FREE CHAPTER from ‘A Practical Guide to the Ending of Assured Shorthold Tenancies’ by Elizabeth Dwomoh

CHAPTER ONE
DEFINITION OF AN ASSURED SHORTHOLD TENANCY

KEY POINTS

  1. The assured shorthold tenancy was introduced by the Housing Act 1988 and came into existence on 15 January 1989. All tenancies granted in the private rented sector on or after 28 February 1997 automatically became assured shorthold tenancies.

  2. The assured shorthold tenancy is a species of an assured tenancy. The main characteristics of an assured tenancy are that: (i) it must be a tenancy of a dwelling house, (ii) let to an individual, and (iii) the dwelling-house must be used by an individual as their only or principle home.

  3. Three different types of assured shorthold tenancies exist: (i) the fixed-term assured shorthold tenancy, (b) the contractual periodic assured shorthold tenancy and (iii) the statutory periodic assured shorthold tenancy.

Introduction

  1. When discussing the termination of an assured shorthold tenancy it is important to start at the beginning. A basic understanding of the characteristics of an assured shorthold tenancy and the various types of assured shorthold tenancies that can be created is necessary. Such knowledge should assist in both the grant of a valid assured shorthold tenancy and its termination.

  2. This chapter focuses on the characteristics of an assured shorthold tenancy and the different types that can be created. It concludes with an outline of the various factors that will also prevent the creation of an assured shorthold tenancy.


The main characteristics of an assured shorthold tenancy

  1. Although the assured shorthold tenancy is a distinct form of tenancy, it is still a species of an assured tenancy. Accordingly, the main characteristics of an assured tenancy apply in respect of an assured shorthold tenancy.

  2. The defining characteristics of an assured tenancy are set out in s.1 of the HA 1988. As a “species” of an assured tenancy an assured shorthold tenancy also shares the following characteristics:

  • a tenancy under which the dwelling house is let as a separate dwelling;

  • a tenant or each of the joint tenants is an individual;

  • the property is occupied by the tenant or if there are joint tenants, at least one of the joint tenants occupies the property, as their only or principal home.

Separate dwelling-house

  1. The HA 1988 does not provide a statutory definition of “dwelling-house”. In the ordinary meaning of the word it is a place where a person lives and regards as their home.

  2. A “dwelling” can be an entire house or part of a house with other facilities such as a kitchen and a bathroom shared in common. 1 In Uratemp Ventures Ltd v Collins and Carrell [2002] 1.A.C. 301 the House of Lords held that a single room could constitute a dwelling and the lack of cooking facilities did not detract from a property being classed as a “dwelling” for the purposes of the HA 1988.

Letting to an individual

  1. An assured shorthold tenancy can only be granted to an individual or individual joint tenants. Consequently, a company cannot be granted an assured shorthold tenancy.

Only or principal home

  1. It is an essential requirement of an assured shorthold tenancy that a tenant, or if there are joint tenants at least one joint tenant occupies the property as their only or principal home. The requirement does not debar a tenant from occupying more than one property at any one time. The requirement is that the property which is held under the assured shorthold tenancy is the tenant’s main home.

  2. A tenant can be temporarily absent from their property without ceasing to occupy their property as their only or principal home. The court must objectively assess the tenant’s intention to return to the property when deciding whether a tenant has ceased to occupy their property as their only or principal home. In doing so a number of factors can be taken into consideration such as the reason for the absence and its duration.2

  3. A tenant who sublets the whole of their property without their landlord’s consent may find it difficult to prove to the court that they continued to occupy the property as their only or principal home. On an objective analysis of the facts, it is highly likely that the court would determine that the tenant no longer demonstrated an intention to occupy the property as their only or principle home.3

Types of assured shorthold tenancies

  1. Three different types of assured shorthold tenancies exist:

  • fixed-term assured shorthold tenancy;

  • statutory periodic assured shorthold tenancy; and

  • contractual periodic assured shorthold tenancy.

