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Assured shorthold tenancy – possession for arrears

Reports in recent media outlets have highlighted the huge rise in rent arrears in the rented housing sector (both social housing and private landlord) in the past 2 months and, indeed, there has been a 20% increase on such rent arrears over the past year.

If you have a lettings business or are a private or social landlord and use Assured Shorthold Tenancies (ASTs) to govern your lettings then are you aware that in many cases it is mandatory for the Court to grant an order for possession of the property?

If the cost of taking the proceedings is off-putting (and most ASTs do not contain any clause allowing the landlord to recover this type of legal fee from the tenant, as opposed to the position in long leases) then note that many insureres offer a landlord’s legal cost policy for possession actions so for the price of a one-off premium you may be able to take action to regain possession of the properties and re-let to new tenants, who, hopefully, will be better payers.

Most ASTs are granted for a fixed term which then becomes a statutory periodic tenancy as the tenants remain in occupation after the expiry of the original fixed term. Occasionally ASTs may be originally granted on a periodic basis and the reason for mentioning these distinctions is to draw attention to the different methods of termination in order to get possession for each type.

Basically there are 3 separate notices which must be served on AST tenants requiring possession of the property depending on the type of AST:

  • During the Fixed Term – Section 8 Notice
  • After expiry of the Fixed Term (including statutory periodic tenancy) – Section 21(1) Notice
  • During Periodic Tenancy – Section 21(4) Notice

Looking at each type of notice in turn we can explain the requirements and process:

FIXED TERM – SECTION 8 NOTICE

A fixed term AST can only be terminated if :
[1] One of the following grounds for possession has been satisfied; and
[2] The AST actually stipulates that the tenancy can be brought to an end on the ground specified.

The grounds for possession in question are:

Ground Mandatory or discretionary Minimum notice period required in section 8, HA 1988 notice
2 – Mortgagee requires possession of the property because of mortgage arrears on the property. Mandatory Two months
8 – Rent is unpaid at the time of the service of the section 8 notice and at the date of the hearing:

  • If rent is paid weekly or fortnightly, at least eight weeks’ rent is unpaid.
  • If rent is payable monthly, at least two months’ rent is unpaid.
  • If rent is payable quarterly, at least one quarter’s rent is more than three months in arrears.
  • If rent is payable yearly, at least three months’ rent is more than three months in arrears.

(The level of arrears in Ground 8 were amended to the above levels by section 101 of the Housing Act 1996.)

Mandatory Two weeks
10 – Rent was unpaid by the tenant when the section 8 notice was served and has not been paid by the time possession proceedings are begun. Discretionary Two weeks
11 – The tenant has persistently delayed paying rent, regardless of whether the rent was in arrears on the date that possession proceedings began. Discretionary Two weeks
12 – Any obligation of the tenancy (other than non-payment of rent) has been broken or not performed. Discretionary Two weeks
13 – The tenant, or anyone living with the tenant, has allowed the property or parts of it (including common parts) to deteriorate. Discretionary Two weeks
14 – The tenant or anyone living with or visiting the tenant is guilty of conduct which has or is likely to have caused a nuisance or annoyance to neighbours, has been convicted of using or allowing the property to be used for immoral or illegal purposes, or has been convicted of an arrestable offence committed in the area of the property. Discretionary Proceedings can be brought as soon as the notice has been served
15 – The condition of any furniture at the property has deteriorated due to ill treatment by the tenant or other person residing at the property. Discretionary Two weeks
17 – The landlord was induced to grant the tenancy by a false statement made knowingly or recklessly by either the tenant or a person acting for the tenant. Discretionary Two weeks

 

So if the above requirements are satisfied then in order to acquire possession during the fixed term the landlord will go through three separate stages:

