(5) Nothing in this section (or in section 14 below) affects the right of the landlord and the tenant under an assured tenancy to vary by agreement any term of the tenancy (including a term relating to rent).

There are certain variations that will operate as a surrender and re-grant of a tenancy which include:

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• Where the extent of the demise is increased [Well Barn Farming v Backhouse [2005] 3 E.G.L.R. 109]
• Where the length of the term is increased [ibid]
• The substitution of one suite of rooms for another operates as a surrender and re-grant. [Giles v Spencer (1857) 3 C.B.N.S. 244]

However, terms that do not operate as a surrender and re-grant but instead are a simple continuation of the existing tenancy include:

• A mere increase in rent does not operate as a surrender and re-grant [Doe d. Monk v Geekie (1844) 5 Q.B. 841; Jenkin R. Lewis v Kerman [1971] Ch. 477; Friends Provident Life Office v British Railways Board [1996] 1 All E.R. 336]

I would hold … In the absence of an increase in the extent of the premises demised or of the term for which they are to be held, both of which would change the legal estate, I can see no reason why the lessor and assignee could not achieve the changes they desired in the terms of the lease without the law implying its surrender and a re-grant for the remainder of the term of the lease. [Beldam L.J. Friends Provident Life Office v British Railways Board [1996] 1 All E.R. 336]

• A reduction in rent is no surrender [Crowley v Vitty (1852) 7 Exch. 319; Buttery v Pickard (1946) 174 L.T. 144.][/amember_protect]

By virtue of paragraph 1(1) of Schedule 1 to the Trusts of Land and Appointment of Trustees Act 1996 any purported grant of a legal estate to a minor will not be effective to pass the legal estate, but will operate as a declaration that the premises are held in trust for the minor.

This essentially means if a landlord grants a tenancy to a minor, then any purported tenancy is held in trust by the landlord for [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']the occupier who becomes the beneficiary to the trust. In order to end the occupation, the landlord must first end the trust which can be very complex.

The Court of Appeal had to consider how a tenancy given to a minor could be ended. In Hammersmith and Fulham London Borough Council v Alexander-David [2009] EWCA Civ 259, The claimant aged 16 applied to the local authority for accommodation under the Housing Act 1996 because she was homeless. The council discharged its duty and entered an agreement on its standard form for adults, where the parties were referred to as landlord and tenant, which gave her a tenancy of the premises.

It was held that a landlord with full capacity to grant a legal tenancy and who granted a tenancy without any express qualification to the effect that something less than a legal tenancy was being granted could not subsequently say that what he had granted was not a legal tenancy but an equitable tenancy. Paragraph 1(1) of Schedule 1 to the Trusts of Land and Appointment of Trustees Act 1996 therefore applied to the tenancy granted to the claimant.

For so long as the council held the premises in trust under that Act for the claimant it could not lawfully destroy the subject matter of the trust by serving notice to quit on her.

See here for the Times report on this case.

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Essentially the changes to the scheme rules and tenancy requirements apply from 1 October 2010 when the threshold increases to £100,000 for when a tenancy is an assured shorthold tenancy. As has been previously discussed, any tenancies currently excluded from being an assured shorthold tenancy because their rent is in excess of £25k will become an AST on this date if the rent is below the new threshold.

The changes affect all those tenancies that become an AST (England only) from this date and there are also significant changes for non assured shorthold tenancies after 1 October 2010 (for example if they are a company let, resident landlord etc.)

The members terms of business must be amended in all cases but this article concentrates on the requirements relating to tenancies.

Each scenario is summarised below:[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']

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Before you begin marketing the property, you must have an Energy Performance Certificate (EPC). This will be given to “prospective tenants” normally when you are viewing the property. Once you have placed a firm order for an EPC, you may market the property whilst the EPC arrives.

Further information on EPCs is available via this article

Members of the Guild of Residential Landlords can obtain an EPC at a discounted rate by clicking here

Inventory

In addition, [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']whilst the property is empty (or about to be empty) you could take this opportunity to create an inventory. If you are taking a high value deposit, it may be worth considering a specialist inventory clerk who will both perform a check in inventory (when the tenants move in) and a check out inventrory (comparing the property when they move out). This provides independant proof of the condition of the property before and after the tenancy.

Alternatively, you can produce your own inventory, this can include photographs of the property and video.

