What sort of tenancy do I have?

It is important before commencing legal action in any landlord and tenant dispute, to identify what sort of tenancy is involved, as this determines the applicable law. There are a multitude of different possibilities, but our expert landlord and tenant lawyers are on hand to guide you.

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Assured shorthold tenancy

Most private-sector residential tenancies granted since 28th February 1997 will be assured shorthold tenancies. There are however a number of exceptions, including: (i) the rent is over £100k p.a., (ii) the tenant is a company, (iii) the landlord is resident at the same property and (iv) the parties have expressly agreed otherwise. Tenancies granted between 15th January 1989 and 27th February 1997 may be assured shorthold if a notice in the prescribed form was served upon the tenant before the start of the tenancy, stating that it was to be a shorthold tenancy. Usually, the landlord will need to produce a copy of this notice.

These tenancies are governed by the Housing Act 1988 as amended by the Housing Acts 1996 and 2004. The main advantage of an assured shorthold tenancy from the landlord’s point of view is that it allows possession to be regained using the ‘section 21 procedure’, which is generally considerably simpler and faster than the procedure applying for other sorts of tenancy. Note however that this procedure cannot be used within the first six months of the tenancy. Where an assured shorthold tenancy is granted for a fixed term and the section 21 procedure is not followed at the end of the fixed term and the tenant remains in occupation, the tenancy will automatically convert to a periodic tenancy. This can then be terminated using the section 21 procedure by giving at least 2 months notice in the correct form, ending on the last day of a rental period.

Assured tenancy

A residential tenancy granted since 15th January 1989 which is not an assured shorthold tenancy will usually be an assured tenancy. There are however a number of exceptions, including: (i) the rent is over £100k p.a., (ii) the tenant is a company and (iii) the landlord is resident at the same property. Assured tenancies are also governed by the Housing Act 1988 as amended. An assured tenancy provides the tenant with a certain degree of security of tenure, and the section 21 procedure is not available. The landlord can only obtain possession on one of the grounds set out in Schedule 2 to the Housing Act 1988. In many cases the landlord will rely on ground 8: non-payment of rent. This requires that there be at least 2 months arrears of rent outstanding.

Protected/statutory tenancy

Residential tenancies granted before 15th January 1989 were usually protected tenancies.  At the end of the fixed term, such tenancies converted to statutory tenancies enjoying the same protection and many such tenancies still exist. These tenancies are governed by the Rent Act 1977, as amended by the Housing Acts 1980 and 1985. These tenancies give the tenant a significantly greater degree of security of tenure than other tenancies and are also subject to rent control. This means that the Rent Service determine a ‘fair’ rent for the property which is often significantly lower than the market rent. As will be clear, the possession of such a tenancy is of great advantage to the tenant, and for this reason the tenants of protected tenancies often strongly resist eviction. This is a highly specialist area of law, and it is strongly recommended that you seek legal advice from specialist landlord and tenant lawyers.

Secure tenancy

Most public-sector tenancies are of this type. As such, they will rarely be of interest to private-sector landlords.

Business tenancy

Tenancies of business premises will usually be business tenancies, governed by Part II of the Landlord and Tenant Act 1954. This is a completely different regime from residential tenancies. While the Act largely leaves the terms of the tenancy to the parties, it allows for the tenant to apply for an extension of the tenancy at the expiry of the term. This application can only be refused by the landlord on certain limited grounds, and compensation may also be payable. Fortunately, it is possible to contract out of these provisions if properly advised.

Care is needed in dealing with properties which include both business and residential premises (e.g. a flat over a shop). The legislation is mutually exclusive, so it is important to determine at an early stage which regime applies. Similarly, care should be taken at the drafting stage, as in some cases it will be advantageous to enter into separate agreements for the commercial and residential parts.

Common law tenancy

This is a catch-all category. Any tenancy which does not fall into any of the preceding categories will be a common law tenancy. In this case the legal protections for the tenant are very limited, although the Protection from Eviction Act still applies if the property is residential, which means that a landlord must still obtain a court order before evicting the tenants. In particular, note that tenancies at rents exceeding £100k p.a. will be common law tenancies, and if you are considering renting a property at this price you are strongly recommended to seek specialist legal advice before finalising the transaction.  Equally, residential tenancies granted to companies (e.g. for the use of a company employee) will be common law tenancies and again advice should be sought.

Licence to occupy

In some cases, a ‘tenant’ will occupy premises under a licence, rather than under a tenancy. The key test is whether the tenant has exclusive occupation of any part of the property. There is a substantial amount of case law examining this concept, and legal advice should be sought if you are unsure whether an arrangement is a tenancy or a licence. Note that the Protection from Eviction Act still applies to licences to occupy residential premises.

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