It is a common belief that tenants are required to leave when their fixed term tenancy comes to an end, if it has not been renewed. For example, a landlord lets out his flat on a 12 month Assured Shorthold Tenancy. If no extension of the tenancy is agreed, the tenants will vacate the property after a year, right?
Well, in practice, probably yes. Most tenants will generally not hold a landlord to the strict requirements of the law because (a) they may not be aware of the law and (b) even if they are, they will usually have no desire to be deliberately obstructive. But if a tenant decides that he wishes to stay put at the end of that year, what then?
The landlord can apply to the court for possession but his application will be refused if he has not complied with section 21 of the Housing Act 1988. Section 21 requires the landlord, before seeking an order for possession, to serve the tenants with a formal written document giving them 2 months notice to leave the property. Only when that 2 months has elapsed and the tenants have not left, can the landlord apply to the court for possession. So, in our example above, if the landlord has neglected to serve the Section 21 Notice at least 2 months before the year is up, the tenants will have every legal right to continue to stay in the property beyond the initial year until the 2 months notice has expired.
When to serve a Section 21 Notice
At least 2 calendar months before possession is required. The notice can be served on the tenant at any time during the fixed term tenancy provided that the tenant receives at least 2 months notice. Many landlords will choose to serve the notice on the tenant at the start of the tenancy but care should be taken to ensure that the tenancy has already started, otherwise the notice may be declared invalid. Handing tenants the notice when they sign the tenancy agreement (as is often the practice with letting agencies) will be invalid unless the tenancy has already commenced.
Another word of caution for landlords: if your property is an HMO (see our post here) which required licensing and you have failed to licence it, the section 21 notice will be invalid. Similarly, if the rental deposit has not been protected in accordance with the Tenancy Deposit legislation, the notice will also be invalid.
What should the Notice say?
The rules are slightly different depending on whether the tenancy is a fixed term tenancy, or a periodic tenancy. In both cases, the notice should state the name and address of the landlord(s) and of the tenant(s) and the full address of the property. The notice must be dated and state that possession is required under section 21 Housing Act 1988.
The difference between a fixed term and a periodic tenancy relates to the date when the two months notice expires. If the date is wrong, courts will nearly always side with the tenant and refuse to grant possession until a correct notice has been served. There have been many possession actions thrown out of court for that reason, the landlord having to start the two month period again, pay a second court fee, and serve the notice in the correct form.
For fixed term tenancies, the notice must state that the two month period expires at least two months after service of the notice. But it must not expire on or before the end of the fixed term tenancy. So if the last day of the tenancy is 31 July, the notice should be served before 31 May and state that possession is required on 1 August.
For periodic tenancies (i.e. where the fixed term has ended and the tenants have been allowed to stay on in the property), the two month period must expire on the final day of a period of the tenancy. The period of the tenancy depends on the frequency of rental payments: if the rent is paid monthly, the period of the tenancy is one month and the periods began immediately after the fixed term expired.
An example might help. The tenancy is initially granted for one year, commencing on 21st June 2010 and the rent is paid monthly. The last day of the fixed term is therefore 20 June 2011. The tenant is allowed to stay on in the property for a further 12 months but no new tenancy agreement is signed. In legal terms, therefore, the tenant continues in occupation under a statutory periodic tenancy. The period is one month (frequency of rental payments) and the statutory periodic tenancy commenced on 21st June 2011 (immediately after the initial fixed term expired). So the section 21 notice must be served at least two months before possession is required and must state that possession is required after 21st of the relevant month (on 22nd, for instance).
It sounds confusing but it is actually quite straightforward if the above guidance is followed. The principle behind the law is that the tenant (a) should not be required to leave before the tenancy is up – whether that be a fixed-term, or the period of a statutory tenancy and (b) should receive at least 2 months clear notice of when he/she has to leave.
As always, our advice to landlords is to maintain a good relationship with your tenants wherever possible. Remember it is their home, that they are paying you to live there and that they deserve to be treated with respect. It is not unreasonable to give tenants at least two months notice to find somewhere else to live.
We suggest that good practice would be for the landlord to write an informal letter, or email, to the tenants as soon as he/she knows that possession is required, even if that is several months ahead (something like: ”The law requires at least 2 months notice but I wanted to let you know as soon as possible that I will be wanting my flat back at the end of the tenancy….”). Follow that up with a reminder and section 21 notice a few weeks later.
Using the courts creates mistrust and resentment and should always be a last resort. In the vast majority of cases, there will be no need to argue about the technicalities of a section 21 notice.
You can download one of our tenancy agreements here. As always, your comments are welcome.