HOUSEBOAT RENTAL AGREEMENTS

INTRODUCTION

This note is intended to provide guidance in relation to preparing agreements to occupy houseboats. It is not intended to be used in relation to agreements to occupy houseboats entered into before the coming into force of Part 1 of the Housing Act 1988 on 15 January 1989.

Houseboat rental agreements often substantially take the form of residential tenancy agreements and may use the language of "Landlord" and "Tenant". This may be for reasons of practicality which would almost certainly be misplaced, or it may be due to ignorance of the law. A houseboat moored on a waterway will almost certainly be a chattel rather than an interest in land and that being the case, a tenancy agreement and all that goes with one is not appropriate to any such rental arrangement. Ambiguity as to the intended nature of the agreement is a bad thing for both parties who may find themselves drawn into time consuming and costly disputes as to the occupier’s rights, as illustrated by case law referred to in this note. Whilst unlikely, it is not beyond the realms of possibility that a houseboat could, in certain circumstances, be deemed to have become part of the land by annexation in which case an assured tenancy will arise pursuant to the provisions of the Housing Acts of 1996 and 1998 and in such circumstances a tenancy agreement would be the appropriate form. Whether or not a chattel has become part of the land is a question of the degree and object of annexation of the chattel in question. Whether or not a houseboat is capable of becoming part of land is a question which has divided judicial opinion and has been considered by the Court of Appeal. It is therefore important to give appropriate thought to the issue when drafting such agreements. On the basis that a houseboat is a chattel, a more appropriate form of agreement would be a hire agreement or a licence to occupy.

OVERVIEW

What is a "houseboat"? There is no single statutory definition of the term "houseboat". A key definition however is set out in Section 3(1) of the British Waterways Act 1971 and it is noteworthy for two reasons. Firstly it is the definition used for the purposes of issuing licences to navigate and moor houseboats on inland waterways controlled by the Canal & River Trust (CRT). An "inland waterway" is defined by the 1971 Act as "any canal or inland navigation belonging to or under the control of the Board", (the "Board" being a reference to the British Waterways Board which was superseded by the CRT in 2012). Secondly, it is extremely broad in scope which means that the majority of boats on a CRT controlled waterway are likely to fall within the ambit of licencing requirements. Section 3(1) provides:

 "houseboat" means any boat or barge or any vessel or structure or any part, remains or wreckage thereof whether or not the same shall be used or intended to be used for human habitation but does not include any boat, barge, vessel or structure-

• which is bona fide used for navigation; or

• which is on an inland waterway with the written consent of the Board for the purpose of being broken up or disposed of; or

• which is owned or used by the Board; or

• which consists of a floating or fixed pier or jetty bona fide used by pleasure boats."

The meaning of the term "bona fide used for navigation" was considered by the High Court in R. on the application of Nick Brown v Canal River Trust [2012] EWHC 3133 (Admin), albeit in the context of the British Waterways Act 1995, where it is also adopted . The Court upheld as lawful the view of the CRT that that "short trips within the same neighbourhood and shuttling backwards and forwards along a small part of the network", do not constitute "bona fide use for navigation" . Consequently, virtually all waterborne craft on inland waterways in England and Wales controlled by the CRT whose predominant use is not genuine navigation are likely to be caught and therefore be subject to houseboat licensing requirements.

Regulatory framework: the thousands of miles of inland waterways of England and Wales are controlled by a number of different bodies which are referred to as "Navigation Authorities". There is not therefore a uniform regulatory system in place, however the common theme that runs throughout is that any person wishing to rent a houseboat out to another person will almost certainly require a permanent mooring which, certainly where the CRT is the relevant Navigation Authority, will require planning permission and a licence of some sort from the relevant Navigation Authority (which may well be a business licence). Enquiries should be made of the appropriate Navigation Authority regarding specific requirements for the waterway in question. The three largest Navigation Authorities in terms of miles of waterway under their control are the CRT, the Environment Agency and the Broads Authority. The CRT is the largest controller of canals. The Environment Agency has responsibility for the non-tidal reaches of the River Thames, the River Medway and the rivers of East Anglia. Responsibility for tidal reaches of the Thames lies with the Port of London Authority. The Broads Authority controls the Norfolk and Suffolk Broads. Numerous other Navigation Authorities exist, including councils, trusts and port authorities. Detailed information regarding control of each inland waterway can be found on the website of the Inland Waterways Association; https://www.waterways.org.uk/ . The powers of each Navigation Authority derive from different statutory sources. For example, the CRT’ s statutory authority stems from the Transport Act 1962, pursuant to which it has the power to issue rules and regulations regarding the use of waterways under its control.

