Ending Assured Shorthold Tenancies

Andrew Lester Employment Law Specialist

Andrew Lester

Ending Assured Shorthold Tenancies [under Section 8 and Section 21 of Housing Act 1988]

With the demand for social housing at record levels and social housing stock at historically low levels across the country, obtaining a possession order is becoming harder and trickier for landlords. With the courts and Judges being meticulous when considering possession applications and the associated documents, we have heard reports of possession applications being dismissed for inaccuracies in tenant names as between the tenancy agreement and the possession application.

In light of the above, it is now more important than ever before for landlords to ensure accuracy at every step of the possession procedure and to ensure compliance with all landlord’s obligations as the courts and judges are being particularly harsh and are looking for valid reasons to dismiss possession proceedings, whereas previously they may have allowed a landlord to rectify within the possession process.

The results of having your application for possession dismissed due to inaccuracies will be wasted costs and further delays in being able to recover possession of the property.

In this note, we examine the routes for obtaining possession of an AST under Section 8 and Section 21 of the Housing Act 1988 and provide some tips to help avoid the risk of the application being dismissed.

What is an AST?

A residential tenancy created on or after 28 February 1997 automatically becomes an assured shorthold tenancy (AST) unless the landlord has served a notice on the tenant stating that the tenancy will not be an AST.

An AST is a type of assured tenancy that allows the landlord to let the property whilst retaining the right to repossess the property at the end of the term.

A landlord must not evict the tenant without obtaining a court order and to do so is a criminal offence under the Protection from Eviction Act 1977.

Tenancy deposit schemes

It has been mandatory since 6 April 2007 for a landlord to join a Tenancy Deposit Scheme (TDS) on creation of a new AST in England or Wales, where a deposit is paid by the tenant to the landlord on commencement of the tenancy. The landlord must comply with the initial requirements of the TDS and give certain prescribed information.

A significant sanction for non-compliance with the requirements is that the landlord is prevented from recovering possession of its property by giving notice under section 21 of the Housing Act 1988.

Failure to properly register a deposit or to provide the prescribed information does not prevent the landlord from serving a notice under section 8 of the Housing Act 1988.

Grounds for Possession

Sections 8 and 21 of the Housing Act 1988 (HA88) provide the two different procedures for a landlord to terminate an AST.​

Under Section 21 of the HA88 a Landlord can simply serve a notice on the tenant giving two months’ notice and does not need to rely on any other grounds or reasons in order to obtain an order for possession.

When giving notice under section 21 the landlord must give the tenant 2 months’ notice to quit and the notice must not expire before the end of the fixed term of the Tenancy Agreement. Where the fixed term has expired and the tenancy continued as a periodic tenancy (on a month by month basis), the landlord must give two months’ notice to quit that expires at the end of the rental cycle.

For Tenancies entered into after 1 October 2015 in England The Deregulation Act 2015 applies (see below) which includes the rule that a section 21 notice to determine a contractual fixed term tenancy may not be given within the first 4 months of the day on which the tenancy began.

Under Section 8 of the HA88, the grounds for obtaining possession of a property are set out in Schedule 2; the most common ground being for unpaid rent of at least two months where rent is due monthly.

The grounds under section 8 of HA88 are either mandatory or discretionary. If a mandatory ground is proved the Court must make an order for possession and if a discretionary ground is proved the Court may make an order for possession if it considers it reasonable to do so.

Section 21 Procedure

Landlords usually prefer to use a section 21 procedure because no element of tenant default is required in order to obtain a possession order.
Under section 21 there are two types of possession proceedings:-
– Accelerated Possession Procedure; and
– Standard Possession Procedure

Accelerated Possession Procedure

Section 21 allows a landlord to regain possession of the property upon the expiry of the Section 21 Notice by filing an application and court fee and dispenses with the need of a Court hearing, provided that the following criteria are met:
1. Where a deposit has been taken, that it has been protected in line with Tenancy Deposit Scheme rules throughout the duration of the Tenancy; and
2. Where a deposit has been taken, that the prescribed information relating to the Tenancy Deposit Scheme has been served on the tenant.

A money claim for rent arrears cannot be brought under the Accelerated Possession Procedure, so where there are rent arrears on a property and the landlord seeks a Court judgment for the rent arrears the landlord should seek possession either under the S.21 Standard Possession Procedure or Section 8 procedure.

Standard Possession Procedure ​application.

The Standard Possession Procedure under Section 21 requires a Court Hearing and will normally take more time than the Accelerated Possession Procedure.

The Standard Procedure requires the Landlord, upon expiry of the Section 21 Notice, to file an application form at Court, pay a fee, and for the landlord to file witness statements in evidence for the Court Hearing.

Where a Landlord has failed to or is unable to show that they have protected any deposit taken and/or that the prescribed information relating to the deposit has been served, the Landlord will need to follow the Standard Possession Procedure.

Where the Landlord requires a Judgment in respect of any rent arrears this can only be given under the Standard Possession Procedure.

Whilst the Standard Possession Procedure will take longer than the Accelerated Possession Procedure, where there are rent arrears or issues over the deposit, it is the best option for the Landlord.

