Since the
beginning of 1989, when the Housing Act 1989 came into operation, those working
in the field of residential lettings have had to become familiar with the new
statutory regime contained therein. The basic form of tenancy protected under
the 1988 Act is the assured tenancy which, in terms of definition, is similar
to a Rent Act-protected tenancy.
However, the
level of statutory protection conferred on assured tenants is very much less
than that accorded to Rent Act tenants. Even so, most landlords who have the
choice (which housing associations and landlords operating under the business
expansion scheme do not) opt not for the full assured tenancy but for its even
less-well-protected offspring, the assured shorthold tenancy. This is a species
of assured tenancy which satisfies additional statutory requirements. Broadly,
these are that the tenancy is one for a fixed term of no less than six months,
which cannot be terminated by the landlord within the first six months and in
respect of which a statutorily prescribed notice has been served on the tenant
before the tenancy is entered into.
The reason
why landlords choose to grant assured shortholds rather than a full assured
tenancy is that this makes it much easier for them to regain possession. Where
the tenancy is fully assured, the landlord can regain possession only by making
out a statutory ground; in the case of an assured shorthold he can do so simply
by serving a minimum of two months’ notice expiring at the end of the fixed
term or at any time thereafter.
There is
plenty of anecdotal evidence to suggest that, while landlords may be intending
to create assured shortholds, they often fail to do so. This is for the simple
reason that, if they create a tenancy which does not satisfy the additional requirements
imposed by section 20 of the 1988 Act, the net result is a fully assured
tenancy. So, for example, if the landlord fails to serve a notice in the
statutorily prescribed form on all prospective tenants before the tenancy
agreement is signed, then the resultant tenancy is an assured tenancy even
though the agreement is headed ‘assured shorthold tenancy’: see Panayi v
Roberts [1993] 2 EGLR 51.
In Bedding
v McCarthy [1994] 41 EG 151 the Court of Appeal has had to consider
another case in which it was argued that a purported assured shorthold tenancy
had fallen foul of the requirements imposed by section 20. Here the defendant
entered into a tenancy agreement, which was stated to run from December 18 1990
for a term of six months. On the morning of December 18 he was given a prior
notice in the statutorily prescribed form, which stated that the proposed
tenancy was to run from December 18 1990 to June 17 1991; this he signed and
returned to the landlords and then the tenancy agreement was signed by all the
parties. In the afternoon the tenant took possession of the property. When the
landlords later sought to obtain possession following the service of two
months’ notice the tenant argued that this could not be ordered because the
tenancy was not an assured shorthold tenancy but a fully assured tenancy.
The first
argument raised by the tenant was that the tenancy granted was for a term of
less than six months because the term commenced when the tenancy agreement was
signed, ie the morning of December 18, and thus fell short of six months by the
hours of December 18 which preceded the signing of the agreement. This was
rejected by the court. As Nolan LJ put it, the ordinary law of landlord and
tenant does not concern itself ‘with hours, minutes or seconds’. Hence the term
of a tenancy will include the full day on which it is stated to commence and,
accordingly, this tenancy did not fall short of the six months’ minimum
prescribed by section 20.
This
conclusion opened the door for the tenant’s next contention. This was that, if
the tenancy commenced on the first moment of December 18, then the prescribed
form of notice which section 20 requires to be served before the tenancy
agreement has been entered into had been served too late. Again this was
rejected by the court as confusing the time when a tenancy is entered into with
the time when as a matter of law it is deemed to commence. It was clear on the
agreed facts that the prescribed notice had been given to the defendant before
he signed the tenancy agreement.
The tenant’s
final throw was to argue that the purpose of prescribing a prior notice
required an assumption that sufficient time must elapse between the serving of
the notice and the signing of the agreement to allow a prospective tenant to
evaluate its significance. The Court of Appeal disagreed. The form is in simple
terms which the ordinary person was well capable of understanding at first
reading. All the section required was that the prior notice had in fact been
served before the tenancy agreement is entered into, and this had clearly
occurred in the present case.
Landlords
will be highly relieved that the court has adopted a pragmatic and sensible
approach. However, one point should be made clear as to the general effect of
this ruling; the court was simply deciding that a tenancy signed part-way
through the first day of the term did not fall short of the six months
minimum because the tenancy will be deemed to commence at the beginning of that
day. It does not mean that a six-month tenancy entered into on, say March 1,
which is stated to commence on January 1 will satisfy section 20; it will not.
repairing obligations
Where a
party to a lease undertakes repairing obligations, whether landlord or tenant,
his covenant will invariably be framed as one to ‘keep’ the premises in repair.
It is well established that this obliges him not simply to maintain the
property in the state in which it is at the commencement of the lease, but also
to put right any existing disrepair and then to keep it in that condition
throughout the term. However, this is subject to the important qualification
that, where the covenanting party is the landlord and in so far as the
obligation relates to the demised premises (as opposed to common parts), there
is no duty to repair until the landlord has notice of the defect.
A related
issue, which has not been the subject of any direct ruling until recently, is
whether a covenantor who is obliged to ‘keep’ in repair is (subject to the
question of notice outlined in the previous paragraph) in breach as soon as
the disrepair occurs, or only when he has failed to remedy the disrepair within
a reasonable time. This was the sole point in the recent decision in British
Telecom plc v Sun Life Assurance Society plc [1994] 43 EG 158. Here
the plaintiff was the tenant of part of a building in Croydon of which the
defendant was the landlord. Part of the exterior brickwork became out of repair
in 1986. The defendant did not commence remedial work until February 1988. The
legal issue which came before Aldous J as a preliminary point was whether the
landlord was in breach from 1986, so that the plaintiff was entitled to damages
for such losses as it could prove, irrespective of whether the defendant had
carried out the repairs within a reasonable time.
Although
accepting that there was some mileage in the landlord’s submission that a
number of the earlier cases were not on all fours with the present one, the
judge was satisfied that there was a consistent line of authority giving
support to the tenant’s contention. Having considered Luxmore v Robson
(1818) 1 B&Ald 584, Lurcott v Wakely and Wheeler [1911] 1 KB
905, Bishop v Consolidated London Properties Ltd (1933) 102 LJKB
257 and Loria v Hammer [1989] 2 EGLR 249 he ruled that liability
arises immediately on the occurrence of disrepair. In his view this was quite
consistent with the business purpose of such a covenant, which is not only to
ensure that repair works are carried out but also to allocate liability for the
effect of disrepair. In practice this decision is one which will affect
landlords the most, since it is in the area of consequential losses such as
disruption to a tenant’s business (which cannot be passed on through any
service charge) that the date from which damages can run will be most keenly
felt.
