Elizabeth Dwomoh looks at a recent decision that will provide succour to private registered providers of social housing seeking to exercise a break clause to end a fixed-term AST with a starter period.
Key points
- A private registered provider of social housing is not required to give a tenant six months’ notice when exercising a break clause to terminate an assured shorthold tenancy with a fixed term of two years or more during the starter period
- Section 21(1B) of the Housing Act 1988 acts only as a bar to the court making an order for possession when the term of an assured shorthold tenancy has expired by effluxion of time
In accordance with sections 21(1A) and 21(1B) of the Housing Act 1988 (the 1988 Act), a private registered provider of social housing (PRPSH) is barred from seeking possession of property let on a fixed-term assured shorthold tenancy for a term certain of not less than two years, unless six months’ written notice has been given to the tenant.
An issue that arose in Livewest Homes Ltd (formerly Laverty Ltd) v Bamber [2019] EWCA Civ 1174; [2019] PLSCS 129 was whether a PRPSH that sought to exercise a break clause to determine the contractual term of a fixed-term tenancy had also to comply with the requirements of section 21(1B) of the 1988 Act.
The background
Livewest Homes Limited (LH Ltd) is a PRPSH. On 27 February 2017, LH Ltd granted Ms Bamber a seven-year fixed-term assured shorthold tenancy agreement, with a starter period of 12 months.
Clause 2.1.1 of Ms Bamber’s tenancy agreement contained a break clause that enabled LH Ltd to terminate the fixed-term period of her tenancy on giving two months’ written notice. Due to alleged breaches of the terms of her tenancy agreement, LH Ltd gave Ms Bamber two months’ written notice to terminate her tenancy in accordance with clause 2.1.1. In so doing, the notice also complied with section 21(1)(b) of the 1988 Act. Ms Bamber asked LH Ltd to review its decision, but it upheld its original decision.
On 8 November 2017, LH Ltd issued possession proceedings. Ms Bamber defended the claim. She contended that the notice served on her was invalid, as it failed to comply with section 21(1B) of the 1988 Act. She also raised public law defences and a defence under the Equality Act 2010.
The issue of whether LH Ltd had served a valid notice to determine the tenancy was to be determined as a preliminary issue.
Notice under section 21(1B)
In the county court, Judge Mitchell found that LH Ltd was not required to give Ms Bamber six months’ written notice under section 21(1B) of the 1988 Act. Judge Mitchell determined that section 21(1B) of the 1988 Act was confined only to cases where the fixed term was due to expire by effluxion of time. In such cases, the tenant needed to know in advance that their tenancy was not going to be renewed so that they could obtain any help and advice they needed. Ms Bamber appealed.
The High Court dismissed Ms Bamber’s appeal. Dingmans J found that the break notice served on Ms Bamber, which gave her two months’ written notice, terminated her fixed-term tenancy that was for a term certain of not less than two years. By virtue of section 5(2) of the 1988 Act, a statutory periodic tenancy arose to which sections 21(1A) and 21(1B) of the 1988 Act did not apply. The statutory provisions only applied if a tenancy “is” a fixed-term tenancy for a term certain of not less than two years.
Ms Bamber argued that Dingmans J’s construction made the statutory provisions inoperable. Possession proceedings under section 21(1B) of the 1988 Act could only commence after the expiry of the fixed term, whereby a tenant would, at that stage, retain possession under a statutory periodic tenancy.
The appeal
Section 164 of the Localism Act 2011 introduced sections 21(1A) and 21(1B) into the 1988 Act. The Court of Appeal had regard to ministerial statements made at the time the Localism Bill was being debated in parliament to ascertain the purpose of the amending legislation. The statements identified that the amendments were intended to give a tenant who remained until the end of their fixed-term tenancy of two years or more the opportunity to obtain assistance and advice in rehousing themselves.
The Court of Appeal found that the ministerial statements confirmed what was implicit in section 21 (1B) of the 1988 Act; namely, that a PRPSH was only required to serve six months’ notice on a tenant to terminate the assured shorthold tenancy when the two-year or more fixed-term period expired by effluxion of time.
The purpose of a notice given under section 21(1B) of the 1988 Act was to inform a tenant occupying a tenancy under an assured shorthold tenancy agreement that their tenancy would not be renewed at the end of the contractual term and not on its termination at an earlier point in time. That information would be of no relevance to a tenant whose tenancy was brought to an end on notice by the operation of a break clause.
The Court of Appeal avoided rendering section 21(1A) of the 1988 Act inoperable by interpreting section 21(1B) as a bar to the court making an order for possession only where the term of an assured shorthold tenancy had expired by effluxion of time.
In dismissing the appeal, the Court of Appeal found that the use of the word “is” in section 21(1A) did not import a requirement that the tenancy should remain a fixed-term tenancy for a term certain of not less than two years at the date possession proceedings were issued or at the date of the hearing.
Section 21(1A) of the 1988 Act only identified the type of tenancy to which the notice provisions in section 21(1B) of the 1988 Act applied.
Elizabeth Dwomoh is a barrister at Lamb Chambers
