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 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]

s 6 To avoid distress.

In cases where the rent of the immediate tenant of the superior landlord is in arrear it shall be lawful for such superior landlord to serve upon any under tenant or lodger a notice (by [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']registered post addressed to such under tenant or lodger upon the premises) stating the amount of such arrears of rent, and requiring all future payments of rent, whether the same has already accrued due or not, by such under tenant or lodger to be made direct to the superior landlord giving such notice until such arrears shall have been duly paid, and such notice shall operate to transfer to the superior landlord the right to recover, receive, and give a discharge for such rent.

Notes:
Reference to registered post to be construed as including reference to recorded delivery service: Recorded Delivery Service Act 1962 (c. 27), s. 1(1)(2), Sch. para. 1[/amember_protect]

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]

The common law provides that where a tenancy is determined all sub-tenancies automatically come to an end unless the superior tenancy has been determined by surrender. S.18 Housing Act 1988 nullifies this rule in relation to assured [shorthold] sub-tenancies lawfully granted by providing that where the superior tenancy is determined any such assured sub-tenancy shall continue in existence. The person who would but for the assured [shorthold] tenancy be entitled to possession of the dwelling-house becomes the new landlord [s.18(1)]. This rule will not apply if the person [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']who would be the new landlord is entitled to rely upon one of the exclusions contained in sch.1 Housing Act 1988 (e.g. rent over £25,000 etc.) [s.18(2)].

18.— Provisions as to reversions on assured tenancies.

(1) If at any time—

(a) a dwelling-house is for the time being lawfully let on an assured tenancy, and

(b) the landlord under the assured tenancy is himself a tenant under a superior tenancy; and

(c) the superior tenancy comes to an end,

then, subject to subsection (2) below, the assured tenancy shall continue in existence as a tenancy held of the person whose interest would, apart from the continuance of the assured tenancy, entitle him to actual possession of the dwelling-house at that time.

(2) Subsection (1) above does not apply to an assured tenancy if the interest which, by virtue of that subsection, would become that of the landlord, is such that, by virtue of Schedule 1 to this Act, the tenancy could not be an assured tenancy.

(3) Where, by virtue of any provision of this Part of this Act, an assured tenancy which is a periodic tenancy (including a statutory periodic tenancy) continues beyond the beginning of a reversionary tenancy which was granted (whether before, on or after the commencement of this Act) so as to begin on or after—

(a) the date on which the previous contractual assured tenancy came to an end, or

(b) a date on which, apart from any provision of this Part, the periodic tenancy could have been brought to an end by the landlord by notice to quit,

the reversionary tenancy shall have effect as if it had been granted subject to the periodic tenancy.

(4) The reference in subsection (3) above to the previous contractual assured tenancy applies only where the periodic tenancy referred to in that subsection is a statutory periodic tenancy and is a reference to the fixed-term tenancy which immediately preceded the statutory periodic tenancy.

Example

A good example of how a sub-letting arrangement can work is an example from a true scenario with one of our members.

Facts

A Mosque (M) rents a property from Landlord (L) on a common law (contractual) tenancy. M employs a Priest (P) and sub-lets the property to P.

Because the contract of employment between M and P “allowed” P to live at the property but did not “require” P to live there, P is a tenant and not a licensee. (If P was “required” to live at the property for the better performance of his duties, he may have been a licensee with little protection”).

P’s wages were deducted by a set amount each pay day for rent. Because the deductions were greater than £250.00 per annum, the tenancy was an assured shorthold tenancy. (If the rent payable was less than £250.00 per annum or £1000 per annum in Greater London, there would have been a common law tenancy and not an AST)

M ends P’s employment and asks P to leave the property. P refuses to leave and insists on a court order.

Because the tenancy was granted as part of the contract of employment, the fixed term ended the moment M dismissed P. Thereafter a statutory periodic tenancy arose [s.5 Housing Act 1988].

If M had a new priest in line to move into the house, they could have obtained possession under Ground 5, Sch.2 HA 1988 (The dwelling-house is held for the purpose of being available for occupation by a minister of religion as a residence from which to perform the duties of his office). In addition, M could also obtain possession using Ground 16 (The dwelling-house was let to the tenant in consequence of his employment by the landlord seeking possession or a previous landlord under the tenancy and the tenant has ceased to be in that employment). Or, of course, M could have served a section 21 2 months notice and sought possession that way.

However, instead, M surrendered the superior tenancy of the property back to L.

Question:

What should L do? How does L get the property back? What is the relationship between L and P?