In contrast to a claim for possession under Section 8 HA88 there is no defence to a Section 21 notice and the Court must award possession to the landlord provided the landlord has met its legal obligations and the S. 21 Notice is valid.

Section 8 Procedure

A Section 8 notice is the only way a landlord can bring an AST to an end before the expiry of the fixed term (save where there is a break clause); provided the Landlord can show one of the grounds under schedule 2 of the HA88.

A Section 8 Notice can also be used outside of the fixed term of the AST provided the landlord satisfies one of the grounds.

Before applying to court for possession the landlord must serve a notice in the prescribed form and give the required length of notice as set out at schedule 2 of the HA88, ranging from 2 weeks to 2 months dependent on the ground relied upon. The most common of these is ground 8, that the rent is unpaid at the time of service of the notice and at date of the hearing, where rent is paid monthly and there are at least two month’s rental payments outstanding.

Rent arrears under Section 8 ground 8 is a mandatory ground for possession and a landlord must give 2 weeks’ notice to the tenant; provided the landlord can prove the tenant owes two or more month’s rent at the date of the Court hearing, the Court must order possession to the landlord.

Landlords must be aware; however, that a tenant can seek to defend a possession claim under Section 8 HA88 and seek to claim a set off against any rent arrears due to dilapidations at the property reducing the sums of arrears by way of set off.

The possession procedure under Section 8 is similar to the Standard Possession Procedure under Section 21. An application will need to be filed and a Court fee paid, the tenant will have the opportunity to file a defence to the claim and there will be a final Court Hearing to determine the ​ application. The landlord will need to provide witness evidence in support of the application for possession to establish the ground/s under S.8 that are relied upon.

Simultaneous service of Section 8 and Section 21 Notices

A landlord can serve a section 21 notice in addition to a section 8 notice, where he can rely on one or more of the grounds for possession in Schedule 2 to the HA 1988, and termination is sought after the fixed term has expired.

This is clear from the wording of section 21 of the HA 1988, which states that the landlord’s right to terminate under that section is without prejudice to any right of the landlord to recover possession of the dwelling-house in accordance with Chapter I of the HA 1988 (the section 8 procedure).

It is therefore possible to serve a section 8 notice and a section 21 notice simultaneously, and for the two notices to run concurrently.

There can be tactical advantages in serving a section 8 notice on the grounds of tenant default.

Where obtaining possession is the priority, the advantage of serving a section 21 notice over a section 8 notice is that the landlord does not need to prove an element of tenant default to obtain possession; all that is relevant is that the correct procedure has been followed. Also, the landlord can use the accelerated possession procedure if the criteria apply.

The Deregulation Act 2015

The Deregulation Act 2015 (DA 2015) introduced new rules in relation to all ASTs of properties in England granted on or after 1 October 2015 (it does not affect any changes to ASTs in Wales) that affect a landlords ability to serve valid Section 21 Notices.

The changes do not apply to fixed term ASTs granted prior to 1 October 2015. However, from 1 October 2018, the rules will apply to any AST. The DA 2015 changes include:

– Protection for tenants from retaliatory eviction – where a tenant notifies the landlord of a legitimate complaint about the condition of the property, if the landlord fails to respond or does not deal with the complaint satisfactorily the tenant can refer the matter to the local housing authority (LHA). The LHA may serve a notice on the landlord in relation to certain health and safety issues to be remedied. The service of a LHA notice would then invalidate any section 21 notice which the landlord had served after having received the complaint.
– The removal of the need for the landlord to specify the last day of a period of the tenancy as the date on which the tenancy comes to an end in a section 21(4) notice.
– A valid section 21 notice cannot be served until the landlord has complied with their legal obligations relating to gas safety certificates and energy performance certificates.
– A section 21 notice to determine a contractual fixed term tenancy may not be given within the first four months of the tenancy. ​
– A valid section 21 notice cannot be served until the landlord has provided the tenant with the prescribed information relating to the rights and responsibilities of the landlord and the tenant under an AST, as set out in DCLG: How to rent: The checklist for renting in England.

Conclusions

Landlords should always consider what they ultimately want to achieve in each individual case and whether obtaining possession quickly is most important or whether ensuring the granting of a possession order or recovery of rental arrears is paramount. The individual circumstances of each case will also determine the best way forward for landlords to obtain possession of their property let on an AST.

We would advise in all cases that where there are grounds for possession under Section 8 that at the same time a Section 21 Notice (where it is outside the fixed term of the AST) is also served. The advantage being that should the Section 8 ground/s be rectified then the landlord does not have to wait any longer than the two months’ notice under a Section 21 Notice served at the same time, as this will be running concurrently to the Section 8 Notice.

We would advise that all landlords seek legal advice at all stages when seeking to obtain possession of a property, in order to ensure compliance and to avoid unnecessary delays.

If you have any questions or require any guidance regarding the ending of Assured Shorthold Tenancies, please call Andrew Lester on 01785 223440 or email Andrew.Lester@orj.co.uk who will be more than happy to assist you.