Answer: it’s easier to stop your land being used as a brothel!

A recent Magistrates’ court decision has set hares running about who pays the price for a tenant’s illegal acts.

Legal context

There are few offences deemed to be so serious that the authorities are likely to pursue a landlord, lessor or agent in addition to a guilty tenant - one long-standing example is the use of a property as a brothel. A landlord or lessor may only be liable under section 34 of the Sexual Offences Act 1956 where they have knowingly permitted such use.

Less well known is section 33(1) of the Environmental Protection Act 1990, which imposes liability upon landlords (and most likely agents) who knowingly permit tenants to use their properties for the ‘unauthorized or harmful depositing, treatment or disposal of waste’. There are, however key differences between these pieces of legislation.

  1. Unlike the 1956 Act, the 1990 Act does not give the statutory right to evict the tenant if he carries out illegal acts on the land and does not desist from doing so after warning. Therefore, unless there is a covenant in the lease to allow the landlord to do this, he will be powerless to intervene.
  2. The 1990 Act also refers to a ‘person’ rather than the ‘lessor or landlord’ referred to in the 1956 Act – it may therefore be that managing agents (or indeed anybody with power to ‘permit’) are just as liable as landlords to prosecution.

As a result of this difference, if you are a landlord and do not have a written lease or there is no express covenant in any written lease not to do any illegal act, you cannot compel the tenant to put things right, you cannot get him out and you are liable in any event to prosecution.

Recent case-law

An illustration of how costly this can be to the landlord is the case of Commercial Motor Spares Ltd, who were fined £30,000 after being held to have ‘knowingly permitted’ their tenant effectively to operate a skip business and “keep waste” without the requisite Environmental Permit (known as a “Waste Management Licence” up to 6 April 2008). The knowledge was imputed by virtue of CMS Ltd’s company directors having made frequent visits to the site whilst the tenant was breaking the law.

Despite having paid £18,000 to clean up the site, and claiming in court that the absence of any written lease limited its ability to control or evict the tenant, the magistrates said that a company which has been established for 28 years ought to have known better than to allow a tenant to occupy its land without a written agreement.

From the case, we can draw three conclusions:

  1. Landlords should always insist on a properly drafted lease which contains provisions enabling you to terminate or obtain an injunction if the tenant breaks the law. 
  2. If landlords ‘smell a rat’, they should investigate the tenant’s activities and take remedial measures accordingly. 
  3. Landlords should be aware that an informal, unwritten lease of commercial premises can be replaced by a formal lease under the Landlord and Tenant Act 1954. If your tenant will not sign a proper lease voluntarily, do you want to run the risk of maintaining the relationship with a tenant who will not agree to your terms?