Foundations of landlord and tenant law – part 10
The law relating to tenancies is now governed by the two statutory codes:
- The Rent Act 1977 and the
- Housing Act 1988.
These change the underlying common law. But to fully appreciate this, we need to know what the law was to start with.
So this post is going to have a quick look at some of the underlying common law principles relating to the creation and ending of tenancies.
Creating a tenancy
As a tenancy is a type of land, a tenancy agreement is a document of title. The Law of Property Act provides that all documents of title need to be made by a deed – except:
- Where the term is three years or less
- When the tenancy starts immediately, and
- Where a market rent is charged
Here section 54 (2) of the Law of Property Act specifically says that no deed is necessary. Which is why tenancies can be created without any paperwork at all.
Where a tenancy is not going to be at a market rent or is for a longer term, or if it is signed up before the tenants go into occupation, you should make sure that the tenancy agreement is signed as a deed – if you want the three-year term to be fully effective.
You do this (ie sign as a deed) by having wording to that effect on the document and getting signatures witnessed by an independent witness.
So, as short lets do not need to be created by deed, we also need to look at that other area of law which governs them – the law of contract. As discussed earlier – under the law of contract, a contract is made when there is
- an offer,
- an acceptance and
- ‘consideration’ (money or money’s worth).
However, practically it is generally considered that notwithstanding anything which may have happened earlier, a tenancy will come into being when the tenant goes into occupation and the landlord starts accepting rent.
From that time onwards, both parties are bound by the rights and obligations which go with tenancies.
Note that if a tenant stays on after the end of a fixed term, and the landlord continues to accept rent, this will create a new ‘periodic tenancy’ which will run from month to month, or from week to week (or occasionally quarterly etc), depending on how the rent is paid.
As the period will inevitably be under three years no paperwork is needed to create the new tenancy. Its terms will almost always be the same as the terms of the preceding fixed term tenancy agreement.
Ending a tenancy
In law, a tenancy/contract can end in one of the following ways:
- By agreement/surrender
- By implied surrender
- By ‘effluxion of time’
- A break cluase
- By forfeiture
- By a notice to quit
- By a court order for possession (or equivalent – eg a notice from the Home Office under the Immigration Act)
- By frustration
Let’s take a closer look
This is fairly obvious. If a tenant asks a landlord if she can leave early and he agrees, then that is a termination by agreement.
Technically this is known as surrender – the tenant offers to surrender the tenancy and the landlord accepts it. This leads us to
This is a rule regarding the termination of a tenancy if the tenant appears to have abandoned it. If the actions of the tenant are inconsistent with a desire to continue with the tenancy, ie removing all their possessions, leaving the keys behind and failing to pay rent, this can be deemed an implied offer to surrender, which the landlord can accept by going in and changing the locks.
Effluxion of time
This is a lovely old phrase. Who but a lawyer would ever use it? It means that the tenancy has come to its natural end. So if the tenant moves out at the end of a six month fixed term he does not have to do anything as the tenancy will end anyway by ‘effluxion of time’. The periodic tenancy mentioned above will only arise if he is still there after the fixed term has ended.
The parties can also agree among themselves a procedure for ending the tenancy early which is then set out in the tenancy agreement – known as a ‘break clause’.
To activate a break clause you need to do what it says. So if it provides for two months notice in writing, you need to give two months notice in writing. If the clause says that this must be after the first four months of the tenancy, then the break clause cannot be used during the first four months of the tenancy.
Note by the way that if the tenant does not move out – a periodic tenancy will then arise. The break clause will only end the fixed term.
This is a very old procedure. It is the right of the landlord to end a tenancy by ‘re-entering’ if the tenant fails to comply with the tenancy terms and conditions (normally this is by failing to pay rent).
In the old days, ‘re-enter’ meant just that. The landlord would physically evict the tenant and change the locks. This can still be done in certain circumstances in commercial tenancies. However under the Protection from Eviction Act 1977 tenants can now only be evicted under a court order for possession, so ‘re-enter’ now means getting a court order.
If you want to forfeit for anything other than rent, there is also a special notice that needs to be served under s146 of the Law of Property Act 1925.
For some types of tenancy forfeiture is still available, but not all as we shall see. The rules of forfeiture are complex and include the right of the tenant to ‘relief from forfeiture’ for example if he pays the rent due in the case of forfeiture for non-payment of rent
Notice to quit
This is the way, under the common law, you end a periodic tenancy. There is a special form for the notice and it has to contain prescribed wording otherwise it is invalid. Under the common law, once the notice period (generally not less than 28 days, ending at the end of a period of the tenancy) has expired the tenancy will end, and the tenant will not be able to defend a claim for possession.
Note by the way that landlords cannot use old style notices to quit for assured and assured shorthold tenancies – because the Housing Act 1988 says so (section 5). You need to use the forms prescribed under the Housing Act (sections 8 and 21) which work in a different way.
Court order for possession
This is the only way nowadays that a landlord can evict a tenant who is unwilling to leave voluntarily.
Unless the landlord is bringing a claim to forfeit based on rent arrears, the proper form of notice will need to be served first. It is fairly easy for a landlord to get an order for possession under the common law, which is one reason why the statutory codes were introduced.
This is a contractual rule which says a contract will end by frustration if it becomes impossible to perform.
Tenants would like to be able to invoke this if they are unable to live at the property because their job requires them to live somewhere else, but in reality, this rule will very rarely apply to a tenancy.
The only circumstances really where it can be used are if it becomes physically impossible to live in the property, for example, if it has burned to the ground or if it was on a cliff top and has fallen into the sea.
Finally, just a couple of rules you need to know.
- Rent is payable in arrears unless the tenancy agreement specifically says it should be paid in advance and is in arrears if it is not paid by midnight on the due date. So for a weekly tenancy where there is no tenancy agreement providing for rent to be paid in advance – if the tenant goes in on Tuesday the rent will be in arrears if it is not paid by midnight on the following Monday.
- A fixed term or periodic term will end at midnight on the last day of the term or period
Next time I am going to be looking at the first statutory code we need to consider, that set up by the Rent Act 1977.