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Insights

Fixed Term Tenancy Advice

Posted on 23rd May 2023 in Affordable Housing

Posted by

Stephen Burtchaell

Partner and Solicitor
Fixed Term Tenancy Advice

As a registered provider you will be obliged to follow the Tenancy Standard, but this is only guidance that is applicable to your own policies and procedures. 

When deciding whether to grant a further tenancy you should be considering the circumstances as a whole and on a case-by-case basis where the following may be relevant:

  • the behaviour of the tenant;
  • occupation of the property, such as whether the property is over or under-occupied;
  • the tenant's financial circumstances and any affordability; and
  • the need for social housing in the area.

The Tenancy Standard is not a legally binding document; it is a guidance document for you to follow, as best practise. The policies and procedures you have should be transparent towards your tenants and other users.

Therefore, there is no black and white rule that would cover all tenants who are living under fixed-term tenancies, nor one that covers all tenants who are in arrears. However, for the cases where you do conclude that you shall either not be offering them a further fixed-term tenancy, there are legal procedures that need to be followed.

 

General formation of the Law

The Housing Act 1985 and the Housing Act 1988 are two of the most prominent pieces of housing legislation relevant to both the private and public sector.

Any tenancy granted after 1989 is either an assured tenancy or assured shorthold tenancy (an ‘AST’). As AST can be either a fixed-term or a periodic tenancy, including one which has an introductory or starter element.

The Localisation Act 2011 (which came into force in 2012) changed this by introducing flexibility to social landlords. Prior to 2012, any social housing tenancy had to have been a secure tenancy, which meant that social housing was allocated for life, even if a tenant only had a short-term or temporary tenancy need.  

From this point onwards, social landlords, including, registered providers, can now offer fixed-term tenancies, rather than being tied to offering tenancies that last a lifetime. This means they can now base their tenancy policies on factors such as:

-       compatibility with the purpose of accommodation;

-       the needs of individual households;

-       the sustainability of the community; and

-       the efficient use of housing stock. 

This is also reflected in the ‘Tenancy Standard’ (see footnote 1 above).

 

Fixed-Term Tenancies

Some of the key characteristics of a fixed-term tenancy is that it a) must be for a minimum of two years and b) once it has been entered into, it cannot be varied or altered without first gaining the agreement of the tenant.

 

Ending during the fixed-term period

As with most contractual scenarios, during the fixed-term of an AST, a landlord can only terminate the tenancy and recover possession where:

a)   there is a contractual right to do so (i.e. a break-clause within the tenancy agreement); or

b)   agreement between the parties (i.e. the tenant agrees to vacate and bring the tenancy agreement to an end); or

c)    a breach (i.e. the tenant is in breach of their obligations under the tenancy agreement).

a) and b) above should be self-explanatory. In respect of c), in doing so, there is a strict legal process to follow. A landlord must first serve a notice on the tenant in a prescribed format, commonly known as a ‘section 8 Notice’ (the notice periods under the second 8 route differs depending on the circumstances, specific legal advice should be taken on this, at the outset of any concern).

Where a tenant remains in occupation after the expiry of the notice period, a landlord can make an application to court. However, a court will only make an order for possession where it is satisfied that the landlord has proved one of the grounds for possession, arising from the circumstances. Some of these grounds are discretionary and some of these grounds are mandatory, but these are generally ‘fault’ grounds, i.e. where the tenant has breached their obligations under the tenancy agreement in some way. 

As with any application to court, this can firstly be time consuming and secondly be costly. Depending on the terms of the AST, a landlord may be limited in what costs can be recovered from the defaulting tenant on conclusion of court proceedings.

 

Ending once the fixed-term period expires

If a landlord wishes to end a fixed-term tenancy at the end of the fixed-term, then there are two procedural steps that need to be taken in respect of notice. 

The first is that the landlord must give the tenant at least six months’ advance notice that they do not intend to grant another tenancy to the tenant on the expiry of the existing fixed-term. For example, if a fixed-term is due to end on 31 December 2023, then advance notice will need to be given before 30 June 2023.  This is sometimes called a “minded to” notice.

The objective behind this is that a tenant needs to know in advance that their landlord does not intend to renew their tenancy, so they have ample time to obtain advice, support and/or alternative accommodation.

Where a tenant remains in occupation after the expiry of the fixed-term, then a landlord must serve a second notice on the tenant in a prescribed format, commonly known as a ‘section 21 Notice’. This notice period must be a minimum of two months. 

Where a tenant remains in occupation after the expiry of this notice period, a landlord can make an application to court. This is generally named the ‘no fault’ route. However, a court will only be obliged to make an order for possession where it is satisfied that the notices were valid. It is therefore of utmost importance that these notices are checked, prior to being issued. Again, as with any application to court, this can, firstly, be time consuming and, secondly, be costly. 

Depending on the terms of the AST, a landlord may be limited in what costs can be recovered from the defaulting tenant on conclusion of court proceedings.

A situation can arise where a landlord has neither served a “minded to” notice or a section 21 Notice within the fixed term. In these circumstances, the law says that the court may only grant possession, rather than must grant possession. This means that rather than being a mandatory possession, the court can exercise its discretion and not make a possession order. 

There is no case law on what matters the court will take into account when deciding whether or not to grant a possession order where a “minded to” notice has not been served at all or after the fixed term has ended. I would have thought that compliance with the Tenancy Standard will be a consideration of the court as well as the general circumstances of the tenant and their household e.g. do they have the same needs as they had at the start of the tenancy.

 

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Our Affordable Housing team have over 25 years’ experience in this sector, forming close working relationships with their housing clients. To find out more about the areas they advise on and their bespoke services please visit their hub page or contact a member of the team here.

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