A tenant appears to be entitled to pay sub-market rent for the rest of his life after a legal case involving his former neighbours and the fine print of a 16-year-old mortgage deal. 

Former Peacehaven residents David and Sheila Harding bought their friend and next door neighbour Colin Gregory’s three bedroom bungalow for £143,000 in 2001; they used what has been referred to as a ‘buy to rent’ mortgage which allowed Gregory to remain in the property and pay £800 a month in rent.

The Argus local newspaper in Sussex reports that the Hardings claimed Gregory was in financial difficulties with his mortgage at the time; Gregory disputes this.

The Hardings went on to move to Spain in 2002 but in 2014 decided to sell the Peacehaven property occupied by Gregory – but he declined to leave. 

“We had a paper agreement stating that I could stay in the house for as long as I want for £800 a month, with a mortgage payment included in the rent. [David Harding] said we didn’t have that agreement when we went to court” Gregory is quoted in the newspaper. 

The Hardings accepted an offer from a buyer who was willing to pay about £240,000 and keep Gregory as a tenant, but only at an increased rent of £1,200 per month – and this prompted a court case in Brighton over who precisely owned the property, and whether Gregory was entitled to remain in it at the sub-market rent.

Gregory’s solicitor cited two laws dating back to 1925 and 1948. Under the 1925 Property Act he has the right to pay £800 for the next 90 years – and this was agreed by the court.

It means that the Hardings can only sell the property if the purchaser accepts Gregory as a tenant at a rent of £800 per month, effectively for life.

You can read the full story here.