Recently, there’s been some discussion in the lettings community about serving notice to end a tenancy, resulting in a range of responses with no clear view. To help landlords understand this complex issue, we’ve invited Tessa Shepperson from Landlord Law to explain how landlords can end tenancies.
Please note: Comments regarding amendments arising from the Deregulation Act 2015 apply to tenancies in England only, not Wales.
How can landlords end an assured shorthold tenancy?
There’s generally a lot of confusion about the service of notices and whether they actually end a tenancy in the eyes of the law.
Before we explore this further, let’s take a look at the original form of notice that we used to use – a Notice to Quit.
Notices to Quit (NTQ)
An ‘NTQ’ is a special type of common law notice that will completely end a tenancy after the notice period. It’s not the same as, say, a section 21 (s21) notice, even though an s21 is a notice asking your tenant to leave!
People sometimes make the mistake of using the term NTQ to end their tenancies. Although NTQs are still used for common law and unregulated tenancies (such as company or resident-landlord lets), they’re invalid for the majority of residential tenancies.
Section 5 (s5) of the Housing Act 1988, which regulates assured tenancies (ATs) and assured shorthold tenancies (ASTs), states that landlords’ NTQs are of no effect, as:
> They can’t be used to end a fixed term early; and
> They can’t be used for ATs or ASTs!
If a landlord is able to use a NTQ (for example if they don’t have an assured or an assured shorthold tenancy), they’ll need to act quickly to issue proceedings to evict their tenant, as accepting another month’s rent from the tenant can resurrect the tenancy - meaning that they’ll have to serve another NTQ to end it again!
However, it’s worth bearing in mind that AT and AST tenants can still serve an NTQ - for example to end a periodic tenancy.
So, if an NTQ is useless for ending the vast majority of tenancies, what should landlords use instead?
Ending a tenancy under the Housing Act 1988
The Housing Act 1988 governs most tenancies created since 15 January 1989. It put into place new rules about ending tenancies, set out in s5 of the act, and says that tenancies can only be ended in the following ways:
1. By a landlord getting a possession order from the Court AND the order being ‘executed’ – e.g. by a County Court bailiff physically removing the tenants - s5(1)(a); or
2. Where the tenancy agreement allows the landlord to end the tenancy - normally by exercising a ‘break clause’ - s5(1)(c) (although it should be noted that if the tenant stays in occupation, a ‘periodic’ tenancy will then come into being, under section 5(2), meaning that the tenant will still have a tenancy.); or
3. By ‘a surrender or other action on the part of the tenant’ - s5(2)(b). This will normally be:
> Exercising a break clause;
> Moving out at the end of the fixed term;
> Serving a tenant’s NTQ during a periodic tenancy; or
> Surrender (which normally needs to be agreed with the landlord).
The Housing Act 1988 notices
There are two notices to be aware of here:
> Section 8 (s8) - landlords can use this when they want to base their claim on one of the grounds for possession set out in Schedule 2 of the Act. The most common ground is ground 8, the mandatory rent arrears ground; and
> Section 21 – this is for when landlords want to use the ‘no fault’ ground for possession.
It’s clear from the legislation that serving these notices doesn’t actually end the tenancy in the same way as an NTQ. They do, however, entitle the landlord to obtain an order for possession if they go to court.
The tenant can continue to live in the property and will be liable for the rent. If the landlord doesn’t issue proceedings, the tenancy will continue indefinitely - unless the tenant leaves of their own free will.
What happens if the tenant leaves early?
Does this ‘end’ the tenancy? This is an important point as the tenant is only liable for the rent while the tenancy exists.
The legislation does not actually say anything on this point, and currently there is no guidance available from the courts. Therefore, the requirement for the tenant to serve notice if they wish to end the tenancy remains. Whilst section 40 of the Deregulation Act 2015 adds a new section 21C to the 1988 act providing for landlords to refund any rent paid in advance where:
“as a result of the service of a notice under section 21, the tenancy is brought to an end before the end of a period of the tenancy”
This would appear to be limited to any overpayment received as a result of the landlord no longer being required to serve their notice to coincide with the rental due date, which may result in an overpayment of rent.
So far as s8 notices are concerned, information is limited to a point at the end of the prescribed form, which says:
“Your landlord cannot make you leave your home without an order for possession issued by a court. By issuing this notice, your landlord is informing you that he intends to seek such an order. If you are willing to give up possession without a court order, you should tell the person who signed this notice as soon as possible and say when you are prepared to leave.”
The important point to understand here, is that the tenant needs to inform the landlord if they wish to end the tenancy after the service of a notice. I do not think that the tenant can unilaterally end the tenancy by moving out after the service of a notice without doing this first.
To help illustrate the point, here are a couple of scenarios. Imagine a landlord has served an s8 notice on 23 May:
The tenant just ups and leaves on 4 June, taking all his possessions and putting the keys through the letterbox. The landlord doesn’t find out until he visits the property on 23 June.
The tenant tells the landlord that he will be moving out on 4 June. He moves all his property out on that day and gives the keys back to the landlord.
> In the first scenario, the tenant is liable for the rent up until the 23 June because they didn’t inform the landlord they’d be moving out on 4 June.
> In the second scenario, the tenancy ends on 4 June because the tenant let the landlord know. Therefore the tenant will not be liable for any further rent after that date.
In many cases where tenants leave in this way, the tenants liability for rent is academic as there won’t be any money available, other than by claiming against the deposit. However, it is always a good idea for tenants to minimise their liability to their landlords.
To put it simply, tenants need to keep their landlords informed if they’re moving out and landlords need to keep a close eye on their properties.
Tessa Shepperson is a specialist landlord & tenant lawyer. Find more of her writing on the Landlord Law Blog.