To sign up for the Landlord Law Newsletter (and get a free guide)>> Click Here

Good news for landlords as new s21 case changes all the rules

Taylor v. SpencerI am still slightly in shock after reading about the new section 21 case on the Nearly Legal website. It brings in a big change – a very welcome one for landlords.

In fact for landlords, Christmas may well have come early …

Taylor v. Spencer [2013] Court of Appeal

The case involves a Miss Taylor who in February 2006 rented a property under an assured shorthold tenancy from Mr Spencer for a six months fixed term.

The fixed term was never renewed and ran on as a periodic.  Mr Spencer than served a s21 notice.  It did not comply with the provisions of s21(4) (which provides for a notice to give a a date which is the last day of a period of the tenancy) but included a saving clause.

Miss Taylor defended the claim for possession on the basis  that (1) the notice was invalid as it gave the wrong date and (2) the landlord could not rely on the saving clause.

The case reached the court of appeal where the following surprising judgement was made by LJ Lewison (which was unanimously agreed by the other two Judges).

The new interpretation of Housing Act 1988 s21(1)

It all hinges on s21(2).  As you are probably aware, s21(1) sets out the rules which we all thought only applied if the notice was served during the fixed term.  But this is what s21(20 says:

A notice under paragraph (b) of sub‑section (1) above may be given before or on the day on which the tenancy comes to an end and that sub‑section shall have effect notwithstanding that on the coming to an end of the fixed term tenancy a statutory periodic tenancy arises.

(My emphasis).  The word ‘may’ means (we now learn) that actually this form of notice can also be served after the fixed term too – so long as there has in fact been a fixed term.

Which then means that the dreaded s21(4) will only apply to tenancies where there has never been a fixed term at all.

Section 21 Saving clauses all right too

Miss Taylor also defended on the basis that the saving clause made the notice invalid as there should only be one expiry date.

LJ Lewison said the so long as it was clear which of the dates was the ‘primary’ date and which was the fallback date, it was perfectly all right.  So its official – saving clauses ARE allowed.

That confirms the position which we all assumed from the case of Elias v. Spencer where the Court of Appeal refused to hear a case at all on this point, on the basis that it had no chance of success.

Comment

This case is a real turnup for the books.   Quite why it has taken the courts some 25 years to reach a correct interpretation of this clause I don’t know.

Always assuming it is a correct interpretation of course.  But somehow I don’t think it will be overturned. The courts are only too aware of the problems that s21(4) have caused landlords – needlessly it now turns out.  No-one (apart from tenants of course) wants that back again.

So what can you do if you are a landlord whose case was chucked out by the court under s21(4)?

Nothing I’m afraid, as the decision would have been correctly based on the law as the Judges were entitled to understand it at the time.

However if you have a case coming up, I suggest you go to court armed with a copy of the Taylor v. Spencer case report.  You’ll find it >> here.


Easy Law TrainingIf you want to keep up to date with the law – why not come along to our of our Easy Law Training workshops?

Find out more >> here.

About the author

Tessa Shepperson Tessa is a lawyer specialising in residential landlord and tenant law. She runs the Landlord Law website (now in its 12th year) and is also a director of Easy Law Training Ltd and Your Law Store. When not working she enjoys reading, cooking and messing around on the computer. You can also find her on Google

Buffer
If you have a landlord and tenant related question please do not ask it here but use our
>> Blog Clinic.

Comments close after three months.

Please >> click here to read our comments policy

Page 1 of 11

9 Responses to Good news for landlords as new s21 case changes all the rules

  1. Jamie says:

    When I read this on Nearly Legal last week I couldn’t help thinking if that was the way it was meant to be interpreted, what was the point of ever having a separate Section 21(1)(a) Notice?

    For what it’s worth I think the old view was actually the correct one.

  2. I think the traditional interpretation does reflect the intention at the time the act was passed in 1988.

    However since then people have come to regret this, so the new interpretation will I think largely be welcomed by the Judges (who previously had no choice but to follow the established line).

  3. Jamie says:

    Oh I don’t disagree that it will make things simpler, I just think it’s best to change the written law rather than suddenly decide to interpret it in a different way.

  4. Roseman says:

    Does this mean the s21(1)once issued after the Periodic Tenancy comes into effect, can be sent giving two months notice without it being inline with the payment date?

  5. That seems to be the general idea. The notice where you have to give a date which is the last day of a period of the tenancy is now only needed if there has never been a fixed term.

    Mind you, if you do comply with s21(4) I don’t think it will be wrong. Just unnecessary.

  6. Andrew Davis says:

    What I understand from Taylor v. Spencer [2013] is that… “a notice under s21(4)(a) is only for tenancies that were periodic from the outset and have always been so”.

    Which raises the question, when would you create anything other than a fixed term AST?

    Does the answer lie in Superstrike Ltd v Marino Rodrigues [2013]… “Broadly, the Court of Appeal has now held that a statutory period tenancy is not a continuation of a fixed term tenancy but a new tenancy”

    I look forward to lively debate…

  7. A periodic from the start tenancy is most likely to arise if someone just goes in on a handshake and starts paying rent.

    It is, I agree, most unlikely to occur if a tenancy agreement has been used.

    However, statutory periodic tenancies have ALWAYS been new tenancies – as I explain here http://www.landlordlawblog.co.uk/2013/08/05/why-a-periodic-tenancy-is-a-new-tenancy/

    The Judges in Superstrike were not saying anything different in that respect. It is the rest of their judgement which is perhaps debatable.

