Part X               

terminating agreements

Introduction

                          10.1              In Part VI we set out our proposals for the core concept of the housing agreement. Parts VII and VIII set out our proposals for the type I and type II agreements and the circumstances in which the landlord is entitled to bring proceedings for possession. In Part IX we set out our proposals on the scope of the scheme.

                          10.2              Here we discuss

                          10.3              The need for due process arises where the landlord seeks to terminate the agreement.[1] It has long been accepted that, where an occupier has not voluntarily left[2] a dwelling, re-possession by the landlord is such an important matter – not only for the occupier but also for members of the occupier’s family – that an opportunity should be provided, prior to eviction, for a court to determine whether possession sought by the landlord should be ordered. Further, the court should not act without the occupier being given notice of the landlord’s intention to seek possession.[3] Obtaining a court order also gives the landlord access to court bailiffs in carrying out any eviction, which provides a desirable safeguard against the risks inherent in physical evictions by landlords in person.

                          10.4              Much of the focus of the recent civil justice reforms has been to ensure that parties settle their disputes without going to court.[4] In the case of possession proceedings the court cannot be relegated to the forum of last resort.

                          10.5              This does not mean that all possession proceedings need necessarily be the same. There is already acknowledgement that the type of process should vary depending upon the basis on which possession is sought. Thus where the landlord is seeking possession on grounds currently categorised as discretionary, there should be an opportunity for a full hearing before the court. With assured shorthold tenancies possession on the notice-only basis can be obtained without a hearing. We stress that the minimum requirement is for a court order, not necessarily for a hearing.

                          10.6              We suggest in Part VIII above that an equivalent of the accelerated procedure should be retained for notice-only repossessions in type II agreements. We also suggest in Part XIII below that in certain cases of anti social behaviour there should only be a hearing on the merits after an eviction. Nevertheless, even in these cases, we retain the requirement that there should be a court order before the actual eviction.

                          10.7              We provisionally propose that a landlord should be required to obtain a court order for possession against any occupier covered by our proposed scheme.

                          10.8              When repossession of domestic rented housing is contemplated, two key matters need addressing. First is the need for clarity. There must be a clear warning that the home may be lost (together with an idea of what, if anything, can be done to lift the threat). Second, occupiers – taken as a whole – are less likely to take up their rights to challenge evictions than might be expected. One key reason is their lack of knowledge of their rights.[5] There therefore needs to be a clear statement to the occupier that they may be able to challenge the possession proceedings and that they should seek advice quickly.[6] The requirement for a notice enables this prior warning to be given to the occupier in a clear and effective way.

                          10.9              Some might argue that this would be best provided for by a protocol requiring this information to be provided, with adjournments at the landlord’s expense for the occupier to seek advice if the information has not been given. This would have the advantage for the landlord that it would not operate as a defence to the proceedings. However, many landlords come to court unrepresented. They may be unaware of any protocol. It would be hard to incorporate a protocol into the contract. Notice requirements are, in our view, clearer. The court already has power in many cases to dispense with the notice if it is just and equitable to do so.[7] This allows some discretion to mitigate the effects of what is otherwise a complete defence to proceedings.

                      10.10              We provisionally propose that landlords should be required to issue a notice warning occupiers of their intention to bring possession proceedings and that this should be a compulsory term in the contract.

                      10.11              We provisionally propose that failure to serve the notice should constitute a defence to possession proceedings. However, there should be power for the courts to ignore non-compliance with the notice requirements where that would be just and equitable.

                      10.12              The lengths of the period of notice need to be different to reflect differences in the circumstances in which the notices are used. In particular we think it will be necessary to have faster procedures where possession is sought on the basis of a breach of the agreement[8] or the social policy grounds than where it is sought on estate management grounds.[9] Faster procedures still will be needed for possession cases brought on the basis of anti social behaviour.[10] The length of notice in the notice-only procedure in type II agreements is another factor to consider.[11]

                      10.13              The most urgent situation arises where the occupier or those associated with an occupier are engaged in anti social behaviour. Here we think that the serving of the notice and the commencement of proceedings should be able to be simultaneous.

                      10.14              We provisionally propose that a landlord’s notice of intention to take proceedings on the basis of anti social behaviour should be able to be effective immediately.

                      10.15              In relation to other circumstances involving breach of the agreement by the occupier, two options suggest themselves. We could adopt the current assured tenancy rule and propose a two week notice period; or we could adopt the secure tenancy rule and propose a four week period.

                      10.16              We invite views as to whether the notice period where the landlord intends to seek possession on the ground that the occupier has broken the agreement should be two weeks or four weeks.

