Assured tenancy – what is it ?

Assured and shorthold tenancies are the most common types of arrangement for the renting of houses and flats by private tenants. They were originally introduced by the Housing Act 1988 and subsequently modified by the Hosing Act 1996. in the act the term ‘assured tenancy’ is used to refer both to assured tenancies and assured shorthold tenancies.

What are the main differences between an assured and a shorthold tenancy?

Assured tenancy provides the tenant with more security of tenure. Under assured tenancy a tenant cannot be evicted without a reason and any aspects of the applicable rent are subject to the supervision of the Rent Assessment Committee. The only circumstances under which the landlord may be able to evict the tenant are when the landlord can demonstrate his or hers ground for possession to the court. Normally, this is not easy and even at the end of the assured tenancy the landlord may not be entitled to evict the tenant.

On the other hand, if you rent under a shorthold tenancy, the landlord can repossess the property six months after the start date of the tenancy, provided that he orshe gives you two months’ notice requiring possession.

How do I know if a particular tenancy is an assured tenancy?

The type of tenancy a person has is determined by the legal status of the landlord and the date the tenancy originally began. The majority of private rental agreements are now concluded as assured shorthold tenancies. Under these arrangements the tenant has no long-term rights. In most cases the tenant can be evicted after the first six months of the rental agreement have passed. To regain possession of the property, the landlord must still obtain a possession order but does not need a reason to evict.

An assured tenancy is likely to exist if the following apply:

  • the tenancy commenced on or after 15 January 1989;
  • the tenancy must be of a dwelling-house ‘let as a separate dwelling’;
  • the property must be let to a private (individual) tenant;
  • the property must be the tenant’s principal home (in the case of joint tenants at least one of them must occupy the property as his or her principal home);
  • the tenancy must not be one excluded by Schedule  1 of the  Housing Act 1988;

Importantly however, the rented property must not have a high rent value (high rateable value is typically over £1,500 in London and over £750 elsewhere). Alternatively, if the tenancy began after the 1st of April 1990, rent must not be more than £25,000 per annum. Also properties rented at low (less than two thirds of the rateable value – for tenancies that commenced after 1st April 1990 the rates are as follows: £1,000 per annum in London or less than £250 elsewhere).

How long for should I grant an assured tenancy for?

Majority of private tenancy agreements are fixed term tenancies that perhaps at a later date continue as periodic monthly tenancies.  The length for which you should grant the tenancy should dependent on how well you know the tenant. If you have previously had dealings with a particular individual you may feel comfortable with 12 months +. Also there are a number of other factors such as agent’s charges for renewal of tenancy and certainty of occupation. In most cases, I would not recommend to sign assured tenancies for longer than 6 months.

What happens at the end of a fixed term tenancy?

At the end of an assured fixed term tenancy, there are two main options. Either to renew the tenancy for a certain fixed period of time or let it run as a periodic tenancy. In majority of private rental agreements payments terms are on a monthly basis. In such cases the tenancy will automatically convert into a monthly rolling tenancy which can be terminated by either party serving a notice or the landlord seeking repossession. For a full list of grounds for possession you can refer to this article.

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Average length of commercial lease reducing

Lease Lengths of Commercial Properties hit all time low

An annual study of commercial property tenancies recently carried out by Investment Property Database (IPD) and the British Property Federation has shown that there has been a dramatic fall in the length of leases on commercial properties over the past five years.

The survey, the biggest of its kind in the United Kingdom, sourced their information from over 100,000 industrial, retail and commercial leases and found that commercial lease lengths have dropped to just 4.8 years compared to 6.2 years in 2007. That’s a drop of 1.4 years. Read More »

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How landlords & tenants should work together in difficult economic conditions

It is common that businesses who occupy a building will lease instead of purchase. In today’s difficult economic climate, landlords and tenants will read every letter of small print in the lease to enforce each other’s legal rights looking for angles and opportunities but does a practical rather than legalistic approach reap better benefits ?

