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Private sector service tenants

This content applies to England

Security of tenure of service tenants in the private sector depends on how much rent is paid and when the agreement began.

Service tenants

The term 'service tenant' describes an employee who is not a service occupier and whose occupation satisfies the normal requirements of a tenancy.

The term does not have a special legal meaning, but is a general one to describe an occupier who also happens to be employed by their landlord. For example, a private employer may rent a flat to one of its employees.

The security of tenure of service tenants in the private sector will depend on:

  • how much rent is paid
  • when the agreement began

Rent

A service tenant may not have statutory protection if they pay a low rent or no rent at all.

Both the Rent Act 1977 and the Housing Act 1988 exclude tenancies where the rent is below a certain amount.[1] Where rent paid is below this amount then the tenant will be an occupier with basic protection. Where no rent is paid, they will usually be an excluded occupier.

Even where no rent is payable, it may be possible to prove there is some consideration in the form of reduced wages. This may mean the tenant has the basic protection of the Protection from Eviction Act.

In order to be protected by the Housing Act 1988 or the Rent Act 1977 a tenant would need to quantify an amount above the low rent limits. This could be done by referring to wage rates for non-tied workers in similar employment.

Agreements on or after 15 January 1989

Service tenancies created on or after 15 January 1989 that satisfy the requirements of an assured tenancy come under the protection of the Housing Act 1988. However, the tenancy is an assured shorthold tenancy if:

  • it started between 15 January 1989 and 27 February 1997 and an assured shorthold tenancy was specifically created, or
  • it started on or after 28 February 1997 and an assured tenancy was not specifically created.

For more information, see the section on Assured tenancies and the section on Assured shorthold tenancies.

The Housing Act 1988 has a special ground for possession – Ground 16 – that applies to service tenants. This ground applies where the premises were let to the tenant in consequence of their employment that has now ceased.[2] This is a discretionary ground, which means that the court must agree that it is reasonable for possession to be granted. However, unlike the ground for Rent Act tenants described in 'agreements before 15 January 1989' below, the employer does not have to prove that they need the premises for another worker.

If the service tenant is an assured shorthold tenant, then it is unlikely that the employer will use this ground. This is because it would be easier for the employer to use the proceedings specifically for the eviction of an assured shorthold tenant - for more information, see the section on Assured shorthold tenancies.

Service tenancies created by a housing association on or after 15 January 1989 will also be assured or assured shorthold tenancies where the conditions are met. 

Agreements before 15 January 1989

If the service tenancy was created before 15 January 1989 and satisfies the requirements of a regulated tenancy (see the section on regulated (protected) tenancies for more information), then the service tenant will have the protection of the Rent Act 1977. The Act contains a ground for possession – Case 8 – that specifically applies to service tenants. It applies where:

  • the premises were let to the tenant by the employer in consequence of their employment; and
  • the employment has now ceased; and
  • the premises are reasonably required for occupation by another worker.[3]

This is a discretionary ground, so the landlord must convince the court that it is reasonable to order possession as well as proving that another worker needs the premises.

If there is a resident landlord or the occupier pays for the use of furniture or services, providing there has been no change in their agreement since this date, then a restricted contract may exist (see the section on restricted contracts for details). Restricted contracts have little security of tenure, and the landlord can regain possession by serving a notice and getting a court order. There is no need for a ground for possession to be made out. Instances of restricted contracts are very rare.

[1] s.5 Rent Act 1977; para 3, Sch.1 Housing Act 1988.

[2] Ground 16, Sch.2, Housing Act 1988.

[3] Case 8, Sch.15, Rent Act 1977.

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