                      10.17              In relation to any of the other circumstances in which a landlord may seek an order for possession, save the notice-only basis for seeking possession available for the type II agreement, there again appears to be a choice available. We could adopt the assured tenancy model that the period be two months, or the secure tenancy model that the period be four weeks.

                      10.18              We invite views on whether the period of notice in circumstances other than breach of the agreement by the tenant or the notice-only basis for possession for type II agreements should be four weeks or two months.

                      10.19              The question of the period of notice where the landlord of a type II agreement seeks possession on the notice-only basis is raised in Part VIII.[12]

                      10.20              The periods suggested here are all based on the assumption that the landlord will not be able to start proceedings until after the date stated in the notice. Below,[13] we raise for consideration whether the date stated in the notice should be the date on which the landlord hopes to obtain an order for possession. If that proposal were to be found attractive, the periods suggested above would need to be increased. We would equally welcome the views of consultees as to what those increased periods should be.

Replacing common law rules

                      10.21              A current source of confusion is that some statutory notice provisions apply instead of the common law rules, while others adopt modified versions of the common law rules.[14] In line with our aim of modernisation and clarity, we believe that notice periods should be defined in the provisions of the legislation that we are proposing. The rules would be incorporated into the compulsory terms of the contract. Those terms can be drafted so as to impose greater certainty than is currently provided by the common law rules.

                      10.22              The only circumstances where the common law rules would continue to apply would be in relation to the limited number of agreements relating to residential premises which fall wholly outside the statutory framework we now propose (they would also continue to apply to notices served by occupiers[15]).

                      10.23              While the minimum periods of notice should be set down in the compulsory terms in Part B of the agreement, we see no reason why the parties should not be able to negotiate longer periods if they so wish. Thus the compulsory terms could be enhanced by a more generous terms in Part C of the agreement. However they should not be drafted by reference to common law rules on periods of notice, nor to notices provided under section 5 of the Protection from Eviction Act 1977.

                      10.24              We provisionally propose that the periods of notice be defined by statute, and the effect of these rules be incorporated in Part B of the agreement, subject to enhancements in Part C.

                      10.25              We further provisionally propose that notices should be able to begin and end on any day, and not be required to end on the last day of a period of a agreement. This will replace the common law rule which currently leads to obscure cautious drafting such as “… on the 15th December or the next day following on which a period of this agreement shall end” which is hard for the occupier to comprehend.

                      10.26              We provisionally propose that notices should be able to be served on the occupier at the property rented as the address for service given in Part A of the contract.

                      10.27              We think that any landlord notice should relate to a genuine wish on the part of the landlord to end the agreement. We are attracted by the “use it or lose it” model found in the Housing Acts 1985 and 1988, whereby any notice becomes ineffective if proceedings are not issued within one year.[16] We do not, however, see the need for such a long period. It would seem more sensible to insist on a shorter period, say three months.

                      10.28              Three months seems to be plenty of time to make a decision to start proceedings. We do not want to cause unnecessary delay and paperwork by landlords having to reissue notices if ongoing negotiations (or improvements in behaviour) break down just after the notice expires. But we think there should be some pressure to come to a decision after a certain time.

                      10.29              We provisionally propose that a limit should be put on the length of time a landlord can allow to elapse after the date given in the notice before issuing proceedings, and suggest that the period should be three months.

                      10.30              We provisionally propose that a landlord’s notice should include the date on which the notice becomes ineffective.

                      10.31              Currently most notices are required to state the earliest date on which proceedings for possession may be started. Nevertheless, both a notice to quit and a notice of intention to seek possession of an assured shorthold tenancy appear on their face to require possession on the date stated in the notice. In practice many occupiers do not understand the difference between a date for issuing proceedings and a date for a hearing or a court order or a bailiff appointment.

                      10.32              We raise for consideration whether it would be more transparent if the notice stated the earliest date on which the landlord could ask for a possession order to be effective. Directly referring to a specific date on which an order for possession might be made should help occupiers, as eviction is the easiest concept to grasp in the procedure. Were this to be adopted, the time limits for notices suggested above would need to be adjusted upwards to account for the extra time involved in taking proceedings.

                      10.33              If there was support for this idea, we would envisage that despite having been given notice, occupiers would still need to be warned of the impending issue of proceedings – as required by the Civil Procedure Rules.[17] The landlord would follow the normal Woolf principles in not issuing proceedings without a pre-action warning letter and without checking whether proceedings would in fact be necessary. The flexibility of the Civil Procedure Rules means that it is possible to issue proceedings with no or minimal warning in urgent cases.

