They can be called a variety of things; guardianship or empty-property schemes; live-in accommodation; even house-sitting services. The essence of each is the same however; a unique way for individuals to ‘live’ and ‘reside’ on a short-term basis at a property that is not officially available for long-term residential use.
Typically, the type of property involved is an old, perhaps derelict, and possibly unusual commercial building, that may be ear-marked for future re-development, for example a nursing home. The owner will agree to allow ‘occupiers’ to live in the property for a period of time; the occupier will have their own living space, and in return, they help to look after and guard the property.
The principle originated in Europe many years ago and has become increasingly popular here in the UK over the last number of years, as the recession and difficult economic and property circumstances make transferring property to new uses both time-consuming and expensive (see Guardian article here on growing popularity).
This solution can provide a mutually-beneficial quick-fix for everyone involved, hence the emergence, particularly around London, of specialist companies who often both assist the process and offer vacant property services.
An Example of How It Works
Suppose you own a small office block in London, it has become empty, and it needs to have a major facelift or re-development before you can let it again. It’s a target for vandalism and even squatters, and left alone, may actually cost you money. So for the next 24 months or so, while you plan the re-development, you look at having people on-site - carrying out ‘security services’ 24/7 and generally looking after the place.
You will save money by not having to pay for a security company, and in fact, you will receive an income for a property that you couldn’t otherwise do, from the very people performing these security services for you.
At the same time, imagine you are a young, single person working in London, wanting to save on accommodation costs for a period to wait and see how a relationship or a job goes, or to save for a deposit. You don’t mind living a little rough and ready for a while, and maybe in a quirky unusual building, and you don’t mind helping out with a few chores around the place.
The guardian scheme brings these two worlds together. For cheaper-than-normal living accommodation, a person agrees to carry out ‘security services’ at a property to assist the owner in looking after the building, as well as providing an income for them.
You have a licence agreement that allows the individual to carry out security services at the property, with the additional benefit of being able to sleep over. In doing so, the arrangement does not come under the Residential Tenancy, Planning, Building Control or Taxation legislation. There is no employment contract, so you have no Employment legislation to worry about, and you have no long-term formal security services contract and compliance issues.
How to Become a Guardian in 4 Stages
So that’s the theory, now more the practice. Although at first glance, these schemes appear an ideal mutually-beneficial arrangement for both parties, it can be difficult to arrange; firstly, people might find it hard to understand and accept the arrangement, and secondly, a lot of practical necessities for the two parties must align in order for an agreement to be reached.
It is an unusual form of occupation, which large swathes of the general population are, with some cause, sceptical of. Whether you are a potential ‘licensee’, or a potential ‘licensor’, there are practical issues that you need to consider before you enter into such an arrangement (we have grouped these into the 4 ‘P’ Perspective used in the Property Management Guide book – it’s a good way to look at different angles of any property issues you have).
1. The Property Perspective
As a potential ‘tenant’ or rather licensee, finding the right property and having it habitable will be tricky, typically they tend to be old buildings, in relatively poor condition, that are probably ear-marked for future changes. Although you won’t need things the way you might in a permanent residential situation, you will need certain things, including a minimum level of building safety. Property owners do have an obligation to make their property safe, including to strangers and trespassers, so most definitely have a duty of care to invited guardians of the property.
There are issues such as fire-compliance, potential asbestos exposure and water-systems to consider. You will obviously require a basic water supply and at least rudimentary washing facilities, even if it’s just a pop-up shower cubicle. Services will need to be up and running, as well as safe, with appropriate certification as is necessary for the building, in particular for electricity, which can obviously be hazardous in an unsafe environment, and certification of which can be a requirement for insurers. Your own personal safety and security are important factors to consider, even more so than that of the property’s.
2. The People Perspective
Obviously, there are two primary ‘people’ in the scenario; firstly, the actual guardian, who is typically single, with no family (or pets), who is in an established job with water-tight references. The second is the property owner, who may be a corporate entity rather than an individual, with various parties making decisions, including external advisors such as managing and letting agents.
There are potentially third-parties with interests in the arrangement also, for example, the local authority, who may be involved in clarifying details in any potential planning applications, such as the intention to change the use of the building. In addition, they, potentially along with the Valuation Office, will be involved in setting any business rates and council tax charges, and may need to approve changes between these different regimes.
The building’s insurers will be interested in the arrangement, and is often one of the biggest hurdles to overcome in establishing an arrangement, as it is they who will ultimately pay if things go wrong in this unconventional occupation scenario.
3. The Paperwork Perspective
Coming to an agreement will generally boil down to the formation of a licence between the property owner and the guardian, often with a month’s notice required by either party to terminate. If you have middle-men providers then they will be involved as well, maybe with wider lease interests in a property that allows them to act as the immediate licensor.
There’s also the initial reference checks, which are similar to those required for letting a residential property, and all the health and safety paperwork requirements, which in some ways, are more important in this instance than in the situation of a conventional rental agreement. The health and safety requirement will often be dictated by the building’s insurers, as well as general legislation, the council, and potentially even the funders of the property.
4. The Payments Perspective
The monthly licence fee should be lower than regular residential properties in the area, but high enough for the guardians to take seriously, and to reward the property owner and cover their costs. Technically, there will be a licence fee paid, rather than formal rent, and it will typically be paid a month in advance, with a month’s deposit also paid up front.
As a potential guardian, watch out for application costs, as well as packs of items that you ‘need’ to purchase, with goodies such as smoke detectors, fire blankets, and attach alarms.
From the property owner’s perspective, look out for your costs increasing, particularly your insurance premium which could go either way depending upon how open your building insurers are to the guardian idea.
Utilities such as electricity, water and gas will need to be covered, potentially along with some extras such as a TV licence, and a phone and internet line.
You also need to watch out for business rates or council tax charges which again, could go up or down, depending on whether or not the use of the building is deemed to have changed.
How to Make It Happen
If this arrangement is something you’re interested in, then the good news is that it’s a great and fresh out-the-box way of thinking for people to occupy properties for the short term, that benefits both individuals and property owners, and is a practical way to help provide affordable accommodation.
The bad news is that it does take effort and lots of needs converging for it to work. If the focus was on ensuring that it is planned safely and correctly, then more people who could benefit from it might see it as a viable short-term housing option – temporary, cheap, with no frills or housing-tenancy rights.
If you do want to progress further, then think through the 4 perspectives, and before you make a decision, make sure you speak with someone who knows the reality of arranging successful property guardian schemes.
Need More Help?
Claim your FREE Property Management Pack here – including a 15-point Property Deal Cheat Sheet, and Introduction & Chapter from our amazon-best-seller book, the Property Management Guide.
Please leave comments below with any thoughts and queries.