Read a free online chapter from ‘A Practical Guide to the Law of Private Renting in Northern Ireland’ by David Smith

CHAPTER TWO

PRIVATE TENANCIES

The Private Tenancies (Northern Ireland) Order 2006 (the “2006 Order”) has been a key element in the growth of the private rented sector in Northern Ireland. It was not the only driver of that growth, which began in the 1990s as the peace dividend and the revival of the Northern Ireland economy was bolstered by a supply of relatively cheap lending secured on residential property along with the beginning of the house price rises that have continued ever since.1 However, just as the Housing Act 1988 created a legal framework which bolstered the rise of the PRS in England and Wales, the 2006 Order put the PRS in Northern Ireland on a firm footing.

It has had an unusual gestation. It found its origins in work carried out by the Northern Ireland Department for Social Development and the Northern Ireland Housing Executive who published a joint strategy for the private rented sector in May 2004.2 The overall aim of that strategy was to promote and sustain a healthy private rented sector, offering choice and flexibility by influencing supply and securing a better quality, managed sector. The Northern Ireland Assembly had however been suspended since 2002 and so the proposals were eventually implemented by way of an order in council with a minimal level of scrutiny in sub-committees of the Houses of Parliament. To be fair this was recognised at the time with David Hanson MP, then a Minister of State for the Northern Ireland Office, acknowledging the unsatisfactory and hugely abbreviated consideration being given to the Order as compared to what would have occurred in a properly constituted Northern Ireland Assembly.3

The exact purpose of the Order is not wholly clear. In debate the Minister of State for Northern Ireland suggested that the order would bring Northern Ireland legislation on the PRS closer to that found in England and Wales.4 However, this is very definitely not what occurred. In fact, Northern Ireland was already quite close to the way things were in England & Wales before the 2006 Order. It was just that it was close to the system that operated in England & Wales prior to the introduction of the Housing Act 1988. A number of residential tenancies were afforded very significant protection while the remainder had almost no protection at all. The Order however did not move Northern Ireland closer to where England had gone as it in no way replicates the Housing Act 1988. Rather, it drew on a mix of concepts from England and Wales and Scotland as well as using unique ideas of its own to create a blend which is entirely unique to Northern Ireland.

Unusually, compared with the rest of the UK, the 2006 Order has remained the cornerstone of the PRS in Northern Ireland. A substantial amount of the legislation since has simply amended the Order or added segments into it and the Order has therefore served something of a consolidating function. Tenancy deposit protection and landlord registration for example have both been grafted into the Order. By contrast, elsewhere in the UK more and more legislation has been layered on top of existing structures creating a confusing patchwork with little effort being made to consolidate them in a meaningful manner.

When the Assembly returned in 2007 much effort was devoted to work on the PRS and other parts of the housing sector. A lot of change was made in 20115 which represented a substantial reframing of the 2006 Order and control over housing being brought definitively back within the control of the Northern Ireland Assembly.

However, the pace of change in Northern Ireland has since dropped off as the Assembly has moved through a further period of suspension while other parts of the UK have pushed ahead with ambitious reform.6

The 2006 Order is fairly light touch in its operation. It does not create a full tenancy regime itself as previous legislation did7 and focuses instead on creating an underpinning structure which permits a substantial degree of freedom of contract and only steps in to create certain minimum standards or fill in gaps left by the contract. It therefore tried to work in concert with the manner in which the Northern Irish sector had been developing prior to its coming into effect by seeking to tame the more wild aspects of its character rather than seeking to re-impose the highly structured regime of the late 1970’s. In fact, much of the work since then has been focused on hanging more regulation onto that initial framework to bring the Northern Irish PRS towards the more regulated model being operated in the rest of the UK. However, the PRS in Northern Ireland still retains a strong element of contractual freedom, more so than the rest of the UK, which is slowly being brought under tighter control. As the interests of the Northern Ireland Assembly often follow those of other law making bodies in the UK this has meant that there is considerable control in some areas and very little in others. No doubt, this will change over time as the gaps are filled in.

The 2006 Order only applies to tenancies. Therefore, if an occupation is not a tenancy (if it is a licence, for example) then the protections afforded by the Order will not apply. This makes the tenancy versus licence debate, which arises with increasing frequency in all UK jurisdictions no less important in Northern Ireland. The Order also does not apply to:

  • tenancies for more than 99 years;

  • tenancies granted by the crown or to a government department (both Northern Ireland government departments and UK ones);

  • tenancies granted by the NIHE or a housing association; or

  • holiday lettings.

