This article is intended to be an explanation of a BBC news item explaining that planning permission is required for certain lets in London titled “2012 Olympic short term landlords ‘could face fines‘” and a subtitle of “Londoners hoping to rent out their homes during the Olympics are being warned they could be breaking the law and left facing a fine.”

Here is an overview of the law which the BBC news item omits.
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Any “development” requires planning permission unless there is a permitted development. Section 55(1) Town and Country Planning Act 1990 defines “development” as including the “making of any material change in the use of any buildings or other land”. As a quick rule of thumb all dwellings have a class C3 use as a dwelling for a single household or family. Under normal circumstances, although the letting for short term purposes may be a change in use, it’s unlikely to be a “material” change in use which is what s.55(1) requires. However, in Greater London the position is different.

Section 25 of the Greater London Council (General Powers) Act 1973 provides (as amended by s.4 of the Greater London Council (General Powers) Act 1983):-

“(1) For the purposes of s.22(1) of the Act of 1971* (*see below), the use as temporary sleeping accommodation of any residential premises in Greater London involves a material change of use of the premises and of each part thereof which is so used.

(2) In this section -

(a) “use as temporary sleeping accommodation” means use as sleeping accommodation which is occupied by the same person for less than 90 consecutive nights and which is provided (with or without other services) for a consideration arising either -

(i) by way of trade for money or money’s worth; or

(ii) by reason of the employment of the occupant, whether or not the relationship of landlord and tenant is thereby created;

(b) “residential premises” means a building, or any part of a building, which was previously used, or was designed or constructed for use, as one or more permanent residences “

* By virtue of the Interpretation Act 1978, the reference to s.22(1) of the 1971 Act now relates to s.55(1) of the Town and Country Planning Act 1990.

This makes it clear therefore that in the areas of councils covered by the Greater London Council (General Powers) Act, a “material” change of use for the purposes of requiring planning permission is sleeping accommodation used for less than 90 consecutive nights which is provided for money (or money’s worth) or by way of trade. Therefore, any letting for less than 90 days will require planning permission in council areas covered by the Act.

I have been unable to locate a copy of the Greater London Council (General Powers) Act 1973 so am unable to look at precisely which individual councils are covered by it. However it seems the answer is in the title and it must cover all “Greater” London councils (so the ones listed in the BBC article).

The provision contained in the Act has been confirmed by Hyde Park Residence Ltd v Secretary For Environment, Transport & Regions & Anor [1999] EWHC Admin 5 and also see Royal Borough of Kensington and Chelsea, Ex Parte Lawrie Plantation Services Ltd, R v. [1999] UKHL 32.

A further useful article “Westminster Council has won an important victory in its battle to rid central London of illegal short-term lets…”
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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.

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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.

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].

This is never advisable but yes it is possible [s54 Law of Property Act 1925]

53.- Instruments required to be in writing.

(1) Subject to the provision hereinafter contained with respect to the creation of interests in land by parol-

(a) no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing, or by will, or by operation of law;

…

54.- Creation of interests in land by parol.

(1) …

(2) Nothing in the foregoing provisions of this Part of this Act shall affect the creation by parol of leases taking effect in possession for a term not exceeding three years (whether or not the lessee is given power to extend the term) at the best rent which can be reasonably obtained without taking a fine.

A lease for three years or less at the best rent which can reasonably be obtained without taking a fine may be in writing or parol (verbal)as the parties please. [See Ryley v Hicks (1713) 1 Str. 651; Bolton(Lord) v Tomlin (1836) 5 A. & E. 856; Wright v Macadam [1949] 2 K.B. 744.] A lease for more than three years from the making [Rawlins v Turner (1699) 1 Ld.Raym.736; Kushner v Law Society [1952] 1 K.B. 264.]must be by deed (and in writing). This includes a lease granted for a term exceeding three years, but determinable within three years. [Kushner v Law Society, ante.]

Will a tenancy made by parol (verbal) be an assured shorthold tenancy?

This will depend on the date the tenancy was granted. [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']Clearly if the tenancy was created before the Housing Act 1988 came into force, it will be a tenancy subject to whatever legislation was in at the time (normally Rent Act 1977 or Rent Act 1964). However, if the tenancy was created on or after the coming into force of the Housing Act 1988 (15 January 1989) then there are two possibilities depending on the date.

Tenancy created between 15 January 1989 and 27 February 1997.

Section 1 Housing Act 1988 will apply which states that all tenancies created are assured subject to certain conditions. Clearly it was possible to create an assured shorthold tenancy during this time but not verbally because the section 20 notice was required in writing (section 20 notice was the old style way of granting an assured shorthold tenancy and informing the tenant it was to be at least 6 months etc.)

The main criteria of importance for a tenancy to be assured is that a separate dwelling was let to an individual and it is their only or principle home. If these 3 requirements are met, the tenancy will be assured. (If not, it will most probably be a common-law contractual tenancy)

1.- Assured tenancies.

(1) A tenancy under which a dwelling-house is let as a separate dwelling is for the purposes of this Act an assured tenancy if and so long as-

(a) the tenant or, as the case may be, each of the joint tenants is an individual; and

(b) the tenant or, as the case may be, at least one of the joint tenants occupies the dwelling-house as his only or principal home; and

(c) the tenancy is not one which, by virtue of subsection (2) or subsection (6) below, cannot be an assured tenancy.

(2) Subject to subsection (3) below, if and so long as a tenancy falls within any paragraph in Part I of Schedule 1 to this Act, it cannot be an assured tenancy; and in that Schedule-

(a) “tenancy” means a tenancy under which a dwelling-house is let as a separate dwelling;

…

Tenancy created 28 February 1997 to present day.