  1. Each type of assured shorthold tenancy is considered below in greater detail.

Fixed-term assured shorthold tenancy

  1. A fixed-term assured shorthold tenancy is a tenancy granted for a defined period of time. On expiry of the fixed-term period both landlord and tenant may agree to renew the tenancy for a further fixed-term period.

  2. Before 28 February 1997, a landlord was required to grant a tenant an assured shorthold tenancy for a minimum fixed-term period of six months.4 This requirement was abolished for tenancies created on and after 28 February 1997. Consequently, a fixed-term assured shorthold tenancy is not required to have a minimum or maximum duration for the length of its fixed-term.

  3. A fixed-term assured shorthold tenancy with a fixed-term period exceeding three years must be created by deed.5 An assured shorthold tenancy with a fixed-term period exceeding seven years must be registered at the Land Registry.6 The tenant is responsible for registering the lease.7 A fixed-term assured shorthold tenancy that is granted for a fixed-term period of more than twenty-one years will be categorised as a long lease.

Statutory periodic assured shorthold tenancy

  1. A “periodic” tenancy is a tenancy that rolls on from week to week or month to month depending on the rental payment period.

  2. On the expiry of the fixed-term period of an assured shorthold tenancy a landlord or tenant must take lawful steps to bring it to an end. In the absence of steps to determine the tenancy, it automatically rolls on as a statutory periodic tenancy by virtue of s.5(2) and (3) of the HA 1988.

Contractual periodic assured shorthold tenancy

  1. A contractual periodic assured shorthold tenancy arises in three distinct circumstances. First, Both the landlord and tenant can agree to a contractual provision in the tenancy agreement that upon the expiry of the fixed-term period the tenancy will continue as a contractual periodic tenancy.

  2. For example, under the terms of an assured shorthold tenancy agreement the rent is paid monthly. A contractual provision in the tenancy provides for a six months’ fixed-term period. On expiry, the tenancy is to continue as a contractual periodic tenancy rolling on from month to month. When the six months’ fixed-term period of the assured shorthold tenancy expires, the contractual periodic tenancy will automatically come into being. It will roll on from month to month until it is brought to an end.

  3. Second, both the landlord and the tenant can agree to enter into a contractual periodic assured shorthold tenancy from the outset of the agreement. Ordinarily, a landlord would grant a tenant a fixed-term period of a month or a week. On expiry, the tenancy would be allowed to continue on a periodic basis until it was determined by either the landlord or the tenant.

  4. Third, before the expiry of a fixed-term assured shorthold tenancy, both the landlord and the tenant can agree to enter into a new agreement for a contractual periodic assured shorthold tenancy.


Pre-28 February 1997: creation of an assured shorthold tenancy

  1. Due to the changes made by the HA 1996, the requirements for the creation of an assured shorthold tenancy before and after 28 February 1997 will briefly be outlined.

  2. An assured tenancy granted before 28 February 1997 would only become an assured shorthold tenancy if the following additional requirements set out in s.20 of the HA 1988 were fulfilled:

  • the tenancy was granted for a minimum fixed-term period of six months;

  • the tenancy agreement did not contain a clause permitting the landlord to terminate the tenancy before the minimum six months’ fixed-term period had expired. Neither a power of re-entry nor a forfeiture clause was to be deemed as contrary to this provision;8

  • Before the start of the tenancy9 the landlord or at least one of the joint landlords10 served on the tenant a notice in the prescribed form11 stating that the tenancy was to be an assured shorthold tenancy. Service of the notice was mandatory and could not be dispensed with.

  1. Sub-section 20(3) of the HA 1988 created an exception to the above. A tenant of a landlord or one of the joint tenants of a landlord who occupied a property under an assured tenancy before the grant of a new tenancy could not hold the new tenancy under an assured shorthold tenancy regardless of whether the above conditions were satisfied.


