Mental capacity and tenancy agreements: common mistakes local authorities make

In order for a person to have contractual capacity, the person must be able to understand the nature of the agreement in question

Photo: Fotolia/Lucian Milasan

This article comprises of excerpts taken from a new guide on Community Care Inform Adults about mental capacity, tenancy and licence agreements. The guide is written by Aasya Mughal, a director of Edge Training & Consultancy Ltd. Subscribers can read the full guide and access other resources on the mental capacity knowledge and practice hub on Inform Adults.


People enter into agreements all the time. Sometimes they are recognised more formally, such as when a couple get married, and sometimes less formally, such as borrowing £5 from a friend with the promise it will be returned.

But, can there be a reliable agreement when the person asking you to, say, sign a contract, knows you have a condition of the mind or brain which causes you to be unable to understand, retain or weigh up (even with support) what the agreement is all about? In other words, where the person knows you lack the mental capacity to enter into the agreement.

In these circumstances, you (or those supporting you) could ask for the agreement to be cancelled even though you were not forced or pressurized into making the agreement. To use the legal jargon, the agreement is ‘voidable’. For example, they may have put the agreement in front of you and said, “please sign this”, knowing you do not have the mental capacity to decide whether you should do so. In this case, your compliance would not make a difference to the right to have the agreement cancelled (Imperial Loan Co Ltd v Stone [1892]).

The first point to note is that a tenancy is simply a type of contract. Around the country, some local authorities have presented their service users with tenancy agreements and asked them to sign even though they are aware the person does not have the mental capacity to enter into what is a contractual agreement.

Alternatively, some professionals have asked another person to sign on behalf of the individual lacking mental capacity, even though the other person has no authority to do so. In some cases, the managers of supported living placements have signed on behalf of a tenant who lacks mental capacity, again without authority.

Common mistakes

Below are some common mistakes made by local authorities (and others):

  1. Not assessing and recording whether a person has contractual capacity to enter into a tenancy agreement, even if there are doubts about their ability to understand the agreement.
  2. Housing officers mistakenly believing a capacity assessment has already been carried out by another professional such as a social worker or a doctor. Mental capacity is decision specific. These other professionals may have assessed mental capacity but it could be for a different decision such as medical treatment or residence and not necessarily about the terms of the contract (the tenancy or licence) and its pros and cons.
  3. Asking a proposed tenant to sign a tenancy or licence when they know the person does not have the mental capacity to do so.
  4. Asking another person to sign on their behalf even though they don’t have the authority to sign, for example, someone who is noted in the records as next of kin but does not have any official authority to sign. The term ‘next of kin’ does not indicate the person has any legal authority.
  5. Housing officers or managers of supported living placements signing the agreement themselves on behalf of the tenant.
  6. Providing the client with a document which states “tenancy agreement” when the person’s actual living arrangements means it is more likely in law to be a licence agreement not a tenancy agreement.

Tenancy or licence agreement?

Before staff assess whether a person has the necessary mental capacity to sign an agreement, they need to consider whether they have actually handed them the correct document. Is the person really subject to a tenancy or is it in fact a licence to occupy property? This can be an issue regardless of whether someone has mental capacity or not. When documents are handed to clients by local authority staff, there is a responsibility to ensure that any document the person has been asked to sign is an accurate reflection of their legal rights.

A licence agreement is a type of agreement indicating that the person does not have ‘exclusive occupation’ of the property. This could be a single room, but it could also be a whole flat or house. Exclusive occupation means that you are allowed to refuse entry to others and have exclusive control of your premises (except in an emergency).

The leading case on this issue is Street v Mountford [1985] UKHL 4. The court decided that in order for a tenancy to exist, three features have to be present: exclusive occupation, at a rent, for a term.

Further, what is on the paperwork is not as important as the factual arrangement between the landlord and tenant (or licensor and licensee).

So, local authorities have to ask themselves whether the clients they ask to sign tenancy agreements really enjoy exclusive occupation of their accommodation. If they do not, it may be that local authorities should be asking them to sign (if they have mental capacity) licence agreements instead.

Examples of situations which are more likely to be a licence include where staff provide meals; help take out rubbish; provide personal care; or perhaps change bed linen; or other control is exercised over the person, such as moving someone around a property (for example, to another room) or having controlled visiting hours.

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5 Responses to Mental capacity and tenancy agreements: common mistakes local authorities make

  1. Duncan Ross June 21, 2018 at 6:05 pm #

    What does the LA do in the case of a service user who lacks capacity to consent to a tenancy?

    • KB June 22, 2018 at 10:06 pm #

      You make a tenancy only application to the court of protection whom can sign to agree to, or terminate a tenancy agreement

    • Ian June 24, 2018 at 9:29 am #

      Where a person hasn’t the mental capacity to sign a tenancy agreemen, and there is no-one with authority to do that (LPA, Court appointed deputy) then only the Court of Protection can authorise it. Can be done on the papers. Guidance here.

    • dandymanyahoocouk July 8, 2018 at 11:54 am #

      Imagine that all Independent Psychiatrists always conclude that he has NOT got capacity to decide residence, care and contact but, the last Independent Psychiatrist’s accurate findings were {he does not have such capacity and cannot gain it} rejected because, the Judge/OS and LA who sided with the fake-crying aunt wanted to deliver her demands. They then used a non-independent SW and an NHS Psychologist to write an absurd assessment stating that my son now has capacity to decide who he sees and where he lives. What was utterly unfair is the fact that they did this assessment at a time when they stopped him from seeing us, the Judge refused to make an Order to resume our contact, my son turned against us, the invalid Assessment was not done in a neutral venue. The SW also fooled him with his own flat {a gilded cage is still a cage-Lady Hale}, and they hired their own advocate to write the opposite. What makes the MCA 2005 unworkable is if someone lacks capacity advocates and Judges “can” pressure the person to make decisions which is against their families and turn them against {as was the case} but in reality, the person “lacks capacity” if assessed later on. This Judge refuses my request for a re-assessment and dismisses my application stating “P have not lost capacity” but, how can one lose something that hey “never” had and could not gain? This case beckons Cheshire West {A gilded Cage is still a Cage}. No Contact for 5. He did escape back home !twice”. The Law is CRAP.

  2. Variety July 6, 2018 at 12:58 pm #

    And what about mistakes that carers could make? From time to time, and for the best possible reasons, professionals working with such people assist them in obtaining accommodation for which that individual will need to make decisions regarding signing or relinquishing a tenancy, and professionals may not consider the issue of whether or not they actually have the capacity to make those decisions.