x-post: Question about ending AST

[GoSeigen]

viewtopic.php?p=149676#p149676


Please answer on the Comfort Cafe thread.

Thank you.


GS

[GoSeigen]

The OP referred to a thread about Landlords giving notice under an Assured Shorthold Tenancy. On that thread I asked what exactly the effect of exercising a break clause would be legally. Having done some in-depth research I can supply an answer which I hope will be of use to readers.

It is fairly common for Assured Shorthold Tenancies to be created with fixed terms of a year or more, but including a break clause to allow the tenant and/or landlord flexibility to end the Tenancy early. What exactly is the effect of this break clause when exercised?


First, a little background on fixed-term ASTs and possession by a landlord. An AST can have a fixed term as agreed between the LL and tenant; the tenant has security of tenure during this fixed term. Security of tenure in practice means that the Landlord may not take possession of the property during the fixed term except in limited cases of breach of contract subject to Section 8 of the Housing Act 1988 (HA 1988). Furthermore, unless this fixed term tenancy comes to an end either by an order of the court, or by surrender by the tenant, then when the fixed term tenancy does end (by whatever means), the tenant has the right to remain in possession, and a new so-called Statutory Periodic Tenancy immediately arises, giving each party broadly the same rights and obligations as under the old tenancy, save that the periods of the new periodic tenancy are the same as the rental period in the original fixed tenancy.

This statutory periodic tenancy may only be ended by the tenant surrendering it or by an order of the court, and to obtain the order the landlord must give notice correctly under Section 21 or Section 8 of the HA 1988 and make application to the court for the possession order.

All of the above is more or less well understood by landlords and tenants, and accurately explained online. What is not clearly explained is what happens if the original fixed-term AST had a break clause which is then exercised.


The break clause will normally state how it should be exercised; if the correct procedure is followed by the landlord (or tenant), the effect is to terminate the fixed contract early -- but then, exactly as stated above, the tenant again has the right to remain in possession (because the tenancy was not ended by the tenant surrendering or by a court order) and a periodic tenancy arises. So the effect of landlord exercising the break clause is merely to terminate the original contract as if its fixed period had ended on the date on which the break clause took effect.

In order to exercise a typical AST break clause, by my reading it is sufficient (though not necessary) for the the landlord to issue a Section 21 notice -- as long as the notice period and other requirements for both the Section 21 notice and the break clause are fully met.



Finally, to give an example from our situation (see OP), our contract is a 12-month contract with a six-month rolling break clause requiring 2-months notice. The LL could have issued a Section 21 notice expiring in 2 months and one day. This would have terminated the fixed term contract at the expiration of the two months, after which time a periodic tenancy would have arisen (assuming we remained in the property). On the first day of that periodic tenancy the Section 21 notice would take effect and the LL could then immediately apply to the court to obtain possession.

Our LL did not issue a Section 21, but simply wrote a letter stating he wished to terminate the contract in two months and for us to quit the property. I think we have two options: to agree that this was his exercise of the break clause, and either vacate on the date specified, or remain and move onto the periodic tenancy; at some point the LL could issue a Section 21 notice and on its expiry apply for a possession order from the court. Alternatively, if we were playing hardball, I think we could argue that the initial letter was not sufficiently clear about the exercise of the break clause and that the landlord should re-issue that notice. Clearly the latter option carries some risk from our point of view, but I think the landlord has also exposed himself to risk by not being clear about the intent of his "notice" letter.


GS

[GoSeigen]

Sorry, forgot to add a couple of useful links to my last message. The section on security of tenure in the HA1988:

http://www.legislation.gov.uk/ukpga/1988/50/section/5

This book was invaluable in understanding the issues:

https://www.amazon.co.uk/Practical-Appr ... 0199273758
https://books.google.co.uk/books?id=c-47BO6lcAwC


GS