Answer:

Because it has been established that P had an assured shorthold tenancy that was lawfully granted by M, the moment M surrendered the tenancy back to L, L became the landlord of P because of s.18 HA 1988 (detailed above).

Therefore, P must pay L the rent he was previously paying to M. Of course as P is no longer in work, housing benefit may need to be claimed if possible, however for the purposes of the tenancy between P and L, the tenancy will be a statutory periodic tenancy (because the fixed term will have ended due to the employment ending) and the rent payable will be the same as P was paying to M whilst he was employed by M.

L may seek possession on any (or all) of the following ways:

• L may serve a section 8 notice on ground 16 (The dwelling-house was let to the tenant in consequence of his employment by the landlord seeking possession or a previous landlord under the tenancy and the tenant has ceased to be in that employment). However, this is a discretionary ground so L is not guaranteed possession.

Schedule 2 GROUNDS FOR POSSESSION OF DWELLING-HOUSES LET ON ASSURED TENANCIES

Part II GROUNDS ON WHICH COURT MAY ORDER POSSESSION

(Ground16)

The dwelling-house was let to the tenant in consequence of his employment by the landlord seeking possession or a previous landlord under the tenancy and the tenant has ceased to be in that employment.[For the purposes of this ground, at a time when the landlord is or was the Secretary of State, employment by a health service body, as defined in section 60(7) of the National Health Service and Community Care Act 1990, shall be regarded as employment by the Secretary of State.

For the purposes of this ground, at a time when the landlord is or was the Secretary of State, employment by a health service body, as defined in section 60(7) of the National Health Service and Community Care Act 1990 , or by a Local Health Board, shall be regarded as employment by the Secretary of State.

• If P failed to pay the rent to L, L could seek possession using the usual section 8 procedure on Grounds 8, 10 & 11 (rent arrears grounds).

• L could also serve a section 21(4)(a) notice (2 months notice) on P and seek possession based upon that notice. If there was no written tenancy, then L would not be able to use accelerated possession procedure and would instead use the standard procedure (virtually the same as section 8 route).

Note: If, before employment ceased, there was no rent payable by P to M, then the tenancy would not be an assured shorthold tenancy. Therefore, the rules are different. Because in this example the superior tenancy was "surrendered" and not determined by notice to quit, then L would still become the landlord of P as detailed above, however as no rent is payable, the tenancy between L and P would not be an AST. In addition, L would not require a court order because the requirement of a court order is excluded from Protection from Eviction Act 1977 (s.3A) where no rent is payable for money or money's worth. It is therefore crucial that a landlord in a similar case finds out if rent was payable under the terms of employment or not.

In addition, it would have probably been wise for L in this case not to accept a surrender of the superior tenancy with M. This way, M would still be liable for the rent to L until the tenancy was properly determined by notice to quit. This would have bough L more time at full rent.

[/amember_protect]

Abstract: Where a demise consisted of a corner shop with accommodation above, and the shop was found to have been occupied for the purposes of a business, the entire demise was subject to the Landlord and Tenant Act 1954 Part II . T was tenant of premises which had the appearance of a corner shop with accommodation over. When L purported to give T notice of the termination under Part II of the Landlord and Tenant Act 1954, T did not apply for a new tenancy under s.29 of the Act, but contended instead that he had never run a business from the premises and was accordingly a residential tenant and protected by the Rent Act 1977 . The judge decided upon all the evidence that T had for a material and significant time up to the issue of proceedings occupied the shop for business purposes; and he accordingly made an order for possession of the demised premises. On appeal T argued, inter alia, that possession should not in any event have been ordered of the accommodation above the shop.

Held, [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']dismissing T’s appeal, that (1) s.23(1) provides that Part II of the 1954 Act applies to premises part of which are used for the purposes of a business carried on by the tenant; and that, having found the shop to have been occupied for business purposes, the judge had thus correctly treated the entire demises as subject to Part II of the 1954 Act; (2) T’s other grounds of appeal failed.[/amember_protect]

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.

It is not possible to assign a periodic tenancy because there is no term to assign.

Under the Unfair Terms in Consumer Contracts Regulations 1999, section 19(1) Landlord and Tenant Act 1927 and Landlord and Tenant Act 1988, an assured shorthold tenancy (or any other type of standard tenancy) may prohibit subletting and assignment but only by stating that the landlord must not unreasonably withhold consent to assign.

