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']

[/amember_protect]

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)

[/amember_protect]

Members of the Guild of Residential Landlords can credit check the prospective tenant and guarantor using the tenant vetting service. This will check CCJs, Electoral Roll, Bankruptcy etc. and costs £4.95 + VAT for a standard check. Alternatively, there are several credit and referencing organisations on the internet.

Remember, the most important thing about a credit check is [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']finding the prospective tenant and guarantor. We would rather take on a tenant who has had a previous CCJ which they have paid off as opposed to a tenant whom we could not find. More often than not, when you can’t find a tenant, it usually means they are providing false details to ensure you can’t find them!

Check on-line that guarantor is a home-owner at www.landregisteronline.gov.uk. This costs £4.00 and is well worth the small fee.

Check with previous landlord for reference if possible but be wary if it is a current landlord as the landlord may give a good reference if he is trying to get rid of the tenants quickly!

Check with other references the prospective tenant has provided, in particular employers. If possible, you should always contact references by telephone. It’s amazing what you can sense by the tones of voice in these situations. Try and get confirmation of references in writing.

Be wary if a tenant provides written references themselves as they often produce their own and give false signatures (we have had this on many occasion.) To be honest though, as long as you at least credit check and phone one of the references and are happy that should be enough, in particular because you will have the back up of a home owning guarantor.

Landlord should start a new file for each tenancy and keep all documentation relating to that tenancy together. Records must be kept for at least six years and longer is recommended.

[/amember_protect]

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.

Times, November 25, 2009

Divisional Court, October 23, 2009

Elias LJ, Openshaw J

A police constable may enter and search any premises for the purpose of, executing a warrant of arrest or arresting a person for an indictable offence [s.17(1)(a)-(b), Police and Criminal Evidence Act 1984]. Where the premises consist or two or more separate dwellings, the constable may only enter:[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']

(1) the common parts of the premises; and

(2) a dwelling within the premises if he has reasonable grounds for believing that the person he is seeking to arrest is inside. [s.17(2), 1984 Act].

The applicant had a licence to occupy one bedroom in a flat, on a daily basis. The flat was used by the local housing authority as a hostel for homeless persons. The bedroom had its own lock and room number. Police officers attended the flat to search for another occupant, whom they intended to arrest. The officers searched the applicant’s bedroom before going on to search the bedroom of the other person. The applicant sought to prevent the officers from searching that person’s bedroom. As a result of that act, he was convicted of obstructing a police officer in the execution of his duty.

The applicant unsuccessfully appealed. He argued that the officers had no power to search his bedroom because it was a separate dwelling. The Divisional Court said that there was no decisive test to determine whether or not premises contained a number of separate dwellings; each case had to be considered on its own facts. In the present case, it was significant that the bedrooms each had their own number and lock; and, the applicant had a sufficient degree of occupation and privacy so as to allow him to exclude other persons from his bedroom. These factors meant that the bedrooms should each be considered separate dwellings. This, however, did not mean that the applicant had been wrongly convicted as he had nonetheless obstructed a police officer in the execution of his duty when he sought to prevent the search of the other occupant’s bedroom.

[/amember_protect]

“a possession claim against trespassers’ means a claim for the recovery of land which the claimant alleges is occupied only by a person or persons who entered or remained on the land without the consent of a person entitled to possession of that land but does not include a claim against a tenant or sub-tenant whether his tenancy has been terminated or not;” [CPR 55.1(b)]

An “occupier” of premises has great powers in dealing with trespassers. However, normally where a landlord (who is not an occupier) turns up at a property to find persons in occupation, a possession order will normally be required. The hearing date for trespasser claims is normally much quicker than a tenancy case and is detailed below.

This page covers the following examples:

Two occupants of a property where only one is named as a tenant. Tenant vacates, leaving the other occupant in possession

Tenants vacate but give the keys to another person(s) who takes up occupation after the tenant has surrendered the tenancy.

Landlord turns up to an empty property to simply find persons are in occupation (whether by forced entry or not)

Position of persons in occupation other than a tenant

[amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']Where a tenant (of any type) shares occupation of his accommodation with another that other person will invariably be a licensee. For an example see Monmouth Borough Council v Marlog [1994] 2 E.G.L.R. 68, CA where the tenant went into occupation and used one bedroom, accompanied by the defendant and her two children who used two bedrooms. The kitchen, bathroom and living accommodation were shared:

“Where two persons move into residential premises together under a tenancy granted to one but not the other of them, each occupying a bedroom or bedrooms and the remainder of the premises being shared between them, the court will be slow to infer a common intention that the one who is not the tenant shall be the sub-tenant of the one who is. The natural inference is that what is intended is a contractual house-sharing arrangement under the tenancy of one of them. The inference is greatly strengthened where, as in the present case, there is written agreement between the landlord and the tenant and none between the tenant and the other occupant” (per Nourse L.J. at 70D).

