Industry Info: Protected Tenancies

The Northern Ireland rental market is dominated by furnished lettings, while the opposite is true in the mainland UK.

A quick look at online property portals for Liverpool* found (at time of writing on 19.12.16) that on average, the split between furnished and unfurnished rental properties was fairly even:

57.5% furnished/part-furnished vs 42.5% unfurnished

A search shortly after on Belfast property search sites** told a profoundly different story:

79.5% furnished/part-furnished vs 20.5% unfurnished

Why is this?

Simple answer – poor understanding and/or fear of rent legislation. In Northern Ireland, there was such a thing as a ‘protected’ or ‘restricted’ tenancy. These were usually properties:

- In a poor state of repair

- With a low NAV (net annual value) Rent frozen at 1978 level (usually <£1.00 a week!)Let unfurnished

- Rent frozen at 1978 level (usually <£1.00 a week!)Let unfurnished

- Let unfurnished

Under the Rent (NI) Order 1978, a tenant with a protected tenancy could be granted lifetime tenancy and even transfer the tenancy on to their family when they died. This caused widespread fear among landlords determined not to ‘lose’ their property.

The legislation specified in article 5 that:

“A tenancy is not a protected tenancy…if, under the tenancy, the dwelling-house is bonafide let at a rent which includes payments in respect of board, attendance or the use of furniture.”

So, furnished letting became the norm for landlords to avoid this potential minefield.

The reality is that it only applied to a few properties - the rent officer for Northern Ireland confirmed that as of 19.12.16, there are 971 protected tenancies in Northern Ireland, with 469 of those in Belfast.

New legislation – the Private Tenancies (NI) Order 2006 – came into effect on 1 April 2007, providing new structure for the rental sector in Northern Ireland. Critically, it said there would be no more protected tenancies.

It stated that “Article 5 of the Rent Order shall cease to have effect.”

The new law goes on to say:

“Any tenancy which immediately before the commencement of this Order was a protected tenancy by virtue of Article 5 of the Order of 1978, shall continue to be a protected tenancy notwithstanding the repeal of that Article.”

This means that although no new Protected Tenancies can be created from 1 April 2007, any tenancy of that type already in existence as at 1 April 2007 will retain their rights (including a right of succession for civil partners or spouses or relatives of the protected tenant who have been living with the Tenant for 6 months prior to their death.)

In a nutshell – unless your property is currently occupied by a protected tenant, deciding whether to offer your property furnished or unfurnished is a decision that is wholly down to you.

We’ll have a blog post in the new year looking at the pros and cons of both options, and what properties, markets and tenants furnished, part-furnished and unfurnished rentals are best suited to.

If you have a question about the buy-to-let or property investment industry, drop us a line to info@thebelfastpropertyblog.com

*Rightmove.co.uk and Zoopla.co.uk

** Propertypal.com and propertynews.com