This article discusses the implications for landlords of periodic tenancies in England. It explains that currently, when a fixed-term tenancy ends, it is automatically replaced with a periodic tenancy unless the original tenancy is terminated. However, the Renters (Reform) Bill 2022/23 is set to replace the current assured shorthold tenancy (AST) with an open-ended or indefinite tenancy. This means that all residential tenancies will become open-ended, with no fixed period. Landlords will only be able to end the tenancy using the extended list of grounds for possession under Section 8 of the 1988 Act. The article highlights that the court system may pose challenges to the implementation of the new bill due to its current inefficiency. The article also discusses legal cases related to periodic tenancies as they exists now, including the requirement for landlords to provide a gas safety certificate and other documents. Overall, the article emphasizes the changing landscape for landlords in relation to periodic tenancies and the need for landlords to stay informed and when necessary seek professional advice.
Under English law, once a fixed period tenancy comes to an end it is automatically replaced with a periodic one, based on the rent payment period (commonly monthly), unless the original tenancy is terminated.
This regime may end soon for residential tenancies as the Renters (Reform) Bill 2022/23 is effectively replacing the existing assured shorthold tenancy (AST) with an open ended or indefinite tenancy.
ASTs have been in existence since the Housing Act 1988 and they are the default residential tenancy in England. They have allowed landlords to create fixed-term tenancies of a determinate length which can be ended using a Section 21 notice seeking possession, without citing a reason for doing that.
All that will come to an end when Section 21 is abolished under the new Act when all residential tenancies will be open-ended – that is, there will be no fixed period for 6 or 12 months, for example, after which the term would end, get renewed or lapse into a periodic tenancy automatically.
For now the fixed term remains. It gives flexibility to those tenants who don’t want to be fixed I their contract terms or may wish to make changes to the terms of the tenancy. With no fixed term a tenancy can effectively last indefinitely, until ended by one or the other party.
Secondly, and most importantly for landlords, to bring the tenancy to an end, they will only do so by using one of the extended list of grounds for possession under Section 8 of the 1988 Act. Section 8 grounds are being extended in number while others are amended and updated. These new grounds will be added in order to give both tenants and landlords more protection in some circumstances.
However, the court system is currently overloaded and inefficient and could prove a major stumbling block to the implementation of the Renters(Reform) Bill. It will inevitably become a major embarrassment for any government in power at the time once Section 21 is removed if the system is not streamlined.
In the meantime we still have the AST, fixed term tenancies, statutory and contractual periodic tenancies and section 21. We don’t know the time scale for the full progression and implementation of the new Bill as the Government has said it won’t be implemented until the court system is sorted out – not a minor undertaking.
Do not rely totally on these guidelines, which apply primarily to England. They are not definitive statements of the law. Only a judge can decide the rules. Before taking action or not, always do your own research and seek professional advice with the full facts of your case and all documents to hand. Treat this information as a starting point for your own research.
With an Assured Shorthold Tenancy, termination of the tenancy would be when the tenant leaves at the end of the term, or is served a 2 months' notice requiring possession by the landlord during the term, effective at the end of the term, that’s if the tenant is not evicted using one of the Section 8 grounds beforehand.
If no such action is taken the tenancy rolls on indefinitely, if both parties desire, as a periodic tenancy, the periods being determined by the rent payments: usually monthly but these could be weekly, fortnightly or even 3 monthly as the parties agree at the outset.
Interestingly, a determination in a test case (Superstrike Ltd v Marino Rodrigues 2013), contrary to what many in the industry believed at the time, a statutory periodic tenancy is a new and distinct tenancy, not a continuation of the tenant's previous fixed-term status.
On this basis a tenant sought to argue that a periodic tenancy is a new tenancy EVERY month. In Walcott v Jones & Jones November 2017, a county court appeal, the tenants argued that in their tenancy, which had started prior to the introduction of new rules (1st October 2015), the landlord had not complied with those new rules before serving his s21 notice, and that therefore the notice was invalid.
Complexity of possession claims
The case reminds landlords of the complexity of the rules around serving notices requiring possession relating to s21 Housing Act 1988, and the requirement to serve varies documents and protect deposits. Failure to comply with any of these rules will affect the legality of any notices
In Walcott v Jones & Jones the parties entered into an oral monthly assured shorthold tenancy of the property on 30 August 2007. A notice requiring possession was served in June 2016 and the tenant contended that it was invalid because it did not comply with the requirements of s21A and did not provide the information required by s21B Housing Act 1988, rules introduced by the Deregulation Act 2015.
The Deregulation Act 2015 made substantial changes to the prerequisites that landlords must comply with before serving a notice under section 21 of the Housing Act 1988 for an Assured Shorthold Tenancy (AST). These were introduced by amending the Housing Act 1988 to insert the new sections 21A and 21B.
