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Housing Bill: Recovering abandoned premises

Update: The bill received Royal Assent on the 12 May 2016, and is now the Housing and Planning Act 2016.

The Housing and Planning Bill, which second reading in Parliament took place this week, contains provisions for a new procedure for recovering abandoned premises in England.

Under the new procedure, a private landlord will be able to bring an assured shorthold tenancy to an end without a court order if:

  • the premises are in England,
  • an unpaid rent condition is met,
  • two warning notices were given to the tenant on a strict schedule, and,
  • no written response was received.

Unpaid rent condition

The unpaid rent condition closely follows Ground 8 of Schedule 2 of the Housing Act 1988 (used for s.8 proceedings). The key difference, if rent is payable monthly, is that two consecutive months’ rent must be unpaid, not just two months’ rent overall.
Like in Ground 8, rent payable four-weekly is not included and therefore a priori such tenancies will be excluded from the procedure, as they are from Ground 8.

Warning notices

The landlord will have to give two warning notices, or rather will have to give a warning notice twice, and comply with a precise schedule for doing so (which I won’t go into in this post…).
The notice must state that the landlord believes that the premises have been abandoned, that the tenant or named occupier (someone named in the tenancy agreement as authorised occupier) must reply in writing before a specific date, and that the landlord proposes to bring the tenancy to an end if no timely response is received.

If the notice cannot be given personally to the tenant or named occupier, which seems likely if the premises have indeed been abandoned then the landlord will have to do all of the following:

  1. leave it at or send it to the premises,
  2. leave it at or send it to every postal addresses in the UK that the tenant or named occupier has given as contact addresses for giving notices,
  3. send it to every email address that the tenant or named occupier had given as contact addresses for giving notices.

This is thorough but understandable considering the importance of a response from the tenant.

Final notice

Once the deadline has expired with no written response, the landlord will be able to end the tenancy by giving a third notice to that effect in the same way as the warning notices.
The tenancy will end on the day that third notice is given.

Looking at the schedule for the warning notices, the earliest the tenancy could be ended will be four weeks after the unpaid rent condition is met.
Depending on when the tenant has stopped paying rent this could be more than two months (if the rent is payable monthly) after the tenant has abandoned the premised, so this new procedure is not particularly quick.

Reinstatement

The tenant will have six months from the day the notice ending the tenancy was given to apply to court for an order reinstating the tenancy, similarly to the procedure that exists in case of forfeiture.

Interestingly, the tenant will not have to show evidence that he hadn’t abandoned the property per se_, but rather that he had a "_good reason for having failed to respond to the warning notices".

It is anyone’s guess how this will work in practice and whether courts will put conditions on the reinstatement, as is usually the case in forfeiture cases. It would seem reasonable to make the reinstatement conditional to the clearing of the arrears as they will be meeting Ground 8, which is a mandatory ground under s.8 proceedings.

Existing alternatives

The existing alternatives to this new procedure very much depend on the status of the tenancy.

Section 1 of the Housing Act 1988 provides that the tenancy is an assured tenancy “if and as long as 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”. This is key but not always straightforward to assert.

Assuming that the landlord has solid evidence that the property is indeed ‘abandoned’ then the tenancy is no longer assured and the landlord may:

  • if the tenancy is a fixed term tenancy, action a break clause without creating a statutory periodic AST afterwards.
  • if the tenancy is a periodic tenancy, serve notice to quit
  • in either case, providing that the agreement contains a forfeiture clause (as it should), forfeit the tenancy and re-enter without the need of a court order.

These procedures may be faster than the proposed one and, apart from forfeiture, do not allow the tenant to apply for reinstatement.
In case of forfeiture the (ex-)tenant may go to court to have the tenancy reinstated. If the court decides to reinstate the tenancy it is usually under the condition that all the arrears are cleared.

If the tenancy is still assured then the only options are the usual s.21 or s.8 procedures.

Lastly, depending on how the circumstances (e.g. if he moved out and posted the keys to the landlord) the tenant’s actions may be interpreted as an implied offer to surrender, which the landlord is free to accept or not. This is probably the simplest option if the circumstances lead themselves to it.

Thoughts

The proposed procedure only allows termination of assured shorthold tenancies (Why not assured tenancies in general?). This is awkward because the procedure purports to be aimed at abandoned premises, and if they are indeed abandoned then the tenancy is no longer an AST, as explained above.

On the one hand, this avoids the issues of gathering evidence that the tenancy is no longer assured (and the arguments that may ensue), on the other hand, this is potentially a fatal flaw as the procedure might never apply when the tenancy is indeed abandoned…
It may be that landlords will have to use existing remedies along the new procedure in order to cover themselves until the situation is clarified.

If the premises are indeed abandoned, and the landlord has solid evidence, existing remedies may also be quicker and more certain than the new procedure.

As a lesser point, it is not entirely clear what will happen when a fixed term AST is ended with this new procedure.
Indeed, section 5(2) of the Housing Act 1988 provides that if a fixed term AST comes to an end otherwise than by virtue of a court order or “a surrender or other action on the part of the tenant” it is replaced by a statutory periodic AST.
The new procedure is not included and the section is not amended by the Bill as it stands. Therefore, although this cannot be the aim, it may be argued that a statutory periodic AST will be created after a fixed term AST is ended through this new procedure.