Here is a question to the blog clinic fast track from Mike who is a landlord.
I have a flat let on AST to two sharers on joint and several terms – they share rental payments equally. One of the parties is leaving and I have received a notice to quit from each with the same expiry date.
Although she has served notice, the second party would like to stay on and is looking for a new sharer. I hope she is able to do so so that a new tenancy can start immediately after the expiry of the current one, but what would be the position if she is unable to find someone in time?
The party who wishes to remain has been at the flat for around 5 years and has been an excellent tenant in every way, so that I would like to assist her if possible. Is there any device to enable her to stay on for a brief period beyond the termination date so that she can continue to look for a sharer. I would be prepared to do this for a brief period provided a new tenancy is not created.
Answer
A bit of a tricky one. Although your tenants’ notices to quit will end the tenancy at the end of the notice period, this does not mean you are entitled to immediate possession. As with most residential occupiers (whether they have a tenancy or not), you have to get a court order first. The fact that your tenants have served notice to quit though will (subject to what I say below) mean that you will be entitled to one if you need it.
Be aware though that in the meantime, if you accept rent from the tenant, then that will usually mean that a new tenancy will be created (s54(2) Law of Property Act 1925). Although you may be able to get around that by making sure that you have it in writing that any payment received is accepted as mesne profits only and without any intention to create a new tenancy.
There is also this very old rule under the Distress for Rent Act 1737 which says that if a tenant stays on after serving a tenant’s notice to quit, you are entitled to double rent.
Come to think of it, I am not entirely sure whether the acceptance of the double rent under the Distress for Rent Act will not create a new tenancy – but if it does it will be one subject to the double rent, so not really one the tenant will wish to continue overlong!
As to what you should do, here are some
Possible options:
- Allow her to stay on (not that you have any choice about the matter if she refuses to move out!) under the default situation which will be that she is liable for double rent under the Distress for Rent Act.
- Sign her up for a new tenancy at the previous rent as a sole tenant and allow her to take in one lodger – on the understanding that at renewal the lodger can be upgraded to a tenant. You could also perhaps say that if she is unable to find a lodger you will allow her to break the tenancy and leave early.
- Sign her up for a new tenancy at the previous rent but give her one month at a special low rent to allow her time to find a sharer and then either do a new joint tenancy agreement when the sharer is found or allow her to take the sharer in as her lodger as above
- Agree to allow her to stay on without any new tenancy agreement on the basis that she will pay half rent (on a mesne profit basis so you do not create a tenancy) for a limited period of time after which if she has not found anyone you will require her to vacate.
Lodgers
So far as the lodger option is concerned, landlords often get very upset about this and are dead against it.
However you need to bear in mind that someone who has been a model tenant (as this one has) for over five years is hardly going to suddenly go mad, divide up all the rooms and sublet to 15 illegal immigrants! Particularly as she will still be living there. She will want someone nice she can share with.
You need to be clear that she can only have ONE lodger, as if she takes any more the property will be deemed to be an HMO (which you probably don’t want). Your tenancy agreement should also make it clear that she will be liable for any damage done by her lodger, and visitors (all tenancy agreements should have something like this anyway).
Advantages of the lodger option though are:
- The tenant is responsible for finding and checking the lodger (ie not you) – and remains liable to you for the whole rent whether the lodger is there or not
- Any right to rent checks are the responsibility of your tenant not you! (Because you will not be the lodgers landlord – she will)
- If the lodger proves unsatisfactory she can leave and the tenant can find a replacement without you having to do anything or sign a new tenancy agreement – the tenant will continue on the same basis and remain responsible for the whole rent
However the lodger option should only be taken with a good tenant who you trust.
And finally
The most important thing though is that this is a good tenant. So hopefully she will be reasonable and you will be able to work something out. Legal rules and occupation rights only really become important if relations break down and you have to go to court. But still, it pays to take care!
Hopefully this article will help you do this.
In the linked article you refer to the Landlord classing rent collected after notice has expired from either party as mesne profits. I don’t think that can be correct for two reasons.
First far as I am aware only a Court can deem payments received after an Order has been granted and the date for the property return has passed. Mesne profits do not even arise on the granting of the Order only when it has matured. I have been in the industry for 25 years and have never heard of anyone other than a Judge awarding mesne profits on request of a Landlord’s advocate in Court.
I have also seen probably several hundreds of tenancy agreements and never seen a clause stating that any payments made after notice has been given and matured by either party to the other would be mesne profits and not rent. And the tenancy agreement surely is the appropriate place to make such a statement and have it agreed by the tenant, just as there is a clause stating any payments made by anyone other than the tenant are made by that person as agent for the tenant.
Second any occupancy by a tenant post any s21 notice to them or a NTQ from them to the Landlord continues as a periodic tenancy with rent continuing to fall due for as long as the tenant is in occupancy.
This is not a post court possession order situation and the notice was a notice to quit served by a tenant. Not a section 21 notice served by the landlord.
S5 of the Housing Act 1988 prohibits NTQs for landlords but not for tenants. The effect of a NTQ is to end the tenancy. Completely. In the same way that a landlords NTQ will end a common law tenancy. Unlike s21 notices where the tenancy continues.
