Written by Krishna Patel – Paul Robinson
Occupational rent is rent which may be payable by a person(s) occupying a property in the event another person(s) is actually or constructively excluded from the same property in which they have a beneficial interest.
The circumstances in which occupation rent can be payable are wide-ranging but can include scenarios such as:
- Where a person(s) has vacated the property and the other continues to reside at the property and the sale of the property is to be deferred—occupation rent may potentially be payable for the duration of the deferment.
- Where a person(s) has vacated the property, the other remains in occupation and the sale of the property is to proceed—occupation rent may be calculated and deducted from the occupying person(s) share of the proceeds of the sale.
- Where a person(s) has vacated the property, the other remains in occupation yet all persons have been passed the property through a deceased’s estate – occupational rent may be payable from the date of the deceased’s death.
In effect, it allows the excluded person(s) the benefit of rental payments as compensation from the person(s) that is residing at the property.
Generally, the method to calculate occupational rent is by basing the figure on the average market rent of the property. To get a rough idea of this research similar properties in the same area and their rental price. Once you have this, you divide the market rent by the percentage of ownership the excluded person(s) has in the property. The occupational rent may be payable from the date the person(s) becomes excluded from the property.
However, there are certain circumstances in which occupational rent may not be payable such as where the excluded person(s) leaves voluntarily, the occupier has paid towards the mortgage payment and/or paid for improvements to the property which have added value to the property.
The issues of occupational rent are dealt with by the provisions of the Trusts of Land and Appointment of Trustees Act 1996. Whether or not the court will make an order for occupation rent is very fact-specific and the court has the discretion to make such an order but equally may decline to do so.
To understand whether the above issue applies to you, please contact us for an initial consultation at 0208 049 5888.