Section 1 detailed above still applies subject to the criteria discussed (tenant individual, only or principle home etc.) However, the Housing Act 1996 changed things and removed the requirement of a section 20 notice. Therefore, only a tenancy need be granted without any notice prior to it’s grant and it will be an assured shorthold tenancy. It is this act that also removed the requirement of a minimum 6 months fixed term. Section 96 Housing Act 1996 inserted section 19A into the Housing Act 1988. The position now is:

19A. Assured shorthold tenancies: post-Housing Act 1996 tenancies.

An assured tenancy which-

(a) is entered into on or after the day on which section 96 of the Housing Act 1996 comes into force (otherwise than pursuant to a contract made before that day), or

(b) comes into being by virtue of section 5 above on the coming to an end of an assured tenancy within paragraph (a) above,

is an assured shorthold tenancy unless it falls within any paragraph in Schedule 2A to this Act.

Does a tenant have the right to receive a written statement containing the terms of a tenancy if a verbal tenancy has been granted?

Yes [s20A Housing Act 1988 as inserted by s97 Housing Act 1996]. A landlord must supply after a written request by a tenant, a written statement of terms which contain the date the tenancy began, the rent payable, any provision for a rent increase and if there is a fixed term, the length of the fixed term. The landlord must supply this information within 28 days of a request, and only has to do this once if there has been no changes and doesn’t have to provide this statement if the tenancy is evidenced in writing (therefore only applies to verbal tenancies).

20A.- “Post-Housing Act 1996 tenancies: duty of landlord to provide statement as to terms of tenancy.

(1) Subject to subsection (3) below, a tenant under an assured shorthold tenancy to which section 19A above applies may, by notice in writing, require the landlord under that tenancy to provide him with a written statement of any term of the tenancy which-

(a) falls within subsection (2) below, and

(b) is not evidenced in writing.

(2) The following terms of a tenancy fall within this subsection, namely-

(a) the date on which the tenancy began or, if it is a statutory periodic tenancy or a tenancy to which section 39(7) below applies, the date on which the tenancy came into being,

(b) the rent payable under the tenancy and the dates on which that rent is payable,

(c) any term providing for a review of the rent payable under the tenancy, and

(d) in the case of a fixed term tenancy, the length of the fixed term.

(3) No notice may be given under subsection (1) above in relation to a term of the tenancy if-

(a) the landlord under the tenancy has provided a statement of that term in response to an earlier notice under that subsection given by the tenant under the tenancy, and

(b) the term has not been varied since the provision of the statement referred to in paragraph (a) above.

(4) A landlord who fails, without reasonable excuse, to comply with a notice under subsection (1) above within the period of 28 days beginning with the date on which he received the notice is liable on summary conviction to a fine not exceeding level 4 on the standard scale.

(5) A statement provided for the purposes of subsection (1) above shall not be regarded as conclusive evidence of what was agreed by the parties to the tenancy in question.

(6) Where-

(a) a term of a statutory periodic tenancy is one which has effect by virtue of section 5(3)(e) above, or

(b) a term of a tenancy to which subsection (7) of section 39 below applies is one which has effect by virtue of subsection (6)(e) of that section,

subsection (1) above shall have effect in relation to it as if paragraph (b) related to the term of the tenancy from which it derives.

(7) In subsections (1) and (3) above-

(a) references to the tenant under the tenancy shall, in the case of joint tenants, be taken to be references to any of the tenants, and

(b) references to the landlord under the tenancy shall, in the case of joint landlords, be taken to be references to any of the landlords.”[/amember_protect]

A tenancy will not be an assured [shorthold] tenancy if the purpose of the tenancy is to confer on the tenant the right to occupy the dwelling-house for a holiday [sch.1, para 9 to the Housing Act 1988]. As a consequence, if a deposit is taken on a holiday let agreement, the deposit will not need protecting [s213(1) Housing Act 2004].

Members of the Guild of Residential Landlords may download for free a suitable agreement.

Whether that is the purpose is a question of fact which, in [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']the absence of anything in the tenancy agreement regarding the purpose of the tenancy, is determined according to the evidence given in court. Where there is a written agreement containing a term expressly stating that the dwelling-house was let for the purpose of a holiday that term is evidence of the parties’ intention and unless the tenant can show that the statement is in the nature of sham or a pretence the court will hold that the tenancy is not an assured tenancy [Buchmarm v May 1978 2 AII E.R. 993].

On the other hand, a landlord who grants successive “holiday lets” to tenants who he knows are clearly not going to use the premises for the purpose of a holiday is likely to find that the tenants will be assured [shorthold] tenants.

Once the holiday let has come to an end the landlord will be entitled to an order for possession the effect of which the court will not be able to postpone for more than 14 days, or six weeks in the case of exceptional hardship [s89 Housing Act 1980]. As the tenancy is an “excluded tenancy” (as defined by section 3A Protection from Eviction Act 1977) he need not even take proceedings for possession and may resort to self-help so long as he does not use any violence.

Key points:

• Ensure the purpose of the tenancy is truly for a holiday
• The rent for the entire period should, where possible be taken in advance
• Once the tenancy has ended, do not allow it run on. Do not accept any rent. If money is accepted after the term has ended (for a short period) this should be receipted as being accepted as mesne profits (damages for use and occupation)
• If a tenant wishes to remain for a short period after the term has ended, a new tenancy for the new short period should be drawn up and signed by all. It is recommended this is not done more than once
• As long as it is truly a holiday let, any deposit taken does not need protecting
• It is submitted that any holiday let greater than 6 – 8 weeks could come under scrutiny as being a sham. It is therefore suggested no tenancy for a holiday should ever be greater than this (unless it is clear and genuine that it is a holiday let)

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