A former licensee is a trespasser within the meaning of CPR 55.1(b) so that the provision that allows for early hearing dates in trespasser claims will apply (55.5(2)) [para 5.016 Residential Possession Proceedings 7th Edition].  (Greater London Council v Jenkins [1975] 1 W.L.R. 155)

A landlord should be careful because the claim here was that the occupant was the sub-tenant of the main tenant. It could be argued that if the landlord accepted both occupants and perhaps accepted rent from both tenant and occupant, they may both be joint tenants.

Assuming though the occupant remaining in possession is a licensee, then, when the tenancy is surrendered by the “tenant”, the license agreement will be at an end.

Tenant sub-lets part of the dwelling

Where an assured [shorthold] tenant sub-lets part of a dwelling (unlike above where the occupant was a mere lodger), the main tenant keeps his status as an assured shorthold tenant. [s4 Housing Act 1988]. However, a landlord may be able to obtain possession using the section 8 notice procedure using Ground 12 (breach of tenancy obligations).

Tenant sub-lets whole dwelling

Tenancy Lawfully sub-let

Where an assured [shorthold] tenant lawfully sub-lets the whole of the dwelling-house on another assured shorthold tenancy (i.e. by seeking the landlords consent or if there is no provision in the tenancy prohibiting sub-letting during the fixed term), then the sub-tenancy will continue as an assured shorthold. If the superior tenancy is ended, the sub-tenancy still continues and the head landlord becomes the landlord of the sub-tenant. [s18 Housing Act 1988]. Therefore any lawful sub-tenant would need to be ended in the normal ways (section 8 or section 21 notice).

Tenancy unlawfully sub-let

It is an implied term of every assured [shorthold] periodic tenancy that, except with the consent of the landlord,  the tenant shall not (a) assign the tenancy in whole or part, or (b) sub-let or part with possession of the whole or any part of the dwelling-house let on the tenancy [s15(1) Housing Act 1988]. The landlord therefore has the absolute right to refuse such an assignment, sub-letting or parting with possession. He does not have to show his refusal was reasonable [s15(2)]. This only applies to a statutory periodic tenancy (a tenancy that has arisen after the ending of the fixed term).

Where an assured [shorthold] tenant sub-lets the whole of the dwelling, then the original head tenant will most likely loose his status of being an assured [shorthold] tenant because the dwelling can no longer be his only or principle home [Ujima Housing Association v Ansah (1997) 30 H. L. R. 831, CA]. In which case, the head tenancy can be ended by notice to quit or maybe forfeiture and a possession order obtained in the normal way (similar to section 8 procedure). If the sub-tenancy was not granted lawfully, then the sub-tenancy will end with the head tenancy or, as it is often graphically expressed “the branch falls with the tree” [Moore Properties (Ilford) Ltd v McKeon (1976) 1 W.L.R. 1278]. The sub-tenancy comes to an end even if the notice to quit has been served with the consent of the head-tenant [Barrett v Morgan (2000) L. & T.R. 209, HL). However, if the tenancy has "truly" been sub-let, then the trespasser possession procedure is not the appropriate route and the standard procedure should be followed.

A sub-letting of the whole term operates as an assignment. An assignment is different to a sub-letting because the estate in land is transferred from the first tenant to the new tenant. However, an assignment by a tenant is ineffective to pass the tenant's legal estate to the proposed assignees unless it is made by deed [s52(1) Law of Property Act 1925]. A deed is not required if the landlord expressly or impliedly agrees to the assignees becoming the tenant and accepts him in place of the former tenant.

Tenant passes keys to another person

Where the original tenant has expressly surrendered the tenancy to the landlord or ideally has given a notice to quit which has ended the tenancy but then passes keys to another person, there are a couple of possible arguments the occupant will raise.

1. They may say that the property was sub-let to them from the original tenant. In this case though, assuming no consent was obtained, then the sub-letting would have been unlawful (see above). It is respectfully submitted that it was not possible in any event for the original tenant to sub-let because if he had surrendered the tenancy or notice to quit had ended the tenancy, then there was no tenancy to sub-let. In any event, the landlord should obtain a witness statement from the original tenant confirming no sub-letting, assignment or parting with possession took place. With this witness statement confirming the occupier is not telling the truth, the trespassing procedure will be available. If the court decided there was a sub-letting, the original tenant would continue to be liable for the rent and his tenancy should be ended by notice to quit or forfeiture, which will end the sub-tenancy. It is likely that the original tenant will be helpful to a landlord in this case because otherwise, their tenancy continues and rent remains payable. The quicker trespasser procedure is not available to a “genuine” sub-tenant (whether the sub-letting was lawful or not).