Crucially, the landlord had failed to fulfil the requirement to obtain a gas safety certificate, energy performance certificate and provide the Government’s information about the rights and responsibilities of the parties – the “How to Rent Guide”. This latter must be the version current at the time of the commencement of a tenancy.
The landlord’s argument on appeal was that the Deregulation Act 2015 is clear that the requirements lacking here are not mandatory for tenancies granted before 1 October 2015 – this one dated from 2007.
The tenant on the other hand argued that the fact it was a periodic tenancy meant that it was granted after that date as each month made a new tenancy and therefore the landlord’s notice would be invalid. (i.e. each month a new tenancy) and that the notice was invalid..
Tenancies commencing before the change date and up to 1st October 2018 do not have to comply with these new rules which were brought in under the Deregulation Act 2015 (s21A and s21B of Housing Act 1988) meaning under these new rules the landlord must provide the tenant with a gas safety certificate (if applicable), an EPC and the Government’s “How to Rent Guide” before a valid s21 notice can be served.
Clearly, if the tenant could establish that the tenancy renewed each time it could be argued that the landlord did not comply, and that was the original decision of the county court before going to appeal.
However, the appeal judge - Judge Hand QC - held that the grant of a periodic tenancy meant that if notice was not given in accordance with the agreement the tenancy would continue after the original term. He said that whether this was considered as an extension of the original term or a 'deemed re-grant' did not matter, as for the purposes of Housing Act 1988 (as amended), neither amounted to a 'grant' of a tenancy. Parliament in drafting the law, he argued, did not intend a 'grant' in such circumstances.
Judge Hand found that a tenant, whose possession extends from one period to another, without either having given or received notice, would be unlikely to think it had been “granted” a series of leases and that the answer to the appeal could not depend entirely upon what the tenant might think. He said it is never a good idea for legal analysis to move too far away from “practical reality”.
The county court judge had erred in law he said and the appeal was allowed. A similar point arose in Leeds City Council v Broadley 2016 concerning council tax liability, where it was acknowledged that a periodic tenancy was a singular tenancy, as per the Law of Property Act 1925.
In that case the court of appeal held that a tenancy grant for a year or six months, and thereafter a month to month periodic tenancy was indeed a single tenancy. The conclusion to all this is that a periodic tenancy it does not result in a new tenancy each period - it is in fact a single ongoing tenancy, from period to period.
But, as per Superstrike, unlike contractual periodic tenancies where the agreement includes a clause that says the tenancy continues on a periodic basis after the fixed term, a statutory periodic tenancy that is arising at the end of an AST fixed term is then a new tenancy.
A key point to understand about a statutory periodic tenancy is that although the periods are one and the same tenancy, it is a new tenancy, separate from the original fixed term. This is very important for council tax, deposits and the service of notices.
In the cases where tenants move into a property without first being granted a fixed-term tenancy, typically as the case above with no written agreement, the result of informal arrangements, and as a statutory periodic tenancy can only be created through the expiry of a fixed-term agreement, these tenancies are classed as contractual periodic tenancies.
The gas safety regulations for tenancies, where gas appliances exist, are set out in the Gas Safety (Installation and Use) Regulations 1988. Landlords are required to have an annual gas safety inspection and they must supply a copy of the gas safety certificate to tenants within 28 days.
Importantly, the current certificate relevant at the date of commencement of the tenancy, needs to be supplied to tenants before they occupy the property.
Landlords cannot serve a valid Section 21 notice if they have not adhered to these regulations by providing tenants with valid gas safety certificate.
The law was unclear on this point until it was clarified in Trecarrell v Rouncefield 2020. Here, the tenant commenced her tenancy in February 2017 without being supplied with a gas safety certificate, though a gas check had been done. The certificate had just not been provided to her at the start of the tenancy. Ten months later in November 2017 the tenant was given an up-to-date gas safety certificate dated January 2017.
In May 2018 landlord Trecarrell served a Section 21 notice on Ms Rouncefield. Court proceedings were later commenced and in defence of the possession claim Ms Rouncefield stated that the notice was invalid. She argued that on the basis that she had never been served a gas safety certificate before her tenancy started.
Initially, Trecarrell was successful in obtaining a possession order and the defence was dismissed.
However, Ms Rouncefield appealed the decision and the case was heard at appeal in Truro County Court. This time, in contrast, the judge considered that Trecarrell should have served Ms Rouncefield with the gas certificate before occupation and, as such, the Section 21 Notice was deemed invalid.
Landlord Trecarrell then took the case to the Court of Appeal in January 2020. They believed that Section 21 was valid, as the gas safety checks and certificate predated the commencement of the tenancy and, while it was not served until shortly before the Section 21 Notice, it had been available at the time the tenancy commenced.
The appeal court decided that provided the landlord has given the tenant a copy of a gas safety certificate later, crucially one that was in force before the tenant occupied the property, then a Section 21 notice could be validly served.
Perhaps the moral of this story is, make sure you serve all the required documents at the start of every tenancy.