As is common in other UK jurisdictions there is no clear definition of a holiday letting. In England the courts have held that it is the intention of the parties at the time that the tenancy was granted and so each case will turn on its fact. The wording on the agreement is a useful indicator of what the parties intended but it can be displaced by evidence of the facts on the ground.8

The Order sets out certain basic requirements that landlords must fulfil in terms of giving information. As originally drafted the landlord was required to provide a tenant with a full statement of the terms of their tenancy and a set of statutorily prescribed wording telling them about their rights but this obligation was repealed.9 However, the second requirement, to give the tenant a rent book remains.10 The rent book is required to contain certain information which is prescribed.11 This is:

  • the property address;

  • the tenant’s name;

  • the landlord’s name, address and telephone and the same for their agent if they have one;

  • the rent and the payment periods;

  • the capital value of the property, the rates payable, and whether those rates are included in the rent;

  • any other payment that the tenant is required to make; and

  • the start date of the tenancy.

This requirement is something of an anachronism. It was in fact something of an anachronism at the time the Order was made as most tenants were already paying their rent by bank transfer at that time, a trend that has hardly reversed itself! The outmoded nature of this idea was raised several times during the House of Lords during the committee debate on the Order. However, the government minister concerned dismissed the points asserting that a rent book provided some degree of proof of the payment of rent.12 This seems a rather odd idea since a bank transfer has its own in-built form of evidence and it has ended up raising the question, never satisfactorily answered, of what a landlord is supposed to do to keep the rent book up to date with payments that they have received electronically from the tenant. In some cases, agents simply electronically generate a new rent book periodically and send it to the tenant so the document ends up becoming more of a written statement of account.

The 2006 Order also largely ends the protected and statutory tenancy regime in Northern Ireland.13 The 2006 Order prevents the creation of any new protected tenancies14 and additionally limits the succession rights under the old regime so that these tenancies will reduce in number. Due to this I have chosen not to cover the older regime in this text.

Tenancy deposits

Tenancy deposit protection provisions were inserted into the 2006 Order in 2011.15 The provisions inserted into the Order were relatively lightweight and only set out the barest outlines of a deposit scheme. The actual scheme was brought into effect later in 2012.16 However, the requirement to protect a deposit only came into effect on 1 April 2013 when four schemes (reduced to three shortly afterwards) were approved by the Northern Ireland government. Therefore, the provisions only apply to new tenancies started from that date.

The actual provisions are fairly similar to those operated in England and Wales17 in that they focus on the receipt of funds intended to be used as security for the performance of an obligation under the tenancy and it is this receipt which triggers the obligation on the landlord.

There are in fact three obligations, to protect the deposit with an authorised scheme within 14 days from receiving the deposit, comply with the initial requirements of such a scheme in the same time period, and given the tenant the information prescribed by law18 within 28 days of receipt of the deposit. The Court of Appeal in England has held that all these requirements are of equal importance and it is not open to a landlord to point to the fact that the deposit is protected and say that the tenant can get all the other information they need from the relevant scheme website for themselves.19 It is worth noting that the date for compliance is based on the date the deposit was taken and not the start date of the tenancy. This can cause problems with tenancies that are due to start some way into the future, such as student tenancies, if the deposit is taken much earlier. In relation to the “initial requirements” of a deposit scheme there has never been any clarity as to what that means save that the English High Court has held that schemes cannot use this to “gold plate” the statutory obligations and it seems to be more of a reference to landlords registering the deposit properly using whatever clerical mechanism the relevant scheme requires.20 In relation, to the definition of a deposit the requirement is that it must be paid as security for another obligation rather than in discharge of an obligation itself. So, rent in advance cannot be a deposit as it is intended to discharge the obligation to pay rent rather than acting as security.21

However, a key difference in the Northern Ireland scheme is that enforcement in by way of prosecution or civil penalty levied by a local authority. This is distinctly different from other UK jurisdictions which allow for civil claims by tenants and give them an incentive to do so by allowing them to claim a multiple of up to three times the original deposit sum. There has been consideration given in Northern Ireland to adopting this mechanism as well. Currently the maximum penalty is three times the deposit sum but this is retained entirely by the state. Proposals have been made to give the tenant some of this money to give them direct recompense and, presumably also to incentivise them to report breaches.22 The fact that this is a criminal penalty in Norther Ireland has meant that local authorities are less likely to take action in the case of minor breaches where there has been no suffering on the part of the tenant, such as registering slightly late. In England and Wales, the fact that a tenant can recover a significant sum of money for such minor errors has led to a substantial amount of litigation which has led to rapid development of the law.

