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6 month’s rent in advance

Section 21 notices in periodic tenancies have long been a source of difficulty for landlords. The position has been simplified but there remain some key issues.

Rent in Advance and S21

Where rent is paid in advance there have been difficulties with section 21 notices in periodic tenancies. In Church Commissioners v Meya, the Court of Appeal determined that the period of the tenancy was a quarterly period despite the tenancy agreement expressly stating a yearly rent. In determining the period of the tenancy, the court had to ascertain what was the last payment of rent the tenant had been obliged to make, and then to ascertain the period covered by that last payment. In this case the amount of rent actually last payable under the fixed term of the tenancy was payable in advance for the last quarterly period. Therefore, the period of the tenancy was a quarterly period and the landlords notice valid. This means that where rent is paid in advance for a fixed term tenancy, if the tenancy then becomes periodic, the periods of that tenancy are the same as the fixed term. So, if rent is payable 6 monthly in advance for a 6 month tenancy which then becomes periodic, then the periods of that periodic tenancy are still six months, regardless of how the rent is being paid in the periodic tenancy. This was a big deal because a s21(4)(a) notice cannot give less notice than a period of the tenancy. So, if the tenancy period is 6 months then the s21(4)(a) notice had to be for 6 months.

Simplification

In Spencer v Taylor, the Court of Appeal, held that a s21(1)(b) notice was usable for both fixed term and periodic tenancies provided that the periodic tenancy arises from a fixed term tenancy that has ended. This is particularly important as a s21(1)(b) notice, unlike s21(4)(a) notices do not have to give notice by reference to tenancy periods at all, they merely have to give 2 months’ notice. Therefore, as the landlord does not have to use an s21(4)(a) notice then they do not have to worry about the periods of the tenancy because they are irrelevant to the notice length.

The Deregulation Act has changed the s21(4)(a) notice provisions so that a notice does not have to end on the last day of a period but this makes no change to the requirement that a s21(4)(a) notice must give one period’s notice. However, as few landlords will need to use a s21(4)(a) notice this is not very relevant.

However, tenants are not in the same happy position as landlords as they do not have a statutory notice structure. So, tenants in periodic tenancies must give the notice required by the common law. As the common law requires one period’s notice for tenants this means that tenants who have paid six months’ rent in advance in a fixed term tenancy must give six months’ notice to terminate the tenancy once that tenancy becomes periodic.

Comment

Notice periods are still a complex matter for those that are not familiar with the new rules and case law. When serving section 21 notices there are also requirements [https://painsmith.co.uk/completing-a-section-21-notice-2/ ] in respect of deposit protection, EPC etc which must be complied with to ensure the notice is valid. Therefore, if you are unclear about what the notice period should be then it is important to obtain legal advice prior to issuing any possession claim to prevent unnecessary delay and wasted costs.

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