Landlord and tenant – Regulated tenancies – Housing association – Claimant Crown Commissioners transferring regulated tenancies to first defendant housing association – Claimants arguing that tenants remaining regulated tenants – Whether tenants becoming assured tenants on transfer – Declaration granted in favour of first defendant
The claimants sold to the first defendant housing association their reversionary interest in a number of residential properties occupied by tenants who had been entitled to protection under the Rent Act 1977. Following the sale, the occupiers became the tenants of the first defendant.
It was common ground that the tenants ceased to be regulated tenants under the 1977 Act on the sale of the claimants’ reversionary interest; the court was asked to make a declaration as to the tenants’ status on transfer. The second defendant tenant was joined to the proceedings to represent the interest of all the tenants.
The claimants, supported by the second defendant, contended that the tenants had become secure tenants subject to the provisions of Part IV of the Housing Act 1985 and housing association tenants subject to section 86 of the 1977 Act. As such, they would be allowed to remain in their homes indefinitely provided that they abided by the rules.
The first defendant contended that they had become assured tenants subject to the provisions of Part 1 of the Housing Act 1988, which introduced the new assured tenancy into the private rented sector with effect from 15 January 1989. They were thus entitled to remain in their homes only for a fixed period.
Held: A declaration was granted in favour of the first defendant.
The tenants had become assured tenants on the claimants’ transfer of their interest. The 1988 Act was intended to facilitate a transfer of rented accommodation from the public to the private sector. The broad scheme was to continue existing protection for existing tenancies but also to alter the scheme for those tenancies granted after the Act came into force.
On a change of landlord, the status of the tenant’s protection depended on the level of such protection that the new landlord could give under the relevant statute. Prior to the commencement of the 1988 Act, the tenants’ status would change on a transfer of interest from the claimants to a landlord that was unable to grant regulated tenancies. The protection available to the claimants’ tenants on transfer would continue to be the highest form of security available under that Act, namely the assured tenancy.
Moreover, it was significant that the claimants had been the landlords. As a body managing property for the Crown, they would be expected to exercise care in identifying the party to whom they transferred their interest and had done so in the instant case by imposing requirements on the first defendant to protect existing tenants.
Section 38 dealt with the transfer of existing tenancies from the public to the private sector. Section 38(5)(d) defined “public body” to include a situation where the interest of the landlord belonged to “Her Majesty in the right of the Crown”; it did not exclude land managed by the claimants. On the literal meaning of that provision, the regulated tenants became assured tenants once the claimants transferred their interest as landlord.
Since “public body” included the claimants but excluded the first defendant, section 38(3)(a) applied. It provided that the tenancy should not be capable of being a protected tenancy, a protected occupancy or a housing association tenancy. That had the effect of disapplying para 1 of Schedule 1 to the 1988 Act, which set out the categories of tenancies that could not constitute assured tenancies.
Ultimately, the words of section 38(5)(d) were clear and their literal construction had not been shown to be contrary to the intention of parliament.
Ranjit Bhose (instructed by Trowers & Hamlins LLP) appeared for the claimant; Jon Holbrook (instructed by the Governors of the Peabody Trust) appeared for the first defendants; Martin Westgate QC (instructed by Hansen Palomares Solicitors) appeared for the second defendant.
Eileen O’Grady, barrister