Term and termination

The 2006 Order effectively abolished tenancies that were periodic from commencement, ordering that any tenancy which was not granted for a fixed term would be deemed to be granted for a six-month fixed term.23 The Order has also created a somewhat unique approach to notice periods. Previously the common law position of a notice to quit being the same as one period of the tenancy had applied in Northern Ireland. The Order initially placed a four-week minimum notice period in place. However, it was later amended24 to create a minimum notice period that varied according to the time for which the tenancy has been in place. These are:

Tenancy Length

Minimum notice period

less than 5 years

4 weeks

between 5 and 10 years

8 weeks

more than 10 years

12 weeks

Compared to other parts of the UK these notice periods are still not hugely generous and few tenants in the private sector will actually be able to avail themselves of the longer notice periods as their tenancies are unlikely to last that long. However, the concept of notice periods that become longer for longer tenancies is one that is unique in the UK. There are proposals to increase the notice period for all tenancies lasting more than 12 months from 4 weeks up to 12 months. There are also proposals to structure the eviction process better to mimic that set out in England25 with specific breaches leading to mandatory possession, removing the discretion of the court, and having these more severe cases dealt with largely on paper.26

During the Covid-19 pandemic the notice period was altered on a temporary basis so that all tenants were able to avail themselves of a 12-week notice period27 and also allowed the notice period to be extended by secondary legislation up to a maximum of six months and to enable the longer notice period to run longer than the one provided for in the Act.28

The new termination provisions only apply to termination on the basis of a notice to quit. In England it has always been the case that a notice it quit is not required to determine a fixed term tenancy which clearly expresses an end date.29 Therefore it is doubtful whether any protection accrues to a fixed term tenant at the end of their tenancy.

Equally, the 2006 Order does not appear to impact the common law of forfeiture at all. There is no equivalent provisions in the Order to those which continue or renew tenancies as long as the tenant remains in occupation30 and only permit the court to make possession orders for specified grounds.31 So the provisions as to the termination of a tenancy for a breach of the agreement will rely on the terms of that agreement. There are a number of advisors suggesting that a landlord must serve a notice to quit under the Order for breaches of the tenancy agreement. The advice from the Northern Ireland government around Covid-19 appears to suggest that eviction of a tenant for rent arrears requires a notice to quit. My view is that this cannot be correct either as a matter of law or as simple logic. The common law right to forfeit exists unless there is some specific mechanism which blocks it, no such mechanism exists within the Order. The provisions as to notices to quit do not apply to forfeiture which is a distinct legal remedy. As to practicality, the 2006 Order effectively prohibits the service of a notice to quit in the first six months of a tenancy as a common law notice to quit cannot be served inside a fixed term. It cannot possibly be intended that a landlord would have to accept a situation where their tenant could accrue rent arrears during the first six months of a tenancy with no effective means of redress. Therefore, unless the notice to quit provisions in the Order are intended to refer to some free-standing statutory notice mechanism as opposed to imposing controls on common law notices to quit, the provisions cannot apply to forfeiture for breach.

In addition, the wording of the relevant article32 suggests a limit to its intended application. It states that is applies to a “notice by a landlord or tenant to quit a dwelling-house” must be in writing and give a specified time period. The equivalent statute in England and Wales which sets a minimum time period for a notice to quit33 also uses the very similar phrasing “notice by a landlord or a tenant to quit any premises” when discussing validity. In addition, the relevant legislation requiring a court order to possess a residential dwelling specifically includes a provision stating that any residential lease which contains a right of re-entry or forfeiture cannot have that right acted on without appropriate court proceedings.34 This would seem to indicate that the legislation does continue to anticipate a right to forfeiture in tenancy agreements independent of the use of Notices to Quit.

However, it seems clear that the Northern Ireland government is of the view that a notice to terminate a tenancy for a breach must comply with this part of the 2006 Order.

If there is no requirement for a notice to quit and accordingly the minimum notice period does not apply then the introduction of the 2006 Order somewhat winds the clock back on termination for breach of lease terms in Northern Ireland.35 Tenants who have failed to pay their rent in breach of covenant have almost no protection other than that provided for by the terms of their tenancy. Tenants who are in breach of a provision other than one involving payment of rent can probably rely on the statutory requirement that they be given a notice specifying the breach, requiring compensation, and giving a reasonable period to remedy the breach.36 It seems likely that a court might hold in such a case that the reasonable period required was similar to that specified by the Order ,37 thereby bringing back the notice provisions in the 2006 Order by the back door. But this would not avail a tenant in rent arrears who would have no more protection than that afforded by the common law of forfeiture and the wording of his or her tenancy agreement.38

Unlawful eviction and Harassment

There are restrictions in Northern Ireland, as there are in most UK jurisdictions and elsewhere as well, on evicting tenants without allowing for a proper court process. The 2006 Order has modified39 the original law on the issues of eviction and harassment but not considerably.40

There is a generalised prohibition on the eviction of someone who is occupying a dwelling-house on the basis of a tenancy or who is occupying it lawfully by way of rights derived through that tenancy (an authorised sub-tenant for example) other than through the court. These provisions mimic precisely those in England and Wales.41 In England, the courts have held that the prohibition extends not just to properties let wholly as residential dwellings but also to premises that have been let partly for business use alongside their residential use.42 The English legislation differs in that it explicitly includes licences within the scope of protection. This has led to further cases on whether hotels and local authority temporary accommodation were included. However, the Northern Ireland legislation has no explicit inclusion of a licence and so it would seem that residential licences have little or no protection. However, where a person has exclusive possession of premises as a consequence of his employment then he also gains the protection of these provisions, even if he is not in fact a tenant.43

