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Assured shorthold tenancies were created by the Housing Act 1988 to enable Landlords of residential premises to rent out the property secure in the knowledge that they retained the right to possession at the end of the tenancy. As long as the Landlord serves the correct notice the court must make an order for possession if the tenant fails to move out in accordance with the date specified in the notice. However, in practice, service of the correct termination notice has set many procedural traps for the unwary Landlord.
To go back to basics, Section 21 of the Housing Act 1988 provides the mechanism for serving a notice on tenants to terminate the tenancy. The form of notice depends upon whether or not the fixed term has come to an end.
If the fixed term has not yet expired, a Section 21 Notice should be served giving the tenant 2 months’ written notice. Many Landlords initially grant a fixed term tenancy with a written tenancy agreement and allow the tenant to remain in occupation, at the same rent and under the same terms and conditions as the fixed term tenancy.
Provided that the tenant does not enter into a further written agreement then the tenancy becomes a statutory periodic tenancy upon expiration of the term. If this is the case, in order to terminate the tenancy, the Landlord should give at least 2 months’ notice with an additional requirement that the notice is to expire on the last day of a period of the tenancy. It is the periodic notice which has caused concern for Landlords, as the last day of a period of the tenancy is the day before the rent day. For example if the tenant pays rent on 14thday of the month, the Landlord must serve two clear months’ notice to expire on the 13thday of the month.
It is imperative that notice expires on the correct day to avoid the risk of being held invalid by the court, resulting in the Landlord having to serve a fresh notice and wasting valuable time especially if matters have progressed to a court hearing.
However, a recent Court of Appeal decision in Spencer v Taylor (2013) has overturned the commonly held belief that only a periodic notice can be served where the fixed term of the tenancy has expired. In this case, the Landlord served a Section 21 Notice which did not end on the last day of a period of the tenancy despite the fact that a periodic tenancy was in existence. The Court of Appeal held that this did not invalidate the Notice and that, provided two months’ notice was given, the Notice complied with the requirements of Section 21.
This decision will come as a relief to Landlords as it has removed some of the onerous requirements of fixed term tenancies that have subsequently become periodic. Provided that the tenancy has at some point been for a fixed term, it is no longer is it a requirement that the notice must expire on the last day of a period of a tenancy. Therefore, the case has to some extent removed the distinction between fixed term and statutory periodic tenancies as a Landlord simply needs to ensure proper service of the notice, giving at least two months’ notice in writing for the notice to be valid. This does not apply to tenancies which have always been periodic from the outset and the expiration date will still be relevant in determining the validity of the notice. As we wait to see whether this point will be appealed to the Supreme Court, at present, the simplified procedure for termination of tenancies is welcomed by both Landlords and their advisers.
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