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General legal definition

This content applies to England

The general legal definition of a restricted contract.

The Rent Act 1977 defines a restricted contract as 'a contract... whereby one person grants to another person, in consideration of a rent which includes payment for the use of furniture or for services, the right to occupy a dwelling as a residence'.[1]

Furniture

Where a tenancy could qualify as a restricted contract because it is furnished, but also qualifies as a regulated tenancy (ie it does not fall into any of the exceptions to a regulated tenancy), it will be a regulated tenancy.

Services

Services include board, attendances such as cleaning of the occupier's room or supplying clean linen and also the provision of heating or lighting, the supply of hot water and any other privilege or facility connected with the occupancy of a dwelling other than the supply of cold water or sanitary accommodation.

The payment for attendances must form a substantial part of the rent otherwise the tenancy is regulated.[2] The meaning of 'substantial' is not defined in mathematical terms but indications from case law suggest that 20% and over is substantial and that 10% or less is definitely not substantial. An amount between these two figures represents a grey area.[3]

Board

A contract for letting cannot be a regulated tenancy if board (food) is provided (see the section on regulated tenancies). Such a contract will be a restricted contract unless the board constitutes 'a substantial proportion of the rent'[4] (in which case it will only have the basic protection of the Protection from Eviction Act 1977). To prevent abuse by landlords the exception will only apply if the contract obliges the occupier to accept board and the rent includes a charge for it.

Board can mean the provision of one meal, which need not be cooked, although it has been held that a morning cup of tea is insufficient and there must be more than the provision of groceries. The provision of a daily continental breakfast is sufficient to constitute board.[5]

[1] s.19(2) Rent Act 1977.

[2] s.7(2) Rent Act 1977.

[3] Palser v Grinling [1948] AC 291, HL; Woodward v Docherty [1974] 1 WLR 966, CA.

[4] s.19(5)(c) Rent Act 1977.

[5] Otter v Norman (1988) 20 HLR 594, HL.

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