Post
28 February 1997: creation of an assured shorthold tenancy

  1. Due to the amendment made to the HA 1988 by s.96 of the HA 1996 all assured tenancies granted on or after 28 February 1997 automatically became assured shorthold tenancies by virtue of s.19A of the HA 1988. No special procedure or prescribed notice was required for creation of an assured shorthold tenancy on or after this date.


Factors preventing the creation of an assured shorthold tenancy

  1. Sub-section 2(2) and sch.1 to the HA 1988 outline a number of factors preventing the creation of an assured tenancy. They apply similarly to assured shorthold tenancies. Below is a summary of the factors likely to affect the private rented sector:

  • a tenancy in England where the yearly rent exceeds £100,000;12

  • a tenancy entered into before 1 April 1990 where the rateable value exceeded £1,500 in Greater London and exceeded £750 elsewhere;13

  • tenancies where no rent is paid;14

  • a tenancy where the rent is low; namely £1,000 or less in Greater London or £250 elsewhere;15

  • lettings to students provided by their educational institution; 16

  • holiday lettings; 17 and

  • a lodger living with their landlord.18

  1. Sub-section 19A(a) and sch.2A of the HA 1988 further outline when an assured shorthold tenancy cannot be created. Below are some of the exceptions that may arise in the private rented sector:

  • a tenancy granted in respect of a contract entered into before 28 February 1997 (the day that s.96 of the HA 1996 came into force);19

  • when a landlord serves notice on a prospective tenant before the grant of a tenancy that the tenancy will not be an assured shorthold tenancy;20

  • when a landlord serves a notice on their tenant after the tenancy has begun that the tenancy will not continue as an assured shorthold tenancy;21

  • when the agreement contains a clause stating that the tenancy to which the agreement pertains is not an assured shorthold tenancy;22

  • succession by a tenant to an assured tenancy by virtue of the death of the former protected or statutory tenant under the Rent Act 1977;23

  • an assured tenancy which arose out of the expiry of a long residential tenancy;24

  • an assured tenancy granted on or after 28 February 1997 by the original landlord to their original tenant or joint tenants which replaced a pre-existing non-shorthold assured tenancy;25

  • a statutory periodic tenancy which arose following the end of a fixed-term assured tenancy. 26

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1s.45(1) of the HA 1988.

2Islington Borough Council v Boyle and anr [2011] EWCA Civ 1450.

3See Ujima Housing Association v Ansah (1998) 30 H.L.R. 831, CA.

4s.20(1) of the HA 1988.

5ss.52(1), 54(1) and 54(2) of the Law of Property Act 1925.

6s.4(1)(c) of the Land Registration Act 2002.

7s.6(3)(b) of the Land Registration Act 2002.

8s.45(4) of the HA 1988

9s.20(2)(b) of the HA 1988.

10s.20(6)(b) of the HA 1988.

11The form of the notice was prescribed by the Assured Tenancies and Agricultural Occupancies (Forms) Regulations 1988 (SI 1988/2203).

12sch. 1, para. 2(1)(b) of the HA 1988 as amended by Assured Tenancies (Amendment) (England) Order 2010 (SI 2010/908).

13sch. 1, para. 2A of the HA 1988.

14sch. 1, para. 3 of the HA 1988.

15sch. 1, para. 3A of the HA 1988.

16sch. 1, para. 8 of the HA 1988.

17sch. 1, para. 9 of the HA 1988.

18sch. 1, para. 10 of the HA 1988.

19s. 19A(a) of the HA 1988.

20sch. 2A, para. 1(2) of the HA 1988.

21sch. 2A, para. 2(2) of the HA 1988.

22sch. 2A, para. 3 of the HA 1988.

23sch. 2A para. 4 of the HA 1988.

24sch. 2A para. 6 of the HA 1988.

25sch. 2A para. 7 of the HA 1988.

26sch. 2A para. 8 of the HA 1988.