Flexible tenancies

Fixed term

Determination before expiry of term - no forfeiture clause

Croydon London Borough Council v Kalonga

(2020) EWHC 1353 (QB)

Summary 

A landlord under a fixed-term flexible tenancy did not have a right to determine the tenancy prior to the expiry of the fixed term because the tenancy agreement did not contain a forfeiture clause.  The tenancy did not fall within the ambit of s82(1)(b) Housing Act 1985 and the landlord could only seek possession under s107D at the end of the fixed term.

Facts

On 25 May 2015 the claimant granted the defendant a flexible tenancy for a fixed term of five years.  The tenancy agreement contained a number of references to potential eviction and possession orders, including a statement that the landlord “may also take eviction action at any time” if the tenant breached the tenancy conditions or created a nuisance or annoyance, and that the landlord would not tolerate anti-social behaviour and would “take such action as we deem appropriate”.

In August 2017 the claimant served a notice seeking termination of the tenancy and recovery of possession and then issued a possession claim.  The claim was made on the grounds of rent arrears and anti-social behaviour (Grounds 1 and 2 of Schedule 2 to the Housing Act 1985).

In May 2019 the judge directed a separate trial of a specific issue, namely “the correct manner in which to determine a secure flexible tenancy during the fixed term (including whether, and if so how, any principles relating to forfeiture apply)”.  He transferred the trial of the issue to the High Court.

Issue

How does a landlord under a secure flexible tenancy obtain possession during the fixed term?

Decision  

The High Court Judge dismissed the landlord’s claim for possession.  The lease did not contain a forfeiture clause: the wording relied on by the landlord did not amount to a clear statement of the landlord’s right to determine the tenancy before the end of the fixed term.

The judge held that the tenancy was not “a tenancy for a term certain but subject to the termination of the landlord” within the meaning of s82(1)(b) HA 1985 because the absence of a forfeiture clause meant that it was not “subject to termination by the landlord”. 

The landlord had submitted that the tenancy fell within s83(1)(b).  This did not require a forfeiture clause, and it was significant that whereas s82(3) referred to “a provision for re-entry or forfeiture” that phrase was not used in s82(1)(b). Similarly the tenancy was still “subject to termination” because it could be terminated by serving a notice under s83(1)(a).  The judge rejected these submissions – if the landlord did not have any right to forfeit the lease or serve a break notice then they did not have any right to determine the lease earlier than the expiry of the fixed term.  If the tenant fell behind with the rent, the landlord’s remedy would be to sue for the rent.

The decision in Artesian Residential Developments Ltd v Beck [2000] 2 WLR 357 did not assist the landlord as the tenancy agreement in Beck contained a proviso for re-entry.

As the tenancy was not within the ambit of s82(1)(b) HA 1985 it could not be determined under s82(1A) by bringing proceedings.  The landlord would have to wait until the end of the fixed term in order to determine the tenancy under s107D.

Comment

This is a surprising decision.  Flexible tenancies were introduced by the Localism Act 2011 in order to give local authorities greater control over their housing stock.  The effect of this decision is to give tenants under flexible tenancies greater security of tenure than those under other secure tenancies, even in the event of anti-social behaviour, which cannot have been Parliament’s intention. 

In practical and policy terms, it leaves many social landlords in a difficult position when dealing with anti-social behaviour and puts them at risk of breaching their obligations to other residents to deal with such behaviour.  The evidence before the court was that very few local authorities have an express forfeiture provision in their tenancy agreements.

The judge stated that the decision in Livewest Homes v Bamber [2019] 1 WLR 6389 CA supported the tenant’s position, and relied on the passage at paragraphs 54-59 of Patten LJ’s judgement where he considered the meaning of “term certain”.  At paragraph 59 Patten LJ referred to the fact that a tenancy for a fixed term could still be brought to an end sooner by forfeiture or by the operation of a break clause.  However, he did not state that these were the only methods by which any fixed-term tenancy could be brought to an end early – rather, he was seeking to illustrate the point that “certain” did not mean that a tenancy was certain to last for the full term.  It is not obvious that the decision in Bamber supports a conclusion that a flexible tenancy cannot be ended by any other means.

It seems that the judge was also influenced by the prospective amendments introduced by the Housing and Planning Act 2016, including the proposed new s82(A1) allowing a landlord to bring a flexible tenancy to an end by obtaining a possession order.  There is currently no commencement date for these amendments.  This decision brings the need for a statutory instrument into sharp focus.

Although the judge held that the tenancy could not be determined by forfeiture, she noted that this did not affect any right a landlord might have under a contractual break clause (para 11).  Social landlords will be well-advised to ensure that their contracts include a break clause in addition to an express forfeiture clause.

 

 

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