ARTICLE
18 April 2024

Steps To End An Assured Shorthold Tenancy

HL
Higgs LLP

Contributor

Higgs LLP
A landlord should always seek specialist advice before serving notice and commencing court proceedings seeking possession. Detailed criteria not covered...
UK Real Estate and Construction
To print this article, all you need is to be registered or login on Mondaq.com.

A landlord should always seek specialist advice before serving notice and commencing court proceedings seeking possession. Detailed criteria not covered in this note must be strictly followed if any notice requiring possession is valid.

Sections 8 and 21 of the Housing Act 1988 ('the Act') provide two different procedures for the landlord to terminate an Assured Shorthold Tenancy ('AST').

The grounds for obtaining possession of a property let on an assured shorthold tenancy in England are set out in Schedule 2 of the Act. They are relevant to the possession procedure under Section 8 only.

Where the landlord uses the procedure under section 21 of the Act, it does not need to rely on any of the grounds for possession.

A landlord must first obtain a court order before evicting the tenant.

A landlord can serve a Section 21 notice in addition to a Section 8 notice if it can rely on one or more of the grounds for possession in Schedule 2 to the Act, and termination is sought after the fixed term has expired. It is possible to simultaneously serve a Section 8 notice and a Section 21 notice and for the two notices to run concurrently.

There can be tactical advantages to serving a Section 8 notice on the grounds of tenant default. Where obtaining possession is the priority, however, the advantage of serving a Section 21 notice (over a Section 8 notice) is that the landlord does not need to prove a tenant's fault to obtain possession. Further, the landlord can use the accelerated possession procedure if the criteria apply.

The landlord can bring a money claim together with the possession claim when it uses the standard possession procedure (usually following a Section 8 notice). It cannot do this if it uses the accelerated possession procedure.

A landlord should, therefore, consider what is appropriate and what it wants to achieve in relation to the case itself.

Break notices

If a landlord purports to exercise a contractual break right to terminate the assured shorthold tenancy before the fixed term expires, it must also terminate the statutory tenancy. The landlord can do this by serving the contractual break notice in accordance with the terms of the tenancy agreement and a Section 21 notice.

This is subject to Section 21(5) of the Act, which provides that an order for possession cannot take effect earlier than six months from the commencement of the term of the original tenancy. Note also the changes effected by the Deregulation Act 2015, which includes the rule that a Section 21 notice to determine a contractual fixed-term tenancy may not be given within the first four months of the tenancy.

If a landlord has served a Section 21 notice to terminate an assured shorthold tenancy of premises in England, it must give the tenant at least two months' notice. If a tenant wants to terminate the tenancy by exercising a break right, the required notice period may be less than two months.

There appears to be nothing to stop a tenant from giving notice to terminate after being served with a Section 21 notice, and so "trumping" the landlord's notice period with a shorter period.

Forfeiture clauses

A forfeiture clause is often included in an assured shorthold tenancy. However, where a property has been let as a dwelling, it is unlawful to effect forfeiture without a court order while any person is lawfully residing on the premises.

If a landlord wants to forfeit the remainder of a tenancy, it must follow the procedure set out in section 8 of the Housing Act.

To comply with section 7(6) of the Act, the forfeiture provisions of an assured shorthold tenancy should expressly refer to the landlord's right to forfeit for certain grounds set out in Schedule 2 to the Act.

If the assured shorthold tenancy does not contain an express clause referring to the landlord's right to terminate the tenancy on the grounds set out in Schedule 2 to the Act, there will be no right for the landlord to terminate the assured shorthold tenancy during the fixed term, even if the tenant is in breach of the tenancy (except where the landlord is relying on Ground 7B - eviction of illegal immigrant tenants). In those circumstances, the landlord can consider serving a section 21 notice before the fixed term ends, to expire on or after the contractual expiry of the fixed term.

Underleases

The general position when a head lease is terminated is that the underlease will also come to an end. However, section 18 of the Act provides that where the underlease is an assured tenancy (of which an assured shorthold tenancy is a sub-species) that has been lawfully granted, termination of the head lease will not bring the underlease to an end. Instead, the superior landlord becomes the direct landlord of the undertenant.

Where an undertenant has a lawfully granted assured shorthold tenancy and the landlord has taken steps to terminate the head tenancy, the landlord must also take steps to terminate the undertenant's tenancy, once it has become the direct landlord of the undertenant.

Section 18 of the Act will not apply where the underlease has not been lawfully granted. In those circumstances, the termination of the head lease will also bring the underlease to an end.

Surrender

An assured shorthold tenancy can be ended before or after the expiry of the fixed term by express surrender or by operation of law. The landlord can, therefore, end an assured shorthold tenancies by accepting a surrender.

If the tenant has abandoned the premises, the landlord may accept the surrender by changing the locks and re-letting it. However, the difficulty is that the landlord may be mistaken in their belief that the tenant has ceased to occupy the premises, as the tenant may, for example, be away on an extended holiday.

In those circumstances, if the landlord peacefully re-enters the premises, the landlord could find they are accused of committing an offence of unlawful eviction.

Accordingly, the safest option is for the landlord to serve notice and commence possession proceedings.

Tenants termination

A tenant who wants to leave the property during the fixed term of the tenancy may be able to exercise a break clause in the assured shorthold tenancy (if there is one) or negotiate a surrender with the landlord. Alternatively, it may seek to assign the assured shorthold tenancy to a new tenant (if the assured shorthold tenancy permits this).

The basic contractual position is that the tenant will be liable for the rent for the whole of the fixed term, even if they leave the property early, before the fixed term ends.

A tenant does not have to give notice to end the assured shorthold tenancy when the fixed term expires. A fixed-term tenancy will come to an end at the end of the fixed term. No periodic tenancy will arise if the tenant leaves the property at the end of the fixed term.

If the tenant remains and the assured shorthold tenancy becomes periodic, the tenant must notify the landlord that the tenant intends to end the tenancy and leave the property.

The notice must be in writing and give at least four weeks' notice, expiring on the last day of the tenancy period.

Practical issues relating to possession proceedings

The following are common issues that arise when the landlord issues possession proceedings after serving a Section 21 or Section 8 notice;

Possession proceedings based on defective notices

Where the landlord has issued possession proceedings following the service of an invalid Section 21 or Section 8 notice, it may want to consider serving a further notice without prejudice to the first one and discontinuing the current proceedings. Fresh proceedings can then be issued if the tenant does not vacate on the expiry of the notice. The normal rule on discontinuance, however, is that the landlord would be obliged to pay the tenant's costs of the proceedings.

Transfer of landlord's interest. The landlord is the person, other than the tenant, who, but for the existence of the assured shorthold tenancy, is entitled to possession of the premises.

Where the landlord's interest is being transferred, the new landlord will not become the legal owner on the date of the transfer but will be registered at the Land Registry on the date the transfer is made. Therefore, based on the definition of the landlord, it is unclear whether to be entitled to serve a notice under the Act, or bring possession proceedings, that person must be the legal owner.

This may rule out a purchaser who has not yet had their purchase registered. In any event, a new registered owner must provide notice of the transfer of ownership, along with an address in England and Wales at which notices relating to the tenancy can be served, for the terms of the assured shorthold tenancy to become enforceable by them.

When will the tenancy end?

If the tenant does not vacate by the date specified in any possession order, the tenancy will end when the order for possession is executed and possession is delivered up.

This note is accurate at the time of production. Changes may be afoot with the consideration of the Renters Reform Bill (2023)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

ARTICLE
18 April 2024

Steps To End An Assured Shorthold Tenancy

UK Real Estate and Construction

Contributor

Higgs LLP
See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More