Members of the Guild may download an inventory template (£12.00)

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In University of Plymouth v European Language Centre Ltd [2009] EWCA Civ 784 the Court decided that in legally binding e-mail correspondence it is essential to have an unequivocal offer and acceptance, together with agreed contract terms.

In the case itself , the parties had been in a contractual relationship since 1998. The University of Plymouth had provided European Language Centre Ltd (ELC) with student accommodation and teaching facilities, by a series of annual written contracts. Until 2005, previous contracts had recognised both parties’ intention to continue the contractual relationship in the coming year. However, the 2005 contract contained no reference to contractual obligations for the coming year, 2006.

During 2005, the parties had discussed by e-mail correspondence, the possibility of the University reducing the number of student accommodation available for ELC to use. ELC did not initially reply, but then in later e-mail correspondence expressed that they found the reduction unacceptable and the parties did not therefore formally produce or agree to a contract. ELC later alleged the University was in breach of contract by failing to provide the reduced beds and submitted that that the email of May 2005 constituted an offer of a reduced number of beds, which it had accepted and relied upon.

The Court noted that the parties had established a degree of mutual trust since 1998, and that it was usual for negotiations to be formally concluded by an annual written contract. The Court therefore held that the e-mail correspondence was lacking in detail and considered that it did not amount to an offer nor a clear acceptance. The Court held that an acceptance must be communicated in a way that objectively sets out on what basis the acceptance was being given and based on the facts before them ELC had done nothing which amounted to acceptance, either by words or conduct. The parties’ comments within the exchange of emails together with the previous contracts were not enough to determine that an unequivocal offer and acceptance had been made.

This decision emphasises the importance of the four essential elements which must exist for there to be a legally binding contract that is; offer, acceptance, consideration and an intention to create legal relations.

Agents are therefore advised to ensure that there is clear communication with Landlords and Tenants and ideally all negotiations should be concluded by written contracts which are clear and free from ambiguity. We have noted that many agents automatically place the phrase ‘Subject to Contract’ within their signature which will have the effect of preventing any contract being concluded this way. However, they should ensure that they obtain instructions and clarify that they or their clients do not want to be bound by informal email or telephone exchanges and should not assume that this is the best position.

I advertised a property at £450pcm. The particulars showed this amount and so did the advert. On signing the tenancy, the tenant also paid £450 first months rent and £450 deposit. The following month, £357 rent was paid instead of £450 along with a letter pointing out that the tenancy agreement stated the rent was £357.00pcm and this was all they were going to pay from now on. On investigation, I have found I have made a mistake on the tenancy agreement and the rent does state £357pcm when it should have said £450. The tenancy is for twelve months.

A:

Crucially, in this case, it seems there is a good amount of evidence showing that both parties intended the rent to be £450. In particular, this is evidenced by the tenant paying £450 at the commencement of the tenancy.

Unfortunately though, getting this put right is not going to be simple.

Rectification

Rectification is an equitable remedy by which the court corrects instruments in order to give effect to the real bargain between the parties. Courts of Equity do not rectify contracts; they may and do rectify instruments purporting to have been made in pursuance of the terms of contracts. [Mackenzie v Coulson (1869) L.R. 8 Eq. 368, 375, per James V.C.] Thus what is corrected is not the bargain, but the expression of the bargain.

In order for a claim to rectification to succeed[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest'] on the ground of a common mistake it must be shown by convincing evidence [Joscelyne v Nissen [1970] 2 Q.B. 86, 98; Lansdown Estates Group Ltd v TNT Roadfreight (UK) Ltd [1989] 2 E.G.L.R. 120; London Regional Transport v Wimpey Group Services Ltd (1987) 53 P. & C.R. 356; Brimican Investments v Blue Circle Heating [1995] E.G.C.S. 18.]:

(1) that the parties to the lease had a continuing common intention in regard to the terms of the lease;

(2) that intention continued up to the moment when the lease was executed;

(3) that the common intention was manifested by some outward expression of accord;

(4) that the lease as executed does not represent the true intention of the parties at the moment of the execution of the lease;

(5) that the lease, if rectified would represent their true intention at that time. [ibid.]

The outward expression of accord may be shown by estate agents’ particulars [Central & Metropolitan Estates v Compusave [1983] 1 E.G.L.R. 60.]