For example, if the tenant cannot afford to pay the rent, this will cause problems to the landlord who would not want their premises empty and unprofitable. Read More »

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Getting it wrong with beak clauses on commercial leases can prove costly

Businesses and individuals who occupy commercial properties have been issued a warning to read the contractual lease agreement which may contain a break clause. This is after a firm has been fined £300,000 in a case in Bristol where the High Court ruled for the landlord to issue a fine after their tenant’s right to use the break clause in the contract was questioned. This has caused the tenant to be liable for rent for the succeeding five years.

Colliers International’s office property team have stated that this case shows the problems of a tenant attempting to invoke a break clause as the conditions to comply with are difficult. Mike Woodliffe who is Colliers’ corporate solutions director commented on the case. He stated that the case was only about a sum of less than £200. However, other implications for both parties involved re-establish the importance of reading the fine print of any commercial lease and making sure this is understood before agreement. Read More »

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Restaurant leases – tips for landlords

Despite the current economic climate, new restaurants are opening up every month in an attempt to establish themselves into successful businesses. Landlords who own property that is ideal for restaurants are therefore not short of prospective tenants.

As landlords, it is imperative for you to ensure you have found the right tenants, as this can save a lot of hassle and grievance in the long run. The first step to take in making this happen is therefore familiarising yourself with what a specific tenant can afford in terms of a lease. Once you have established this, you will then be able to consider whether the property you have on offer is suitable for their requirements, whether the site has parking, and whether there is visible signage space. Although other factors are indeed important, the most important factor you should have at the forefront of your mind is the prospective tenant’s financial situation, and what figures they are looking at for their new lease. Once you know these figures, you will be able to put together an appealing package which the tenant can comprehend. Read More »

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Better bargaining position for tenants now with commercial leases

Recent trends have witnessed commercial leases being at their most flexible they have ever been. This has had the result of a number of factors including a big shift in respective bargaining positions. From a tenant’s point of view, a long lease, which could be sold at a premium, but with lots of flexibility in the form of break clauses, can often be the most attractive option. Read More »

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10 tips for dealing with a Housing benefit tenant

For those landlords who are on the housing benefit system, here are 10 tips to help you get the most out of your tenancies.

Tip #1: Check Whether Your Tenant Receives Local Housing Allowance

If your tenant receives Local Housing Allowance, this sum is normally not payable directly to landlords. The only exception to this rule is where the tenant can be classed as ‘vulnerable’. If you believe you may have a tenant which falls within this category, it is advisable to contact the benefit office in order to find out what your next step is. Read More »

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Guide to the law on empty residential property

It is estimated that there are over 300,000 long term empty residential properties in England and thousands of abandoned commercial buildings. These wasted assets often become a shelter for homeless and squatters. The number of empty properties is not decreasing and councils have certain legal enforcement measures that allow them to take possession of empty properties. As such enforcement of empty properties and rights associated with empty properties are an interesting topic for public discussion. The topic attracts great media attention and is frequently subject to governmental reviews. Read More »

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Consequences of Delaying Consent To Assign or Sublet Commercial Lease

It is not unusual for a commercial property lease to prevent a tenant from assigning or subletting the property. Where assignment or subletting is permitted it will usually be qualified to state that it can only be done with the consent of the landlord. In such circumstances the landlord cannot unreasonably withhold consent nor delay his decision.

Nevertheless, a landlord must provide his decision to the tenant in writing regardless of whether he gives consent, withholds consents or what conditions have to be satisfied in order for him to provide consent.

In leases where assignment or subletting is permitted, it is important that the landlord deals with a tenants request in good time – see also here on assigning a lease generally. Failure to do so could not only be deemed as a breach of the terms of the lease, but if the landlord has a reasonable reason to refuse it may be too late for him to rely upon it.

Of course there may be circumstances where it is reasonable for the landlord to delay his decision. This may be because the tenant has not satisfactorily provided the landlord with all the required information in order to make an informed decision, such as the proposed tenant’s financial information (e.g. the last two or three years accounts) and references from previous landlords, their accountant or their bank. But once this information has been provided the landlord should act swiftly or risk the tenant acting without his consent and if the matter goes to court, risk further financial penalties which could be imposed by the court in addition to legal costs. These penalties could be exemplary damages in addition to compensating the tenant for his loss which is likely to be as a result of the proposed tenant pulling out of the transaction due to a landlord’s delay.