In addition to the prohibitions on eviction without court proceedings there are further prohibitions on any person depriving a tenant of the occupation of their property, either as a whole or a part of it. This also extends to prohibiting actions “likely to interfere with the peace or comfort of the tenant or members of his household” where these are intended to get the tenant to give up possession of part or all of the property or to persuade them not to exercise a right.44 There are defences where there are reasonable grounds for the acts in question or where it can be proven that there were reasonable grounds to believe that the tenant was no longer residing in the property concerned. In England it has been held that there is a further defence if a person reasonably believes that someone was not a residential occupier. However, the belief must be reasonable45 and whether it was or not is a factual matter for the court.46 While the Northern Ireland legislation is narrower in scope and only protects tenants, as opposed to the wider class of residential occupiers, it seems reasonable to assume that a similar defence would exist in Northern Ireland if it could be shown that there was a reasonable belief that the victim was not a residential tenant.

MORE INFORMATION / PURCHASE THE BOOK ONLINE

1 Karly Greene and Heather Porter, “A place apart? Trends and challenges in the Northern Ireland housing market” Housing Finance International Spring 2018.

2 Renting Privately—A Strategic Framework.

3 Draft Private Tenancies (Northern Ireland) Order 2006 Deb 10 May 2006 c6.

4 Draft Private Tenancies (Northern Ireland) Order 2006 Deb 10 May 2006 c8.

5 By the Housing (Amendment) Act (Northern Ireland) 201.

6 Wendy Wilson et al, Comparing private rented sector policies in England, Scotland, Wales and Northern Ireland, House of Commons Library Briefing Paper, 19/07624, 2 May 2019, p. 4.

7 Rent (Northern Ireland) Order 1978.

8 Buchmann v May [1978] 2 All E.R. 993.

9 By s1, Housing (Amendment) Act (Northern Ireland) 2011.

10 Article 5, 2006 Order.

11 By the Rent Book Regulations (Northern Ireland) 2007.

12 Draft Private Tenancies (Northern Ireland) Order 2006 HL Deb, 17 May 2006, c345.

13 Created by the Rent (Northern Ireland) Order 1978.

14 Article 5.

15 By way of the Housing (Amendment) Act (Northern Ireland) 2011.

16 By the Tenancy Deposit Schemes Regulations (Northern Ireland) 2012.

17 In ss212-217, Housing Act 2004.

18 In Schedule 1, Tenancy Deposit Schemes Regulations (Northern Ireland) 2012.

19 Ayannuga v Swindells [2012] EWCA Civ 1789.

20 Draycott & Draycott v Hannells Letting Limited [2010] EWHC 217

21 Johnson & Ors v Old [2013] EWCA Civ 415.

22 Department for Communities, Private Rented Sector in Northern Ireland – Proposals for Change, Consultation Document January 2017.

23 Article 13.

24 By s3, Housing (Amendment) Act (Northern Ireland) 2011.

25 In the Housing Act 1988.

26 Department for Communities, Private Rented Sector in Northern Ireland – Proposals for Change, Consultation Document January 2017.

27 Section 1, Private Tenancies (Coronavirus Modifications) Act (Northern Ireland) 2020.

28 30 September 2020 but extended to 31 March 2021 by the Private Tenancies (Coronavirus Modifications) Regulations (Northern Ireland) 2020.

29 Right d. Flower v. Darby (1786) 1 T.R. 159, 162.

30 Section 4, Rent (Northern Ireland) Order 1978 or in England s5, Housing Act 1988.

31 Section 13, Rent (Northern Ireland) Order 1978 or in England s8, Housing Act 1988.

32 Article 14.

33 Section 5, Protection From Eviction Act 1977.

34 Article 55, Rent (Northern Ireland) Order 1978.

35 As compared to the position under the Rent (Northern Ireland) Order 1978.

36 Section 14, Conveyancing and Law of Property Act 1881.

37 In Article 13, 2006 Order.

38 As s14 of the 1881 Act does not apply in these cases.

39 In Article 13, 2006 Order.

40 Articles 54-58, Rent (Northern Ireland) Order 1978.

41 In s3, Protection From Eviction Act 1977.

42 Pirabakaran v Patel & Anor [2006] EWCA Civ 685.

43 Article 58, Rent (Northern Ireland) Order 1978.

44 Article 54, Rent (Northern Ireland) Order 1978.

45 R. v Phekoo [1981] 1 W.L.R. 1117.

46 R. v Davidson-Acres [1980] Crim.L.R. 50.