Nature of long term agreements to rent houseboats for residential purposes: Section 1(1) of the Housing Act 1988 provides that (with effect from 15 January 1989), a tenancy under which a "dwelling-house" is let as a separate dwelling (in other words, where the landlord is not also resident), is automatically an assured tenancy provided that:

• the tenant (or each joint tenant) is an individual (subject to certain exceptions which are beyond the scope of this note);

• the tenant (or at least one of the joint tenants) occupies the dwelling-house as their only or principal home; and

• it does not fall within one of the exceptions.

A "dwelling-house" is defined simply as "a house or part of a house". Furthermore, pursuant to the Housing Act 1996 the majority of assured tenancies entered into after 27 February 1997 will be an Assured Shorthold Tenancy (AST). An AST has various important features including conferring security of tenure but these are beyond the scope of this note. The question arises whether or not a houseboat rented as a residential dwelling on a long term basis is capable of being a "dwelling-house" within the meaning of the 1988 Act and therefore, whether any such arrangement is by nature an assured tenancy.

Meaning of "dwelling-house" and relevant case law: the above question was considered by the Court of Appeal in Chelsea Yacht Club & Boat Co Ltd v Pope [2000] EWCA Civ 425. The Court overturned the decision of the County Court that the houseboat in question was a dwelling-house for the purposes of the 1988 and 1996 Acts, a decision which meant that the respondent occupied the houseboat under an assured tenancy. The appellant owner who sought possession, had appealed that decision. The houseboat in question was a modified steel Thames barge whose engine had been removed and which had been converted to provide permanent living accommodation. It was permanently moored on the River Thames, fixed to a pontoon by ropes from its stern and, by ropes from its bow, to an anchor in the river bed and rings attached to the embankment wall. It was also fixed by ropes to other barges. It was connected to utilities via plug-in and snap-on connections. The vessel floated for approximately half of the time and for the other half, sat on the river bed. It was agreed that the houseboat was not to be moved from the mooring other than for maintenance purposes. Judge Cotran, who heard the matter in the county court, took the view that the key issue was whether or not the houseboat was "permanently immobile and let as such". Whether it was on land, attached to a river bed or whether or not it floated for some or all of the time was, in the judge’s view, irrelevant. He held that the two key criteria he identified were satisfied and therefore it was capable of being a "dwelling-house". The Court of Appeal disagreed and held that the key question was in fact whether or not the chattel had become part of the land by annexation and that the applicable test was one laid down by the House of Lords in Elitestone Ltd v Morris [1997] UKHL 15.

Whether or not a structure has become part and parcel of the land depends on the degree and object of its annexation to the land. There must a be a degree of permanence and sufficient attachment is required for the chattel to become part of the land itself. If the structure can be removed without injury to itself or the land it is likely to remain a chattel. The purpose of the annexation is also a vital factor and whether or not it was intended that the chattel was to become part of the land is relevant. A passage from Blackburn J’s judgment in Holland v Hodgson (1872) LR CP 328 which was cited and approved in the lead judgment of Tuckey LJ provides helpful guidance:

"Blocks of stone placed one on top of another without any mortar or cement for the purpose of forming a dry stone wall would become part of the land, though the same stones, if deposited in a builder's yard and for convenience sake stacked on the top of each other in the form of a wall, would remain chattels. On the other hand, an article may be very firmly fixed to the land, and yet the circumstances may be such as to show that it was never intended to be part of the land, and then it does not become part of the land. The anchor of a large ship must be very firmly fixed in the ground in order to bear the strain of the cable, yet no one could suppose that it became part of the land…"

