Fixed Term & Flexible Tenancies: ironing out the wrinkles Nick Billingham Partner Devonshires Solicitors LLP Donna McCarthy

By way of reminder PRP fixed term tenancies: Localism Act, Housing Act 1988 and Tenancy Standard (HCA Regulatory Framework) LA flexible tenancies: Localism Act, Housing Act 1985 and Tenancy Standard Both arise out of 2010 CLG Policy Document “A fairer future for social housing” Initial reticence soon overcome by sector

Tenancy Standard Tenancy Standard: “minimum fixed term of 5 years or exceptionally a tenancy for a minimum fixed term period of no less than two years, in addition to any probationary period” “Exceptional circumstances”? Specific schemes (high-turnover); redevelopment anticipated; likely changes in household make-up (kids leaving home) Shorter term may also be relevant on renewal NB Less than 5 years means between 2 and 5yrs (not 5 or 2)

Tenancy Standard (2) Can have probationary period before fixed term LAs => introductory tenancy PRPs => stand alone starter tenancy Could include probationary period in fixed term (but watch out! See later) Importance of Tenancy Policy both for grant and renewal. Tenants need to know in advance (risk of public law defence based on policy non-compliance)

Tenancy Policies Tenancy Policy enables tenant to understand basis on which tenancy granted and why may not be renewed, and explains: Kinds of tenancies granted Length of fixed term – any exceptional circumstances? Who gets what – exceptions (sheltered, supported, adapted etc) Renewal/termination – reasons Right of appeal to grant of particular tenancy type/non-renewal (NB statutory right of appeal for LA flexible tenants) How deal with vulnerable households – age, disability, illness, households with children Advice and assistance to tenants on finding alternative accommodation if tenancy not renewed

Localism Act 2011- LA flexible tenancies Amendments to HA 1985 – s107A -107E Tenant/applicant must have written notice before grant (inc. introductory tenancy grant) Notice tells tenant tenancy will be flexible and contains terms of tenancy Min.2 yr fixed term but remember Tenancy Standard Right of review but only as to length of term and only if not in line with LA policy No right to make improvements/no compensation for improvements

Localism Act 2011 – PRP fixed term tenancies Not a new tenure type – “tweaked” AST Amendments to s21 AST for fixed term of not less than 2 years and landlord is PRP (s21(1A) HA 1988) Provides for termination by s21 notice but only after 6 month “minded to” notice served

Management during the tenancy: grounds for possession PRP fixed term tenancies => restrictions on grounds Most important omissions: 6 (redevelopment) and 9 (suitable alternative accommodation) Consider any likely development plans especially on renewal LA flexible tenancies: all secure grounds apply (s107D(10)) Need re-entry clause in tenancy to allow forfeiture of fixed term before NOSP can take effect Non-occupation => s146 notice not NTQ

Management during the tenancy (2) Mutual exchange – surrender and re-grant (s158 LA 2011) Termination by tenant: surrender (PRP fixed term); tenant’s notice but only if no arrears/breach (flexible tenancies) No termination of joint tenancy by tenant’s NTQ Amendments to section 11 to extend to flexible tenancies/PRP fixed tenancies even if terms 7 years or more No s102/103 variation of flexible tenancies (oversight?) Section 13 does not apply to fixed term assured/ASTs => need contractual rent review clause

PRP fixed terms including probationary periods Stand-alone starter or built-in probationary period with break clause Pros and cons – FTAs, sign-ups etc for stand-alone starters But issue with s21 and minded to notices: s21(1B) “The Court may not make an order for possession…unless the landlord has given to the tenant not less than 6 months’ notice in writing…” Court of Appeal will decide later this year

What happens at end of fixed term - PRPs? 6 month “minded to” notice then 2 months’ NRP (s21) No statutory right of appeal but Tenancy Standard Proportionality/public law challenges (what if no Tenancy Policy at outset/Policy has changed?) What if FTT rolls on or miss date for minded to notice? Loss of right to serve s21 => have to rely on grounds NB Regulatory expectation NOT to allow tenancy to become statutory periodic BUT could be circumstances eg looking for alternative accommodation where under-occupation?

What happens at end of fixed term - LAs? Court can make Order for Possession (mandatory) if: - Condition 1: FT ended + no other tenancy granted - Condition 2: 6 months ‘minded to’ notice (NB right to request review) -Condition 3: 2 months’ “notice requiring possession” (NOT s21 NRP). Must be given on or before the day the tenancy comes to an end Court can refuse order if review requested and not completed; or LA failed to carry out review in line with Act or policy; or review “otherwise wrong in law” s107D(6)

Nick.Billingham@devonshires.co.uk Donna.Mccarthy@devonshires.co.uk Any questions? Nick.Billingham@devonshires.co.uk Donna.Mccarthy@devonshires.co.uk