Assured shorthold tenancies – one less banana skin...

30 December 2013

As 2013 draws to a close, the Court of Appeal has given landlords of residential properties, in the words of the late great Ian Dury, a “reason to be cheerful”.

That reason is Spencer v Taylor [2013], a case not yet widely reported.

Assured shorthold tenancies (‘ASTs’) have been with us since 15 January 1989 (being the date the Housing Act 1988 came into force).  Yet they continue to cause problems for landlords, one of the most persistent problems being the validity of Section 21 Notices.

It is unlawful to evict a tenant from residential property without a court order.  Where the tenant holds an assured shorthold tenancy, a landlord may issue possession proceedings if:

  1. The tenancy has ended
  2. No further assured tenancy has come into existence other than an assured shorthold periodic tenancy
  3. The landlord has given the tenant not less than two months’ written notice that possession is required (the Section 21 Notice).

For a supposedly simple document in a supposedly straightforward procedure, the Section 21 Notice has caused landlords no end of grief.

There is no prescribed form for the Notice, which itself offers a landlord with no experience of legal drafting golden opportunities for crucial error.  Also, there are two different types of Section 21 Notice (those served under Section 21(1)(b) of the 1988 Act and those served under Section 21(4)(a)) and whichever one should be served depends on the facts of the particular case. A landlord usually serves a Section 21(4)(a) Notice when seeking to end a periodic tenancy, using a standard form of wording, "the saving provision", to avoid errors on the termination date.

In my experience, many district judges rely on a technical error in a Section 21 Notice to dismiss possession proceedings and thereby enable a tenant to stay in their ‘home’ for a few months longer.

Although drafting error remains a problem, the decision in Spencer v Taylor offers real assistance to landlords. 

In essence, the Court of Appeal decided that a Section 21(1)(b) Notice would be the appropriate Notice to serve in all circumstances other than where the tenancy was periodic from the start.  If the original tenancy was a fixed term, as in most cases, then there is no longer a decision for a landlord to make as a Section 21(1)(b) Notice will do the job.

So, one potential problem for landlords has been resolved.  However, residential landlords can never afford to fall into complacency.  For instance, time and time again I see possession proceedings scuppered because a landlord has failed to protect a tenant’s deposit in a government-backed deposit protection scheme.  No Section 21 Notice can be served on a tenant if a landlord is in breach in respect of their legal obligations on protecting the deposit.

If in fashion red is the new black and in age 40 is the new 30, then the obstacle of the deposit schemes may well take over from Section 21 Notices as the bane of the life of the unsuspecting residential landlord.

Legal advice should always be sought before possession proceedings are issued.  If you have any queries on any of the information contained in this blog, please contact a member of the Real Estate Disputes team.

I wish you a peaceful and prosperous New Year!

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