What is an assured tenancy and how do assured tenancies under the Housing Act 1988 differ from the old-style assured tenancies?
The idea of the assured tenancy was introduced by the Housing Act 1980 to provide an alternative to the grant of protected tenancies under the Rent Act 1977 by certain bodies approved by the Secretary of State for the Environment. It was the first of the Government’s attempts to bring more private rented accommodation on to the market and went alongside the introduction of protected shorthold tenancies in the same Act (s56).
It took the Government a further eight years before it felt sufficiently confident to tackle the main bastion of protection given by the Rent Act. It has done this by replacing the extensive protection given to tenants with a form of protection similar to that given to tenants of business premises under Part II of the Landlord and Tenant Act 1954.
An appropriately modified version of this scheme of protection was given to assured tenants under the 1980 Act.
There are three conditions to the grant of assured tenancies under the 1980 Act (as amended in 1986): the interest of the landlord must belong to an approved body; the dwelling-house must form part of a building which was erected or otherwise constructed after the coming into force of the Act; and no part of the same unit should, prior to the grant, have been let on anything other than an assured tenancy.
As already indicated, tenants of such bodies are subject to the regime of protection granted to business tenants, with certain appropriate changes: for example, the forms of section 25 and section 26 notices are altered to take account of the different nature of the tenant’s occupation(1), and, of course, section 23 (definition of occupation for business purposes etc) does not apply.
After the coming into force of the Housing Act 1988 on January 15 1989 all assured tenancies will be under the scheme in that Act and will not be under the more modest scheme contained in the 1980 Act. The three qualifying conditions will be removed and replaced with a more extensive scheme of protection contained in Part I of the 1988 Act, and in particular chapters 1 and 2. The 1988 Act does not refer to the 1954 Act (unlike the 1980 Act) and it contains a complete scheme.
Exemptions from protection
Schedule 1 contains a complete list of tenancies which are exempt from protection, many of which are the same as in the Rent Act 1977. Among the more important exemptions are tenancies entered into before the commencement of the 1988 Act, tenancies of a rateable value above £750 outside Greater London and £1,500 in Greater London, and local authority and housing association tenancies. Resident landlords are free to grant tenancies which do not receive assured-tenancy status.
The new assured tenancies
The new system of protection owes more to the Landlord and Tenant Act 1954 than to the Rent Act 1977. One fundamental difference between the 1977 Act and the new Act is that the new Act operates in a similar fashion to the 1954 Act in continuing the contract between the parties after the expiry of the original term and grants various rights to the landlord and the tenant during that extended period (for example, to alter the amount of rent payable under the original contract). The Rent Act 1977, after the expiry of the initial term (or after service of a notice to quit), creates a purely statutory right to occupy the premises which is terminable only in accordance with the terms of the Act, regardless of what was agreed between the parties prior to entering the agreement.
Section 5 of the Housing Act 1988 provides that an assured tenancy can only be brought to an end by a court order or by the exercise of a right of re-entry in a fixed-term tenancy. However, upon the premature termination of a fixed term by execution of a power to determine the tenancy by the landlord or otherwise (eg a right of re-entry), the tenant has a right to possession so long as a “statutory periodic tenancy” arises in the manner described by that section.
Section 5(3) describes the characteristics of a “statutory periodic tenancy”; one of them is that the tenancy takes effect immediately in possession and that it is a periodic tenancy for the periods on which rent was paid under the fixed term.
This is really an enactment of the common law principles which operate where a tenant holds over after expiry of a fixed term.
It may be seen that the continuing occupation of an assured tenant is closer to that of a 1954 Act tenant than a Rent Act statutory tenant who, in the words of Sir Robert Megarry “fits into no recognised category of property law”.(2) The statutory tenant has a purely personal and non-assignable right to possession. A statutory tenancy is not really a tenancy at all, while an assured tenant, like a 1954 Act business tenant, continues in occupation in all respects as a tenant of the property. Section 5(1) is thus similarly worded to section 24(1) of the 1954 Act.
