast, a licence is no more than permission for that person to occupy the property for the time being. The statutory protections do not apply. However, simply calling the agreement a licence does not make it so.

To be fair, most agencies appear to have taken advice on this issue and their licences include the right to make regular inspections and to change the allocation of rooms in the building. If this is done in practice, the agreement is likely to be a licence.

Potential pitfalls

Even if the guardians are granted licences, two substantial problems arise. Many agencies pledge to have the property empty within 2 weeks’ notice. Most licences fall within the Protection from Eviction Act 1977 which requires at least 4 weeks’ notice in a prescribed form to terminate. If not done, the agency and the owner commit a criminal offence and could face up to 2 years’ imprisonment. If the owner is a company, the directors and managers could be liable.

If the guardians do not leave once notice has been given, a court order will be required to evict them, adding further delay and costs. Less reputable agencies may turn their backs at this point and leave the owner to apply to court.

The second problem is that if at least 3 guardians live in the property, who are not members of the same family, it will usually be a house in multiple occupation, which may need to be licensed. Failure to apply for a licence could lead to a fine of up to £20,000. In addition, certain criteria must be met, such as installation of smoke alarms, producing a gas safety certificate and ensuring that the furniture and appliances are in a safe condition. For properties that are not designed for use as a residence, the costs of complying with these requirements may be higher than employing security guards.

Going ahead?

Despite these risks, in practice it seems that guardians are happy to leave when asked.

However, the guardians will leave the property unattended at various times, for example, to go to work. If squatters do attempt to enter the property, the guardians are not under any obligation to try to stop them. If you have a building where it is crucial that squatters are kept at bay, a guardian may not offer enough security. If you do decide to go ahead, you should consider the following:

  • find a reputable agency that
    • regularly enters the property and moves the guardians around to stop them obtaining a lease
    • restricts the guardian's use of the property to a residence to avoid a business renewal under the Landlord and Tenant Act 1954
    • agrees to pay the costs of evicting guardians through the courts, if necessary
    • provides 4 weeks’ notice to the guardians to leave the property. It is a bonus if they agree to leave before then, but you should prepare for the worst case scenario where you will have to get a court order to get your building back
  • ensure that no more than 2 people are assigned to the property at any time.

Elizabeth Greaves is Trainee Solicitor at Hogan Lovells. Shanna Davison is Associate at Hogan Lovells