Real Estate Matters Update - December 2013

19 Dec 2013

A Christmas gift for residential landlords

The Court of Appeal decision in Spencer v Taylor (2013) EWCA Civ 1600 has resolved the previous uncertainty as to the type of notice a landlord must serve under Section 21 of the Housing Act 1988 (the "Act") once a fixed term Assured Shorthold Tenancy (AST) has expired and the tenant remains in occupation as a statutory periodic tenant. The result is a welcome boost for landlords and their advisers.

The salient facts of the case are these:-

  • The landlord granted an AST on 6 February 2006, which was a Monday;
  • The AST was for a fixed term of six months and rent was payable weekly;
  • A weekly periodic tenancy duly arose at the end of the six month fixed term which ran weekly from Monday to Sunday;
  • The landlord sought to determine the tenancy in October 2011 by serving a Notice under Section 21(4) of the Act and gave an expiry date of 1 January 2012 which was a Saturday;
  • The landlord relied (in the alternative) on the saving provision contained in its section 21(4) notice (using the wording previously approved by the Court of Appeal in Lower Street Properties v Jones) which stated that the tenancy would terminate "at the end of your period of tenancy which will end next after the expiration of two months from the service upon you of this notice";
  • The tenant argued that the date on the notice was wrong as it did not expire on the last day of a period of the tenancy which should have been on a Sunday. The tenant also argued the section 21(4) notice was invalid on the basis that the combination of the 1 January 2012 date and the saving provision made the notice uncertain as it provided for two different dates.

The Court of Appeal were not persuaded by the tenant's arguments. Lord Justice Lewison, a leading property QC during his time at the bar, gave the leading judgment and dismissed the appeal. Firstly, Lewison LJ held that the two different dates provided by the use of the saving provision did not invalidate the notice. However, the more interesting aspect of the judgment was that he also decided that the notice served was valid under section 21(1)(b) of the Act and so the landlord's expiry date of 1 January 2012, which was more than two months from the date of service, was all that was required.

Previously, it was considered that a notice under section 21(4) must be used where possession was required after the end of a fixed term tenancy and must give two months' notice to expire at the end of a relevant period. This is no longer the case and landlords can now be satisfied that where a tenant remains in occupation under an expired fixed term AST they must simply give 2 months' notice in writing. There is no longer any need to fret about the periods of the tenancy. A notice under section 21(1) does not have to expire on a particular date as long as it expires two months from the date it was served.

Landlords and their managing agents have been regularly frustrated by having served incorrect notices in such situations in the past and so will warmly welcome this decision.

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