Terms of the statutory periodic tenancy
Section 5(3)(e) of the 1988 Act provides that the tenant is to take the new tenancy on the same terms as the fixed-term tenancy “other than as to the amount of rent” (and the landlord’s right to terminate the tenancy is largely dependent on his statutory rights only).
These are known as the “implied terms”; section 6(1)(b).
A system of notices and counternotices is provided for by section 6, which is similar in nature to that in the 1954 Act. Section 6(2) provides that:
Not later than the first anniversary of the day on which the former tenancy came to an end, the landlord may serve on the tenant, or the tenant…on the landlord, a notice in the prescribed form proposing terms of the statutory periodic tenancy different from the implied terms and, if the landlord considers it appropriate, proposing an adjustment of the amount of rent to take account of the proposed terms.
Rent
Section 6(3) goes on to provide that where either the landlord or the tenant is served with a notice in accordance with section 6(2) above, he may apply within one month to the rent assessment committee for a variation of the terms proposed. Following such an application, the terms proposed in the original notice shall, after the initial one-month period, become the terms of the tenancy. The rent assessment committee must then consider the merits of the case and ask whether “the terms proposed…are such as in the committee’s opinion, might reasonably be expected in an assured periodic tenancy of the dwelling-house concerned”. Section 6(5) goes on to give the committee a discretion to alter the terms as to rent, even where the application is concerned with the other terms, if they consider it appropriate.
Orders for possession
Section 7(1) provides that the court shall not make any order for possession of a dwelling-house let on an assured tenancy “except on one or more of the grounds set out in Schedule 2”. Section 7 goes on to state that possession can be claimed either on one of the mandatory grounds or on one of the discretionary grounds contained in that schedule. These grounds are very similar to those found in section 98 of and Schedule 15 to the Rent Act 1977.
Additional protection
Section 8 of the 1988 Act provides some additional protection to all types of assured tenant. It provides for notice to be given prior to the court’s entertaining any proceedings under the Act. The notice is one informing the tenant that the landlord wishes to claim possession on one of the grounds in the Act and the ground should be specified in the notice. The landlord should state in the notice a date after which he will commence proceedings and that date should not be earlier than two weeks from the date of the notice. More detailed provisions as to notice are provided for in some cases. The court is given a discretion to dispense with the notice requirement where they consider it “just and equitable to do so” in all but the case of non-payment of rent.
Assured shorthold tenancies
Like the protected shorthold tenancies introduced by the Housing Act 1980 which they supersede, assured shorthold tenancies will be for a minimum period, except that this minimum period is to be reduced from one year to six months. The new shorthold tenancies will not be subject to the five-year upper limit for protected shorthold tenancies in section 52 of the Housing Act 1980. As was the case for protected shorthold tenancies, the landlord must, prior to the tenancy, serve a notice in prescribed form stating that the tenancy is to be a shorthold tenancy. When an assured shorthold tenant holds over after the expiry of the original term, he does so on another assured shorthold tenancy and not on an assured tenancy: section 18(3)(3).
In addition to the landlord’s rights to possession already discussed, the landlord of an assured shorthold tenancy may bring an immediate action for possession in which the court “shall” make an order for possession provided that the original tenancy has expired and notice in appropriate form has been given.
Controls over rent levels
Because of the more limited security of tenure which shorthold tenants enjoy, they do not necessarily have to pay full market rents. Section 20 grants the tenant the right to apply to the rent assessment committee in cases where he considers that the rent he is paying is “significantly” higher than the rents payable for similar tenancies of similar dwelling-houses in the locality: section 20(1). This provision does not apply in cases where a rent has already been determined by the committee on the application of either party under section 13.
(1) See Landlord and Tenant Act 1954 Part II (Assured Tenancies) (Notices) Regulations 1983.
(2) Megarry and Wade: The Law of Real Property. 5th ed, P1110.
(3) But the landlord may let under an assured tenancy if he serves notice in appropriate form: s18(4).