2. The other argument could be that the tenancy has been assigned by the original tenant to the occupier. However, to argue this, they must produce the Deed as required by section 52 Law of Property Act 1925 (see above) (subject to the landlord not giving consent). A failure to provide the Deed would be clear evidence that no such assignment took place. However, if the court decided an assignment has taken place, the trespasser would be the tenant of yours and the usual possession procedure would need to be followed (not the trespasser procedure).

On both points 1 and 2 above. If the tenant claims the sub-letting or assignment as the case may be were on the terms that no rent was payable, then any tenancy or assignment could not be an assured shorthold tenancy [sch1 Housing Act 1988]. In addition, a tenancy where there is no money’s worth for rent is not protected by the Protection from Eviction Act 1977 and is described as an “excluded tenancy”. Therefore, no notice or court order is required to regain possession (at common-law some form of reasonable notice is required). A landlord could therefore use the self-help method (without using violence etc. to secure entry). The defendant occupier should supply evidence of rents being paid because a failure to provide such evidence could lead the court to believe that no such sub-letting or assignment took place.

If the trespasser is claiming that he has sub-let the property from the main tenant, this would be for a court to decide whether this was the case. A defendant wishing to make such a claim would be wise in any defence to being a trespasser, provide the written agreement.[/amember_protect]

Sharing facilities e.g. kitchen, bathroom etc with tenant

If you share facilities with the occupier, then it is unlikely that they are a tenant. This scenario is a lodger and creates a licence not a tenancy. A licence is simply permission to use a room (or any land) and that permission can be revoked anytime. No granting of an estate in land is provided with a licence. In addition, this type of sharing means a landlord is excluded from some parts of the Protection from Eviction Act 1977 (requirements to serve written notice and court orders) and so is called an excluded licence.

When drafting an excluded licence you should always ensure you are entitled to enter the room at any time in order to provide services such as cleaning. This will make it clear it is a licence and not a tenancy. The Guild provide an appropriately drafted excluded licence for this purpose.

Landlord lives in same building but only shares communal hallway

This situation is slightly different to the one above. This is where there is a building that, since construction has been “converted” into flats. The exclusion does not apply to a purpose built block of flats.

If we take a simple example:

Building when originally constructed was a single house. Since then, it has been converted into three flats. Landlord lives in ground floor flat and lets the other two flats. These two let flats cannot be an assured shorthold tenancy. They will be common law tenancy.

For this exclusion to apply, the landlord must reside in the building at all times since the tenancy was created. If the landlord moves out, the tenancy will become an assured shorthold. A landlord may vacate for up-to 28 days and the tenancy will continue to be excluded, or a landlord may serve notice that he intends to return within 6 months (perhaps living abroad for a few months at a time). If notice is served then the tenancy continues to be excluded for up-to 6 months.

Schedule 1, resident landlords exclusion reads:

Resident landlords

10. – (1) A tenancy in respect of which the following
conditions are fulfilled -

(a) that the dwelling-house forms part only of a
building and, except in a case where the dwelling-house also forms part of a
flat, the building is not a purpose-built block of flats; and

(b) that, subject to Part III of this Schedule,
the tenancy was granted by an individual who, at the time when the tenancy was
granted, occupied as his only or principal home another dwelling-house which, -

(i) in the case mentioned in paragraph (a) above,
also forms part of the flat; or

(ii) in any other case, also forms part of the
building; and

(c) that, subject to Part III of this Schedule,
at all times since the tenancy was granted the interest of the landlord under
the tenancy has belonged to an individual who, at the time he owned that
interest, occupied as his only or principal home another dwelling-house which, -

(i) in the case mentioned in paragraph (a) above,
also formed part of the flat; or

(ii) in any other case, also formed part of the
building; and

(d) that the tenancy is not one which is excluded
from this sub-paragraph by sub-paragraph (3) below.

(2) If a tenancy was granted by two or more persons jointly,
the reference in sub-paragraph (1)(b) above to an individual is a reference to
any one of those persons and if the interest of the landlord is for the time
being held by two or more persons jointly, the reference in subparagraph (1)(c)
above to an individual is a reference to any one of those persons.

(3) A tenancy (in this sub-paragraph referred to as “the new
tenancy”) is excluded from sub-paragraph (1) above if -

(a) it is granted to a person (alone, or jointly
with others) who, immediately before it was granted, was a tenant under an
assured tenancy (in this sub-paragraph referred to as “the former tenancy”) of
the same dwelling-house or of another dwelling-house which forms part of the
building in question; and

(b) the landlord under the new tenancy and under
the former tenancy is the same person or, if either of those tenancies is or was
granted by two or more persons jointly, the same person is the landlord or one
of the landlords under each tenancy.

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].