  8. Deborah says:

    As a Landlord I am unsure how to react to this. When ending a tenancy which has become a SPT (after previously being a fixed terms tenancy) the question now is whether or not I serve a 21(1) or 21 (4)? I am sure many a landlord will be asking the same question. The RLA nor the NLA have responded to this yet (from what I can see) and the only published articles are ones which seen to be debating this question especially on the Nearly Legal site without a definitive answer being provided. So the question is for the time being is it safer to carry on as before?

  9. Industry Observer says:

    Please excuse lengtyh of this post but I think there is a bit more that needs considering. All the rules might just not have been changed – not quite yet.

    The key problem area to be considered and reflected upon in Spencer v Taylor and before singing from rooftops or dancing in the streets is this is a CoA decision and they often rest, as in this case, on specific points. That is why CoA decisions often throw up more questions than they answer, and more problems than their decision solves, as recently evidenced by Superstrike and Johnson v Old.

    The whole nub of the problem now is that LJ Lewison has strayed into an area he really didn’t need to, made it sound as though only a s21(1)(b) is needed to terminate either in the fixed term or when periodic no matter when served. And that only 2 months notice is needed from the Landlord apparently no matter what the period of the rent, which under NTQ rules [and which applied to s21(4)(a) notices] and for all we know still might apply to s21(1)(b) served in the periodic state.

    Most commentators so far, mainly because it is an advantage at last to the Landlord and makes life easier all round, are jumping on this 2 months only notice business being all that is now needed in any s21(1) service, including in tenancies where longer notice, under NTQ requirements, would have been needed.

    This obviously is not what the Spencer decision intended, or one assumes not, but potentially is a side effect of the decision. If the decision is as everyone who has commented so far seems to think it is, even if only tentatively and in hope (have you seen anyone dogmatically pronounce on this yet?!) then it may indeed be so.
    Back to the plot and CoA decisions causing uncertainty.

    Does Spencer v Taylor really say all you need at any time is a s21(1)(b) or equivalent, and only 2 months notice at any time? On the face of it yes, so good news for Landlords, but did the decision really intend to have this cutting across NTQ notice periods outcome? Did it really make s21(4) so obsolete that a specific date doesn’t need to be entered even into a s21(1)(b) served during the periodic state?

    Logic and in the case of a tenant having to give longer notice than a Landlord(!) equity would probably say not but Spencer on the face of it seems to be going in that direction. But consider this on CoA decisions on narrow points leading to other problems and uncertainty.
    Spencer served notice stating section 21(4) and the court held it valid. Therefore after the fixed term has expired either notice can be used, even if the section 21(4) version is actually a section 21(1) look alike. As commented on above by myself and Mark in response to Recardo’s question it has always been possible to use a validly served s21(1)(b) as under the ‘old’ rules to terminate an AST that has gone periodic.

    But the CoA problem in Spencer is that the argument was about a 21(4)(a) and its validity with the two dates and saving clause wording. As often in CoA cases no other specific point was argued, LJ Lewison even makes reference to this himself in the decision. The key point as to if the section 21(1)(b) notice has to follow common law rules about service of notices if used in future to terminate a periodic was not argued at Spencer.
    So until it is in probably an inevitable future case then continuing to follow the NTQ rules if using a s21(1)(b) served in the periodic state would be a very wise move. It may turn out to be overkill and not needed and of course the easier solution is to have a s21(1)(b) served during the fixed term. That may not be a long term solution though given Law Commission mutterings about making such notices valid only for 3 months (just as a s8 is only valid now for 12 months).

    The saving clause needed will be a little more complex as the conventional clause works on periods of the tenancy that will not exist in a fixed term notice. You can of course still use a notice saying it is served under section 21(4) as Spencer did and be told the notice was valid as Spencer’s was. In Spencer they gave a notice saying it was under section 21(4) but the CoA effectively said it was still valid as a section 21(1) notice.

    Therefore and until the matter is tested you can still do as before and serve under section 21(4) if the tenancy is periodic and no prior s21(1) has been served. But it should also be clearly born in mind that there has been no discussion in Spencer about end dates to be used if the section 21 was served when the tenancy had gone periodic [even if served under section 21(1)] and whether it has to comply with the common law rules requiring the periodic notices to expire at the end of a period.

    The issue of the common law rules was not discussed. There could be strong implications it does not have to but the point was not really argued and as we all know to our cost another Judge may take a different view. Although Spencer is a CoA decision and on the face of it binding on lower courts that is only in arguing the same point – the common law rules would be a different one!!

    Proceed with caution would be my advice




»

«


The Landlord Law Blog from Tessa Shepperson

Tessa is an English lawyer specialising in residential landlord and tenant law.


Legal Services

Legal services are provided via Tessa's online service Landlord Law. Some advice services are provided by Tessa, other legal services are provided by specialist housing firm Anthony Gold.


Disclaimer

The purpose of this blog is to provide information, comment and discussion. Although Tessa, or guest bloggers, may from time to time, give helpful comments to readers' questions, these can only be based on the information given by the reader in his or her comment, which may not contain all material facts. Any comments or suggestions provided by Tessa or any guest bloggers should not therefore be relied upon as a substitute for legal advice from a qualified lawyer regarding any actual legal issue or dispute.


Nothing on this website should be construed as legal advice or perceived as creating a solicitor-client relationship (apart from the Fast Track block clinic service - so far as the questioners only are concerned).


Guest bloggers

Please note that any opinion expressed by a guest blogger is his or hers alone, and does not necessarily reflect the views of Tessa Shepperson, or the other writers on this blog.


Other websites from Tessa

Lodger Landlord | School for Landlords | Google+ | Your Law Store | Google | Landlord Law facebook page | Tenancy Agreements Manual | How to Evict Your Tenant website | the Which Tenancy Agreement Guide | Landlords Tips | Tenants Tips