The question then is what happens after the NTQ notice period if the tenant does not move out? The Distress for Rent Act provides for double rent to be payable. Which would indicate that a tenancy will be resurrected if they stay on.
However, I am not convinced that a tenant can resurrect their tenancy upon which they have served notice to quit simply by staying on.
Particularly as it is clear that landlords can evict tenants who remain after serving a NTQ (this is often done by Local Authorities when women being rehoused after fleeing a violent partner serve a NTQ to the Council so the Council can evict the violent partner).
My understanding has always been that in this situation a landlord can prevent the tenancy from resurrecting itself (eg under s54(2) of the Law of Property Act 1925) by providing that any money paid is accepted as an occupation rent (mesne profits) only and without any intention to create a tenancy.
However if I am wrong, no doubt someone will post here and explain why.
I would agree with your analysis, Tessa. The tenants’ NTQ ends the tenancy. While a possession order would be required to get them out, this does not mean the tenancy continues to eviction, as with a s.21 notice, because that is an effect of the Housing Act 1988.
The double rent route does seem rather risky, possibly creating a new tenancy. I’ve not come across that before, but no-one would want to be the precedent…
Mesne profits until fresh tenancy sounds like the best option, but of course, any deposit would have to be returned in the meantime. And then there is the question of liability for council tax…
A tenancy by demand and payment of rent arises only by implication; since “double rent” while holding over after tenant’s NtQ is payable by statute, there is no room for an implication of a new tenancy by payment of rent, in my view.
On the other hand, a tenant holding over after termination of the tenancy (however determined) while a new lease is negotiated is one of the classic cases of a tenancy at will.
This ‘double rent’ is not really rent but mesne profits. Indeed there is no longer any rent due since the tenancy has ended, and the ex-tenant must be treated as a trespasser in order for the statute to apply.
Of course, the landlord is not obligated to claim double the previous rent, especially in this case as the aim is not to make the ex-tenant leave, at least for now.
There is no risk of creating a new tenancy by claiming under the Distress for Rent. The risk is to demand or accept any payment in advance, or in a way that could be interpreted as accepting occupation.
I would not return the deposit until this issue is settled as any proposed deductions cannot be worked out until vacant possession is recovered (probably an implied term of the tenancy), or a new tenancy agreed.
Lastly, the remaining ex-tenant is solely liable for council tax as the only resident.
The 1737 Act has been held to apply only where the tenant is a trespasser and treated as such by the landlord: see Oliver Ashworth (Holdings) Ltd v Ballard (Kent) Ltd [2000] Ch 12, where the landlord had treated the notice as invalid and demanded further rent before issuing proceedings claiming rent under the lease or double rent under the Act.
In Booth v Macfarlane (1831) 1 B & Ad 904, KB, a tenant who paid double rent after their NTQ had expired did not then have a further tenancy requiring them to serve a further NTQ.
I agree that otherwise, once the tenancy has ended (which it does automatically on expiry of the NTQ) it is mesne profits.
Thanks to Romain for the explanation of what actually exists if the tenant doesn’t vacate as something must – even trespasser status!! The deposit I think would have to be returned as the tenancy has ended so the refund clock as per the various Scheme Rules would start ticking. Obviously delay return.
On Council Tax what makes you sure it is the remaining tenant – if there is no tenancy why would the C Tax office demand payment from a trespasser?
It does not matter if the resident is a trespasser, or even a squatter. As long as he is a resident liability lies with him, not the owner.
I don’t think that there can be any doubt that an ex-tenant holding over is indeed a resident.
The precise status of someone holding over is a bit confusing.
They do not have their previous tenancy any more (as this has ended due to the NTQ) or indeed any real right to be in the property – but they are not a trespasser. So if proceedings are used to evict them it is the standard procedure and not the special procedure used for trespassers.
As R above says, it is probably a ‘tenancy at will’ which is about the most limited type of tenancy you can have with no real rights at all.
c/f the situation where a license to occupy is ended where the occupier IS then a trespasser (and where the trespasser procedure should be used).
An ex-tenant holding over after the expiry of his notice to quit is indeed a trespasser. He no longer has any lawful right to be at the property, he occupies it unlawfully.
For the tenant to have a tenancy at will the landlord must consent to the occupation. I think that this is the point R made.
As I mentioned previously, for double rent to be due the ex-tenant must be a trespasser, i.e. holding over without the landlord’s consent.
Likewise, mesne profit is the compensation an owner is entitled to recover from trespassers.
Reading between the lines, is the issue that the “remaining tenant” can’t afford the rent without a new sharer and therefore the landlord does not wish to take the risk of a AST being created unless an 2nd person is on it?
Otherwise just issue an AST to the “remaining tenant”, given the “remaining tenant” a break cause of 1 weeks’ notice, so she is not committed if a flat mate cannot be found.
And the interesting Council tax side-issue? Is the ex-tenant still liable until he leaves the property? If the Council chase the owner instead will he be able to convince them of the ex-tenants responsibility to pay, if the case?