Rented property focus - May 2011

I have tenants occupying my property whose assured shorthold tenancy has expired. Can I still serve a two month notice to terminate their agreement?

In short, the answer is no.

Much greater care is needed when issuing the notice to ensure it cannot be challenged by the tenants. Served incorrectly, it will cause you problems when you want to regain possession of the property.

Most private lettings are assured shorthold tenancies. The main attraction is that the landlord can regain possession by simply giving two months notice. However, they do have their problems, as the Housing Act 1988 applies different rules to notices served on fixed term and periodic agreements.

Usually, landlords grant assured shorthold tenancies for six or 12 months – a fixed term. During this time, the tenant is entitled to no less than two months notice in writing if the landlord requires possession at the end of this period.

If the fixed term expires and the tenant remains in the house, their agreement becomes a periodic assured shorthold tenancy. To regain possession in these circumstances, the landlord must give written notice stating that he wants to take control of the property on a date that marks the termination of the lease. This must be no less than two months after the notice is served and must fall at the end of a period of tenancy.

It is vitally important to comply with these rules, which are applicable to both weekly and monthly tenancies. For example, if the tenancy started on the fifth of the month, the notice must state that it will end on the fourth, no less than two months hence.  

Many landlords, especially those operating in the university sector, do not bother to serve notice, relying rather dangerously on the assumption that tenants will leave voluntarily at the end of the fixed term.

To avoid losing control of your tenancies, you must get to grips with the complicated rules surrounding serving notice, or seek legal advice before taking action.

My tenant has just informed me that he is leaving and has asked for a refund of rent paid in advance. How much notice does a tenant have to give and can I hold onto rent that has already been paid?

As usual, the answer to this question depends upon the type of tenancy you have granted.
  
Let’s assume you are dealing with an assured shorthold tenant. If he is still within the initial six or 12-month period, then strictly speaking, your tenant can only determine the length of the agreement if it contains a break clause and only then, if the terms of the clause are followed.
  
If the tenant wishes to leave during this initial period, no real notice is required, as he is liable for the rent for the shorthold term. Obviously, this does not usually happen in practise. Reasonable landlords will normally advertise the property for let, leaving the current tenant responsible for rent until a replacement is found. Alternatively, it may be agreed that the landlord keeps any rent deposit paid as compensation.
  
The rules are quite different if you have an assured tenancy or a periodic assured shorthold tenancy. In these situations, the tenant can determine the end of the agreement by serving a Notice to Quit, which must be issued in writing at least 28 days in advance of the date they wish to move out.
  
Other than the return of any deposit – subject to a satisfactory inspection of the property – there will be no money to pay back if your tenant pays rent just one month in advance.
  
An interesting point develops here. A landlord has more control over notice periods if they issue assured shorthold tenancies. Therefore, when the initial contract is due to expire it may be in your interests to encourage your tenant to enter into a further shorthold tenancy agreement.

Rob Cooke is a partner specialising in commercial litigation with Sheffield solicitors, Taylor&Emmet LLP. Telephone 0114 218 4000.