Under land law, a minor (someone under the age of 18) cannot hold a ‘legal’ interest in land and can only hold an ‘equitable’ interest.
This creates difficulties for landlords when granting and ending occupation rights to under 18’s as, depending on the type of letting, there might not be a direct contractual relationship between the landlord and the minor.
Therefore How do you Rent to Minors?
A landlord can grant occupation rights to minors in one of the following 3 ways:
- The Landlord is the Trustee
If the minor signs the tenancy agreement as sole tenant, this will take effect as a contract by the landlord/grantor of the tenancy to hold this in trust for the minor until they reach 18.
This usually happens when the landlord enters into a tenancy agreement with the minor, without realising that the minor cannot hold a legal interest in property.
This is not a good idea and can cause problems in the event of the landlord wishing to seek possession, because the landlord cannot serve notice on themselves.
- A Third Party is the Trustee
Although a minor cannot hold a tenancy they can ‘benefit’ from a tenancy. The tenancy can be granted to a third party, a ‘trustee’, and held on trust for the minor until they reach the age of 18.
The minor has a beneficial interest, which means they have the right to live in the property, whilst the trustee holds the legal title to the tenancy.
The trustee could be an adult relative or friend or a social worker and is in effect a caretaker of the tenancy. The trustee is responsible for ensuring the rent is paid but is not liable to pay the rent out of their own resources unless they give a personal guarantee to do so.
- Grant of a Joint Tenancy
If there is a person aged 18 or over who is willing to enter into a tenancy agreement with the minor, a joint tenancy can be created.
From a landlord’s point of view this is the best thing to do. The adult tenant can hold the tenancy on the minor’s behalf, and also act as guarantor. It is important though that the minor signs too, as minors can be held liable under contracts for ‘necessaries’. This will include the rent.
An agreement between all parties (including the landlord) could be drawn up to say that a sole tenancy will be granted to the minor when they reach 18 years old, at which time the joint tenancy will be surrendered.
For advice on tenancies and managing property contact Horizon Lets today
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