The remedy of rectification requires some mistake in the document sought to be rectified.  Rectification is usually granted where words in a lease have been wrongly omitted or wrongly included. [e.g. Cowen v Truefitt Ltd [1899] 2 Ch. 309 (parcels wrongly described).]

The fact that the mistake was negligent is no bar to relief [Weeds v Blaney [1978] 2 E.G.L.R. 84, CA.] ; nor is a clause which states that the written agreement is the parties’ entire agreement. [JJ Huber (Investments) v Private DIY Co [1995] E.G.C.S. 112.]

Actions for rectification are assigned to the Chancery Division. [Supreme Court Act 1981 s.61; Sch.1.] However, any other Division of the High Court may treat an instrument as rectified if the defendant to an action sets up facts which, in the Chancery Division, would entitle him to have it rectified. [ibid.] A claim for specific performance may be joined in the same action as a claim for rectification.

Correction of errors by construction

In some cases the court is able to correct errors as a matter of construction, without recourse to the remedy of rectification. In order to do so the mistake must be clear. [Wilson vWilson (1854) 5 H.L. Cas. 40.]

The principle applies “where a reader with sufficient experience of the sort of document in issue would inevitably say to himself ‘Of course X is a mistake for Y.’ ” [East v. Pantiles (Plant Hire) (1982) 263 E.G. 61.] Thus the court may correct an obvious misnomer of one of the parties [Nittan (U.K.) v. Solent Steel Fabrications [1981] 1 Lloyd’s Rep. 633.] ; or an obviously erroneous reference to a clause in the lease. [Booker Industries Pty. v. Wilson Parking (QLD) Pty. (1982) 149 C.L.R. 600.]

However, The law of construction excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification [para 11.007 Woodfall Landlord & Tenant].

Therefore, an application for the correction of the error as a matter of construction is most likely not suitable in this case because the key evidence is the adverts and particulars which were essentially the negotiations leading to the execution of the tenancy.

What next

The Chancery Division is part of the High Court and the case will be dealt with by a senior judge. Although the Guild can assist, it would be very advisable to employ the services of a solicitor. Hopefully with an adequate letter before action outlining all the evidence would put off a tenant continuing or defending the claim because there could be high costs involved if they were unsuccessful.

The problem of course is a question of costs. Claims in the High Court such as this can be expensive so a balance will need to be struck over the value of claim.

A cheaper “gamble” would be to take the matter to either the small claims court or issue a section 8 notice on Ground 10 (any amount of rent arrears). This would be issued on the hope that the court would look at the case and make an order to the effect that the full rent is “lawfully” due. Of course, a savvy judge may dismiss the claim on the basis that the tenancy must first be rectified as discussed above. However, because of the relative low cost of brining these proceedings as against a claim for rectification, it may be worth the gamble.

Note: If an agent has made this error, it is our opinion that the landlord will still be entitled to be paid by the agent the full proper rent as this would have been a mistake made by the agent that shouldn’t affect the landlord.

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Most residential lets are to people, real people who are alive and who physically live in the property. However sometimes lettings are made to a limited company. If this happens there are a number of important differences and a few things to watch out for.

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A brief list of the exclusions are:

• Tenancies entered into before commencement (of the Housing Act)
• Tenancies of dwelling-houses with high rateable values and where rent payable greater than £100,000 per year (Wales £25,000 until 1 December 2011 then £100k)
• Tenancies at a low rent (in Greater London, £1,000 or less a year and, if it is elsewhere, £250 or less a year)
• Business tenancies
• Licensed premises (accommodation in same building as pubs, nightclubs etc)
• Tenancies of agricultural land
• Tenancies of agricultural holdings
• Lettings to students by universities
• Holiday lettings
• Resident landlords
• Crown tenancies
• Local authority tenancies etc.
• Transitional cases

In addition to the exclusions contained in Schedule 1, there are a couple of other tenancies which cannot be assured or assured shorthold because of the way section 1 Housing Act 1988 is worded.

• The tenancy must be to an individual, therefore a company let cannot be an assured tenancy
• The tenancy must be the tenants only or principle home, therefore if the tenant has another home that is his principle home, the tenancy cannot be assured

Virtually all the exclusions that relate to a private landlord, mean that the tenancy will be a common law tenancy. This would be the case even if the landlord had granted an assured shorthold tenancy because law overrides contract and it doesn’t matter what label you put on a tenancy [Street v. Mountford [1985] 2 W.L.R. 877].