On the facts the Court of Appeal found that the vessel had not become part of the land itself. In any event, the question arose as to "which land?" and there was no satisfactory answer to that question. The fact the vessel could not move under its own power was irrelevant and the Court rejected the respondent’s argument that the purpose of the attachment was to provide a permanent home. It held instead that the purpose of the attachments to the land were to prevent the houseboat being carried away by the tide and to provide services to the houseboat, not to provide a permanent home.

The Chelsea Yacht Club decision was considered by the Court of Appeal in Mr Christopher Mew, Ms Janet Just v Tristmire Limited [2011] EWCA Civ 912. The case concerned a similar claim that houseboats occupied by the appellants were part of the land and subject to assured tenancies. The facts were somewhat different however in that the houseboats sat upon wooden platforms which themselves were supported by wooden piles driven and cemented into the harbour floor. They did not float. Again however, the Court of Appeal held, applying the test in Elitestone v Morris, that the houseboats were chattels and had not become part of the land.

In the light of these decisions, it is difficult to envisage circumstances where any conventional houseboat which floats for at least part of the time will acquire the requisite degree of attachment to land to be considered "land". However, if advising on houseboat rental agreements, appropriate investigation of the facts should always be undertaken in order to form a view.

Drafting considerations for houseboat rental agreements: assuming the facts of a particular case support the boat being a chattel, the rental agreement should avoid use the terms "tenancy", "landlord" or "tenant". A licence to occupy or a hire agreement would be appropriate general forms and terms should be adopted for the parties which reflect that choice. It would be advisable to also include a statement in the agreement to the effect that the agreement is one to occupy or hire a chattel and it does not create a tenancy in respect of an interest in land. Important provisions to consider including in any such agreement are likely to include:

• Term and termination rights

• Licence / rental fee and deposit including how the deposit is to be held

• Responsibility for payment for utility costs and, if applicable, Council Tax

• Arrangements for disposal of refuse

• Maintenance and repairing obligations

• Insuring obligations

• Access and inspection rights

• Security arrangements and obligations of occupier

• Right to remove and dispose of any items left by the occupier on termination of agreement

• Restrictions on use of the houseboat including specifying maximum number of visitors on board any given time, whether or not pets are allowed, any applicable noise restrictions, restrictions on affixing of pictures etc, smoking, storage of flammable or dangerous items etc

• Appropriate restrictions to ensure compliance with licence terms and a suitable indemnity in respect of any loss suffered or costs incurred as a result of any breach of the licence (specific attention being drawn to the terms of the indemnity and appropriate warning as to its effect)

• If the boat is to be navigated at any time, a requirement to comply with all speed limits and other applicable codes of the waterway, together with an appropriate indemnity in respect of mis-use

Practical considerations of renting houseboats: the specific requirements will vary according to Navigation Authority but in addition to the likely requirements of a permanent mooring and a licence already mentioned, anybody wishing to rent out their houseboat for residential use will likely also need to be able to satisfy a number of additional requirements. These include being able to demonstrate the boat has the right to access utilities and rubbish and waste disposal facilities, that third party and public liability insurance cover is in place to a sufficient level, that a non-private Boat Safety Scheme certificate is in place for the boat and there is a handover document which describes how to operate the boat and its equipment in a safe manner. The Boat Safety Scheme is a body administered by the CRT and the Environment Agency which is responsible for issuing safety certificates. If the boat has a gas supply, a Gas Safe Certificate will also be required.

Council Tax may be payable in respect of houseboats. If the houseboat is enjoyed with a piece of land in such a degree of permanence as to form a single unit of occupation, it will constitute a rateable hereditament together with the land for the purposes of the Local Government Finance Act 1992 (Stubbs v Hartnell (1997) 74P. & C.R. D36.)