  • Service of the Section 8 Notice on the tenant. The form is prescribed under the Assured Tenancies and Agricultural Occupancies (Forms) Regulations 1997 (SI 1997/194). The notice informs the tenant that:
    • The landlord intends to bring proceedings for possession of the property on the grounds specified in the notice.
    • The proceedings will not begin before the date specified in the notice. (The notice period depends on which grounds are being relied upon – see table above for details of notice periods in column 3).
    • The proceedings will not begin more than 12 months after the notice was served.
  • If the tenant does not vacate the premises by the expiry of the notice period then the landlord can apply to the court for possession on Form N5 and will need to support the application with evidence of the tenant’s default. As you will see from the table above – whether the court will then grant possession depends on the ground and can be mandatory or discretionary. If a mandatory ground the possession will be granted and the landlord can proceed to the next stage; if a discretionary ground then if the court are satisfied that the landlord has made out the grounds and it is reasonable to do so then they may order possession. It could be an outright order for possession or a stay/suspension of an order for possession or a postponement of the order [for such period the court deems appropriate]. The latter two may be used where the tenant may be exposed to hardship if evicted on short notice.
  • If an order for possession is granted then the tenant must vacate by the date specified in the order. If he does not then the landlord must apply for a warrant for possession giving details of the time and date after which bailiffs will call at the property and return possession to the landlord.

 

FIXED TERM EXPIRED – SECTION 21(1) NOTICE

The court can order possession in the case of a fixed term AST which has expired if the (a) AST term has ended and there are no other AST’s of the premises other than any periodic tenancy arising after the expiry and (b) the landlord has served the tenant with two months’ notice requiring possession.

Again it is a three stage process for the landlord:

  1. Service of a Section 21(1) Notice on the tenant. There is no prescribed form and does not need to expire on any particular day. It should be noted, however, that no order for possession would ever be granted before the expiry of the first 6 months of the term, nor does it need to specify any ground.
  2. If the tenant does not vacate at the expiry of the notice period then the landlord may apply to the court for possession on form N5B. The court will then consider (on the paperwork) whether there needs to be a hearing or not and if not then an order for possession will be granted. If a hearing is necessary then the tenant can produce its’ side of the argument. If an order for possession is granted then usually the tenant is given 14 days to vacate.
  3. If the tenant does not vacate on the date of the court order then the court will issue a warrant for possession to enable the bailiffs to regain possession for the landlord.

 

PERIODIC TENANCY – SECTION 21(4) NOTICE

If the tenancy was originally granted on a periodic basis from the outset [e.g. from month to month] then the court will order possession provided the landlord has given the tenant 2 months’ notice requiring possession.

Once again, and as above, it is a three stage process but the only difference here is that the landlord must serve a Section 21[4] Notice:

  • which must specify notice is being given by virtue of that section of the Housing Act 1988
  • which must expire on the last day of the tenancy period
  • which must stipulate that possession is required AFTER the last day of a tenancy period [which, in effect, means more than 2 months’ notice must be given]

This can be a tricky to fathom so, for example, if the tenancy was a monthly periodic one from the 2nd day of each month then the last day of the tenancy period is the 1st day of the month following. So if the landlord served notice on 15th of January then a 2 month period would take him to 14th March BUT the notice must expire on the last day of a tenancy period – the 1st day of a month- so the landlord must add on the necessary amount of days to take him up to that date – i.e. 2 months and 19 days – i.e. from 14th march to 1st April and maybe even add a day or 2 to be on the safe side.

As this can be quite convoluted, instead, landlords can stipulate a formula as agreed in a Court of Appeal case Lower Street Properties v Jones [1996] 28 HLR 877:

“The landlord gives you notice that the landlord requires possession by virtue of section 21(4)(a) of the Housing Act 1988 of the dwelling house known as [address] after the day on which a complete period of your tenancy expires next after the end of two months from the service of this notice.”

If , however, this formula is used you may wish to send a covering letter explaining that the formula was approved in Lower Street Properties v Jones [1996] 28 HLR 877 and Notting Hill Housing Trust v Roomus [2006] EWCA Civ 407, in case the court is unfamiliar with the formula.

At SLC Solicitors we are specialists in obtaining possession for landlords of AST lettings and regularly give advice on possession proceedings. If you have any queries or require assistance with this type of work then please get in touch.

For more information please contact Analise Broomhall on 0333 0 300 200 or email at adb@slcsolicitors.com.

Click here to download a print ready PDF of this guide.

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