Here is a question to the bloc clinic from Steve who is a landlord
I issued a 6 month AST 3 months ago and to date the tenant has not paid any money.
The tenant is claiming benefit and receiving that money direct to himself but not using it to pay his rent.
The tenant is not contactable and I have reason to believe he has already left the property being pursued by the police.
My question is, as he has made no payment “at all”, is the rent agreement binding as a contract? or can I end the tenancy immediately.
I don’t think you can say that the tenancy never existed if the tenant has lived in the property. A tenancy is not just a contract, it is a transfer of land.
What I suggest you to is find out what the situation is at the property. Take an independent witness with you and knock on the door.
If there is no reply use your keys to enter and have a look. If
- The tenant has removed all his possessions and
- Has left the keys behind
Then you are safe to change the locks and re-let the property. Leaving the keys behind in particular is generally considered to be a symbol of giving up possession.
If the tenant has left possessions behind (but not the keys) then I don’t think you can re-enter. However as he is in receipt of benefit you can contact the benefit office and let them know that the tenant is in arrears. They should then pay the rent direct to you.
If there are just a few things lying around and it looks as if he has gone but the keys have not been returned, then you may want to consider changing the locks anyway.
The general rule is that if a tenant’s conduct is inconsistent with an intention to continue with the tenancy, that is deemed to be an offer to surrender which you can ‘accept’ by going in and changing the locks.
In the unlikely event that you are wrong and the tenant decides to sue you for unlawful eviction you would be able to defend and counterclaim on the basis of the unpaid rent.
Have a look also at this post on implied surrender.
If the landlord gets Housing Benefit paid directly in this situation, where it appears the tenant shouldn’t have HB for the place he doesn’t live in, is the landlord liable to clawback later?
That is a potential problem and landlords should always be completely upfront with HB about the situation at the property.
If you are pretty certain the tenant is not coming back, this is a good reason to repossess anyway, bearing in mind that the tenant is unlikely to claim for unlawful eviction if there is a big unpaid rent bill.
And I can’t see the local authority bringing a prosecution if the tenant is apparently non resident because he is being pursued by the police! They have better things to do with their limited time.
Hi Tessa,
I was always under the impression that rent paid is one of the conditions that creates a tenancy, as per Street v Mountford.
If rent had never been paid to and accepted by the Landlord, could it not reasonably be argued that a tenancy had never been created?
The signed agreement was for rent to be paid, its just that the tenant is in breach of this by failing to pay it.
I could be wrong of course and it may be arguable that the tenancy was void ‘ab initio’ because rent was never paid. I’ll see if I can get another lawyer to comment.
Leaving technical issues aside however, my feeling is that the questioner will probably be reasonably safe to change the locks in this case.
Housing Benefit
If there is any HB outstanding in arrears then the LA will normally suspend payment pending establishing if the tenant is entitled to a claim. If he is not living there, then that will be a reason for cancelling a claim and not automatically transfering payment to the landlord. The landlord may eventually get any monies due up to the date of notification that the tenant had vacated.
Thanks Colin. HB is not my best subject!
I have heard this line of argument used before. It is a good question. Unfortunately it relies on a mistaken interpretation of the law of contract, or as John has done, a misunderstanding of Street v Mountford (sorry, John).
The contract argument relies on two possible lines. The first is that the non-payment being seen a repudiation breach of the contract by the tenant which allows the landlord to consider the contract void. Unfortunately the court does not agree. There is only one case where the courts have allowed non-payment of rent to be seen a repudiation of the contract and it is very specific to the scenario there. It would not be an acceptable argument in relation to a residential tenancy.
The other contractual argument is that not paying the rent means that the tenant has not provided any consideration for the contract and so there is no contract at all betweent the parties. However, consideration is treated by the courts in a much lighter sense. There is clearly an intent by the parties that there should be a consideration for the contract (the rent) and the landlord can now sue for that money (as Tessa has said). In fact the consideration is not the rent but the promise to pay rent which leads to a right to sue. Therefore this line of argument also falls.
The Street v Mountford line of argument is incorrect because that case does not say that rent is the essence of a tenancy. It is exclusive possession which is the essence of a tenancy. Rent is indicative but not determinative. Rent is only a vital component of a tenancy in Scotland.
Or, to summarise, no you cannot!
Thanks David, good to have an authoritative statement of the law!
I’m not so sure my understanding from several sources and many years experience (not at David’s level from a legal angle I grant you) is that for a contracts to be perfected you need the three C’s – Contract, consideration and Control (keys).
If no money was ever paid and there was no consideration then I’d say there is at least a legal argument that there was no contract perfected between the parties and therefore the Landlord can change locks etc as tenant has no right to occupy.
However it is an arguable claim, plus of course if valid then the right to pursue for the rent is also lost. Mind you”ll never get that, so probably best to proceed with a lock change
@ IO
I thought ‘perfection’ related to security interests like mortgages, not tenancy agreements?
“If no money was ever paid and there was no consideration then I’d say there is at least a legal argument that there was no contract”
True, but in this case, although no money was paid there was consideration, so there was a contract.
Consideration is something that each party promises in a contract. The landlord’s promise is exclusive possession and the tenant’s promise is to pay rent. If either promise is unfulfilled then the contract still exists but it has been breached. It is not void. Otherwise how could any contracts ever be considered binding if all any party has to do is not fulfill their part of the bargain?
Consider the other angle for a moment. If the landlord failed to fulfill their promise and refused to hand over the keys, would you say the contract is void? No, you would take the landlord to court and seek damages or specific performance.