It mainly occurs in commercial leases but can happen with a residential tenancy. Most of the case law quoted on this page refers to commercial leases but there is no reason why it would be different to residential (except the last case at the bottom where the damages awarded to the tenant would be nothing like those in that case)

There is no hard and fast answer as to what is withholding reasonable [amember_protect levels='keywee' user_action='error' user_error='amember_error_default_user' visitor_action='error' visitor_error='amember_error_default_guest']consent. It is for the landlord to prove if he withholds consent that it was reasonable to do so. [s1(6)(c) Landlord and Tenant Act 1988]

Because an assignment is essentially surrendering the previous tenancy and granting a new tenancy to a new tenant(s), a written application will need to be made by all joint tenants [Leek and Moorlands Building Society v Clark [1952 2 Q.B. 788]

The procedure that a landlord and tenant must follow is governed by the Landlord and Tenant Act 1988. Essentially, a tenant must make an application to the landlord, then the landlord must respond in a reasonable time and give reasons.

Once L has given written notice with reasons refusing consent the period of reasonable time for giving consent (required by s1(3) of the Landlord and Tenant Act 1988) has passed. L cannot subsequently change his mind and say that the change has occurred within a reasonable time of the request. The fact that there were subsequent attempts to negotiate permission to assign did not deprive T on the facts to its rights under the 1988 Act.

“The expression ‘within a reasonable time’ may have entitled the landlords to a longer period in which to serve the notice than in fact they chose to take. Having chosen to serve a notice, however, they cannot subsequently be allowed to say, because they could have taken more time, that their refusal was ineffective as a refusal under the section. The purpose of written statutory notices such as those required by section 1(3) is to ensure that each party knows where the other stands and the refusal must be treated as such.” (Pill LJ at para 80).

Go West Ltd v Spigarolo [2003] EWCA Civ 17; 07 EG 136; [2003] 2 WLR 986; [2003] 2 All ER 141.

Breach of covenant as reason for refusal

Landlords often think that they can refuse to give consent to an assignment on the ground that the intended use by the assignee would be a breach of covenant. They used to be wrong. The view taken by the courts was that as the landlord will have the same rights against the assignee as he has against the tenant he would not be prejudiced (Killick v Second Covent Garden Property Co. Ltd [1973] 2 All ER 237, CA). However, the House of Lords has now overruled Killick and held that a refusal in these circumstances is not automatically unreasonable. Instead one must ask what the reasonable landlord would do in the particular circumstances of the case. The court cannot and should not formulate strict rules as to how a landlord should exercise his power of refusal.

Ashworth Frazer Ltd v Gloucester City Council (No.2)[2001] UKHL 59: [2002] 05 EG 133.

Guarantor

A requirement for a prospective assignee to offer a guarantor of its covenants is often included in a lease as an absolute requirement in what is otherwise a fully qualified alienation covenant. There is no implied term that the landlord will act reasonably in requesting a guarantor. The most that can be said is that there is an implied term that any request for guarantors must be genuinely for the purpose of improving the landlords financial security

Mount Eden v Towerstone [2002] 31 EG 97; [2003] L&TR 4

Underletting

Difficult landlord

Let this case be a warning to any landlord who thinks he might like to make life difficult for a tenant seeking to assign or underlet. The proposed assignee was clearly suitable. After a reasonable time had passed for making a decision Ls advisors made increasingly unreasonable demands on T and even went on to write an outrageous letter in which they accused T of a long delay in furnishing replies. The reason why no decision was given was because [L] through its agents was pursuing a deliberately obstructive policy designed to prevent assignment going through. The reason for doing this was that L thought that if the assignment could be prevented it would be able to negotiate a surrender with a nil premium because of the difficult situation that T would then be in. Peter Smith J awarded 25,000 exemplary damages on top of his award for damages under the Landlord and Tenant Act 1988 (which included damages for loss of the premium of 75,000 that it would have got from the assignee, and a sum for loss of goodwill and turnover).

“It seems to me that it is important to mark the courts disapproval by a sum which will cause the Defendant to consider seriously its future conduct. The sum should not be excessive; it should be moderate. Moderate however, is to be assessed on the overall facts of the case and in the light of the conduct and the need to mark disapproval. It is important for landlords to appreciate that they should not resort to tactics to frustrate legitimate expectation of tenants by raising long and irrelevant queries designed to avoid giving the answer to the application for a licence to assign. This is the more so when the conduct is calculated to achieve an extraneous benefit for itself at the expense of the tenant.” (para 150).

Design Progression Ltd v Thurloe Properties Ltd [2004] EWHC 324[/amember_protect]