It is difficult to be certain about what will be considered a reasonable amount of time for the landlord to provide his decision to assignment or subletting. However, the clock begins ticking from the moment the tenant provides the landlord with the notice or application and all the required supporting documentation. A prudent landlord should in reality be able to make this decision within two or three weeks, depending on the complexity of the application.

In any event, whether you are a landlord or a tenant, if you are not sure about the time periods or feel that one party is unreasonably delaying matters then you should consider obtaining legal advice from a commercial property solicitor.

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Accelerated Possession Procedure

Accelerated Possession Procedure

The accelerated possession procedure is a fast track procedure available to a landlord to repossess their property and evict the tenant under an assured shorthold tenancy. This type of claim has 3 very important aspects :-

  • The landlord must have given the right notice before starting a claim and it must be exactly compliant with the Housing Act rules
  • No claim for unpaid rent or other financial claim can be made
  • It will still take about 6 weeks after getting an order under the so-called accelerated procedure and even then, some tenants do not leave without attendance by bailiffs

The accelerated possession procedure is only applicable to assured shorthold tenancies which can be described as a residential tenancy with limited security of tenure (the right given to a tenant to continue occupancy of a property following the end of their tenancy).

A landlord who has granted an individual an assured shorthold tenancy has the right to acquire repossession any time after the fixed term lease (a tenancy granted for a specified length of time) has run out or during a periodic tenancy (a lease granted where the period is specified but rolls over for example month to month). The landlord is not required to provide grounds for repossession and may apply under the accelerated possession procedure.

Criteria

The following criteria must be satisfied in order for a landlord to make a claim of accelerated possession procedure and be successful in it:

  • The landlord should not be a local authority or housing association but a private landlord
  • Tenancy must have begun after 15 January 1989
  • A written assured shorthold tenancy exists with the tenant and any other agreement of tenancy prior to that be same
  • The landlord must serve a notice on the tenant providing details of their address
  • If the tenancy was one between the dates of 15 January 1989 and 28 February 1997, the landlord should have served at the time a notice on the tenant informing them that the tenancy is an assured shorthold tenancy.
  • Deposits received after 6 April 2007 is paid into a tenancy deposit scheme (used to protect the deposit) approved by the Government.
  • If the property is a house occupied by several tenants or is located in an area where the local authority requirement a licence, the said licence has already been obtained or been applied for
  • The tenant should have been in occupancy for a minimum of 6 months
  • The fixed term tenancy has ended or the tenancy is a periodic tenancy.

Procedure

The Housing Act 1988 requires the landlord to serve two month’s notice on the tenant stating that they vacate the property and that he wishes to repossess after the tenancy has ended. Without this notice, the landlord runs the risk of committing a criminal offence. If the tenant fails to leave before the expiration date of the notice, an application to the County Court for an order requiring the tenant to vacate the property can be made.

In reality the tenant is likely to have stopped rent in particular during the two-month notice period. This however does not entitle the landlord to ask for a judgment of money from the courts even if he is out of pocket for two months arrears or more. The option here is to issue legal proceedings for arrears separately. Unfortunately this would involve further expenses and time.

When filing the application to the court it is necessary to attach copy of the Section 21 notice, evidence that the notice was served and the Assured Shorthold Tenancy Agreement. If the paperwork is all in order, the court will make an order for possession and a court hearing would not be a necessity. It is to be noted however that a technical error or mistake made in the notice, procedure or other documentation can result in the court striking out the claim meaning the whole procedure would have to be restarted.

The court application will then be served on the tenant giving them 14 days to either accept the claim or dispute it and file a defence. As already mentioned if the case is well founded, a defence would not be available, irrelevant of whether the tenant’s complain is sincere and genuine.

The accelerated possession procedure allows the landlord to bypass a costly and lengthy hearing to evict a tenant. This is of course dependent on the right paperwork being filed. If the tenant still refuses to leave the property within the given time frame (usually 14 days) after an order has been sought, the landlord can apply to the court for a warrant of bailiffs to evict the tenant on their behalf. The tenant however, can apply to court to delay their eviction justified by grounds of exceptional hardship. If this is accepted by the courts, the eviction period would be extended to a further 6 weeks.

Further assistance from us, if needed, here.

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