Urban Myth – you can give a tenant a probationary period before the tenancy starts

Probationary tenancy?

This urban myth is really about the law overriding what landlords want to happen.  What many landlords would like, is to have their tenants  live in the property for a short probationary period, during which time the landlord can evict the tenant at will, before the tenancy starts properly.

Not possible.  Sorry!

Street v. Mountford [1985] House of Lords

It all goes back to the case of Street v. Mountford in 1985.  This is a House of Lords decision which said that if an occupier had:

• exclusive possession of a property
• for a term (ie an agreed period of time, and
• was paying rent

then it was a tenancy, whatever the landlord called it and whatever was  written on the piece of paper signed by them both (in the Street v. Mountford case the landlord was calling it a license agreement).

Interestingly there has been a recent case on this point, reported in the excellent LAG Magazine.  This case is called Kirby v. Lynch.  (You will also find it mentioned in the Garden Court Chambers Housing Law News bulletin.)

Kirby v. Lynch [2010] QBD

In this case Mr Lynch wanted to rent a room from Mr Kirby in February 1997.  Mr Kirby said he could have it but only if he got housing benefit.  He signed a tenancy agreement and moved in on 20 February 1997.  The housing benefit was awarded some six weeks later and backdated to the 20 February.

At the time Mr Lynch moved in, you needed to serve a section 20 notice on your tenant in order to create an assured shorthold tenancy.  However this rule was changed in the Housing Act 1996 which came into effect (in this respect) on 28 February 1997.  No section 20 notice had been served in this case.  So, what sort of tenancy did Mr Lynch have?

• If his tenancy started on 20 February he would have an assured tenancy, which would give him long term security of tenure.
• However if his tenancy started when the housing benefit was received he would have an AST, and could be evicted under section 21

Mr Kirby was of the view that he had an AST.  The tenancy, he held, had been conditional upon Mr Lynch getting benefit.  Until this was confirmed his occupation had been an act of generosity, even perhaps an act of charity.  He started proceedings for possession under section 21 on this basis.

Initially he succeeded.  However, Mr Lynch appealed the decision and it went to the High Court.  Here the Judge, Davies J, held that Street v. Mountford applied.  All three elements of a tenancy were present.  There was an intention to create legal relations on 20 February which was when the tenancy began.

Conclusion – attempts to create a probationary tenancy are unwise

Of course today, the point is less important than in the Kirby case, as all tenancies (or the vast majority) are automatically ASTs.  So you will (if you are a landlord) be able to get the occupier out eventually by following the section 21 route.

However attempts to create any sort of probationary initial period are unwise, even if the tenant agrees to it. If you base a possession claim on this agreement, the Judge will almost certainly come to the same decision as the Judge in the Kirby case. Also, as this is a High Court decision, it will be binding on County Court Judges.

If an occupier is allowed to live in a property rent free, then this will not be a tenancy.  If the occupier does not have exclusive possession (for example lodgers – see more on this on my Lodger Landlord site) then it will not be a tenancy.  However apart from these situations, a landlord should assume that a tenancy has been created from the time the tenant first goes into the property.

This is why it is so important not to let someone into occupation until you are sure that you want them as your tenant.

Do you know of any ‘urban myths’? Or have you had any problems with this particular urban myth? Please post a comment if so, I would love to hear from you.

This post is part of my urban myths series. You can see the rest of the series >> here.