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Keeping up with the Joneses: Periodic tenancies and the ever-developing intricacies of Section 21

Key on tenancy document Print publication

08/05/2018

Basic facts of Walcott –v- Jones

On 30 August 2007 Ms Walcott granted Mr and Mrs Jones an oral assured shorthold tenancy agreement (AST). It was a monthly periodic tenancy from commencement. On 21 June 2016 Ms Walcott served a notice pursuant to section 21 of the Housing Act 1988 on the Joneses. Possession proceedings were issued on expiry of the notice. In those proceedings the Joneses challenged the validity of the notice on the basis that the prescribed information had not been served as required by Section 39 of the Deregulation Act 2015 (the Act).

The Act confirms that sections 33 to 40 only apply to an AST granted on or after the day on which the provision came into force [1]. Section 39 came into force on 1 October 2015. On the face of it, therefore, the Act did not apply to an AST entered into prior to 1 October 2015.

However, this case hinged upon the interpretation of the term “granted“.  The case therefore discussed when, and how often, a periodic tenancy is granted.

The Joneses – A periodic tenancy is a lot of fixed term tenancies

The Joneses relied on established law [2] to state that the term of a lease must be certain. In order for the term of a periodic tenancy to be certain, each period of the tenancy must be treated as its own fixed term, which expires and is re-granted each time a period expires and a new one commences. The relevant periods were the monthly rental payment dates. Relying on this argument, 106 one-month fixed term tenancies had been granted, with the last one before service of the section 21 notice being granted on 30 May 2017.  That interpretation meant that the Act would apply.

Ms Walcott – A periodic tenancy grows & grows

Ms Walcott argued that the AST was granted once and for all on 30 August 2007. When each period had expired, the original tenancy did not expire and no further tenancy agreements were granted. Instead, when each period expired the term of the original tenancy grew by another month and the term was determined when an appropriate is served to bring it to an end. Therefore, there was one tenancy granted for a term of 8 years and 9 months at the time of service of the section 21 notice. As that interpretation was founded on the tenancy agreement being granted prior to the Act coming into force, it meant there was no requirement to comply with the Act.

HH Judge Hand QC – No comment, but a practical resolution

HH Judge Hand QC, sitting as a Deputy Circuit Judge in the Central London County Court, failed to make a binding ruling on the nature of a periodic tenancy. Instead, he settled the matter practically. He ruled that the nature of a periodic tenancy was irrelevant, as those legislating did not intend for either an implied re-grant or an extension to amount to the grant of a new AST for the purposes of the Act. As such the AST was granted on 30 August 2007 and the section 21 notice was therefore valid.

Practical implications

One can see why HH Judge Hand QC avoided the need to rule as to the nature of a periodic tenancy. If every period amounted to the grant of a new AST, the prescribed information would need to be served every period, amounting to the absurd situation that the landlord would have to reserve the prescribed information (and comply with other requirements of the Act) on a monthly basis. Further, a Section 21 notice could never be utilised for a monthly or weekly periodic, as two months of the AST need to have elapsed before a Section 21 notice can be served.

However, if the Judge had decided that a periodic tenancy agreement continues to grow, this would directly contradict centuries of legally binding precedent regarding the need for a tenancy term to be certain.

From a practical perspective the decision was undoubtedly correct given the consequences of the alternatives. However, this argument may well be raised again in the future and the same reasoning or decision may not result.

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[1] Deregulation Act 2015 s41(1): “Subject to subsections (2) and (3), a provision of sections 33 to 40 applies only to an assured shorthold tenancy of a dwelling-house in England granted on or after the day on which the provision comes into force.”
[2] Mexfield Housing Co-operative v Beresford [2010] EWCA Civ 811; [2011] Ch. 244

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