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Granting tenancies to minors is no minor matter

08 March 2010

Despite the Law of Property Act 1925 prohibiting anyone under the age of 18 – a minor – from holding a legal estate, registered providers (RPs) continue to grant tenancies to people under 18.

The effect of this is that where a minor has signed tenancy agreement, the landlord is effectively the ‘trustee’ of the minor, and holds the tenancy in trust for them. 

The Trusts of Land and Appointments of Trustees Act 1996 provides that any attempt to grant a legal estate to a minor will result in ‘the person, or organisation which has granted the legal estate, holding the land on trust for the minor’.

The minor will hold an ‘equitable tenancy’ as minors have the capacity to contract for ‘necessaries’. Items as accommodation, food and clothing are classed as necessaries.

In the 2009 in case of Alexander-David v London Borough of Hammersmith and Fulham, the local authority granted Ms Alexander-David a non-secure tenancy in order to discharge its homelessness duty.

The council subsequently received complaints of nuisance and rent arrears accrued, and sought to bring the tenancy to an end by serving a Notice to Quit. However, the court held this was not possible. 

It was decided the local authority held the tenancy ‘on trust’ for Ms Alexander-David under the Law of Property Act 1925.

When the local authority decided to serve a Notice to Quit, it did so on itself as her trustee. However, the service of such a Notice put them in breach of trust, as the local authority could not destroy the subject matter of the trust (i.e. the tenancy), which the service of a Notice to Quit would do.

The most appropriate way of dealing with the matter is for the minor to be required to produce a suitable adult, such as the young person’s parent, relative or friend, to hold the tenancy on trust for the young person until they reach the age of 18.

In the absence of such a person, the association should work with the minor and other agencies to see if their social worker, teacher, lecturer or someone similar would be prepared to act in such capacity. If all else fails an application can be made for the appointment of a Trustee under the Trusts of Land and Appointments of Trustees Act 1996.

There is no financial risk to the person who acts as a Trustee. The minor is responsible for the payment of the rent as accommodation is a ‘necessary’ item for which minor can enter into a contract.

Clearly, rent is payable for the accommodation. Furthermore, a Deed of Trust would be signed containing provision for the legal interest in the tenancy to be transferred to the minor upon them turning 18.

To encourage people to act as trustees, RPs should produce a leaflet which details what their obligations would be if they acted in this capacity.

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Dot Pawlowski

Associate
T: 03700 86 4197
I: +44 (0)121 625 4197
E: dot.pawlowski@shoosmiths.co.uk