                      10.34              One model for this approach is found in section 83(3)(a)(ii) of the Housing Act 1985.[18] It provides that proceedings may be commenced immediately, on the same day as the issue of the notice. But the provision still requires that the possession order cannot be granted before a specified date. If this model was applied more broadly, the various notice periods we suggested above would need adjustment and would apply to the proposed possession date.

                      10.35              One problem with this approach is that the date for possession will depend on when the particular court can list the case, so the earliest date for possession may turn out to be a notional one. On the other hand, rule 55.5(3)(b) of the Civil Procedure Rules calls for the standard period between issue and hearing in most possession cases to be no more than eight weeks. Thus the scope for uncertainty is much reduced.

                      10.36              Against this it can be argued that people are familiar with the current system. The occupier needs to know the date when proceedings might be started, so he or she can take steps to remedy any problem or establish a defence or find another home, before proceedings are issued. Further, as the date of issue of proceedings is in the direct control of the landlord, the date given in the notice is more likely to turn out to be the actual date of issue (although the landlord does not have to issue straight away).

                      10.37              We invite views on whether the date to be given in landlords’ notices should be the date before which proceedings cannot be started – as is currently the more common case; or the date before which a possession order cannot take effect.

                      10.38              We want notices to make a number of key points

                      10.39              The detail of these provisions would be set out in the statutory instrument prescribing the terms of the agreement.

                      10.40              These requirements would replace the present situation where in some cases the contents of notices are very fully laid down,[19] and in others there are only minimal requirements.[20]

                      10.41              Our proposals on written contracts should mean occupiers already have the key information set out there. There could also be a requirement that a copy of the written agreement should be enclosed with the notice.[21]

                      10.42              We recognise that a difficulty with prescribing forms is that landlords commonly fail to use the correct one, or manage to get them wrong. This can render subsequent proceedings invalid. To meet this difficulty, we envisage that the model agreement would incorporate a form of notice, which could form a tear-off sheet at the back of the agreement.

                      10.43              The agreement could also allow for notice to be given in any equivalent form, with the court having a discretion to accept any alternative. Currently any failure to include the required information can be used as a complete defence to proceedings. The defect can only be cured by restarting the process. An alternative approach might be that where there was failure to use the correct form, or to complete it correctly, this could be the basis for allowing the occupier an adjournment of any proceedings (perhaps for four weeks to allow time to get advice and file any defence), possibly with costs against the landlord.

                      10.44              We provisionally propose that notices should contain prescribed information, in plain English, and that the details should be contained in a term in the agreement. A sample notice should appear in a Schedule to the model agreement.

                      10.45              We invite views whether a copy of the original agreement should be attached to any landlord’s notice.

                      10.46              We invite views as to the contents of notices relating to both type I and type II agreements and whether a single form of notice for both agreement types can be developed.[22]

                      10.47              We provisionally propose that any failure to comply with notice requirements should not form a defence to proceedings, so that the whole process has to be started again, but rather could become the basis for an adjournment and/or costs application as appropriate.

                      10.48              We see no reason why notices arising from a break clause in a fixed term agreement should be different in nature from their equivalents for use in periodic agreements.

                      10.49              Although they may not always realise it, tenants are subject to the same rules relating to notices to quit a periodic agreement as landlords who fall outside the statutory scheme. Such notices must be in writing and the period of notice must be at least 28 days.[23] There appears to be no reason to change these basic requirements. The principle would need to be expanded to apply to contractual licensees.

                      10.50              We do, however, consider that the requirements on occupiers would be clearer if the rules about their ability to issue a notice to quit were contained in the terms of the agreement.

                      10.51              We provisionally propose that the length of notice to be given by a occupier should continue to be four weeks and that the default terms should contain a provision relating to the occupier’s notice to quit.

                      10.52              One issue relating to notices to quit is notices issued by one of two or more joint occupiers.[24] We are not dealing which this topic here because it is more appropriate for our later consultation paper on succession and transmission of agreements.

Exercise of break clause by the occupier

                      10.53              Where a occupier exercises a break clause in a fixed term agreement, we suggest that he or she should be required to give the landlord the same notice as would have been given to terminate a periodic agreement. The default terms should make it clear that the notice exercising an occupier’s break clause in a fixed term is essentially the same as the notice an occupier issues to end a periodic agreement.

                      10.54              Thus, both should have the same requirements for writing, minimum notice, a definite date for leaving and so on. The break clause notice would also make it clear that it is bringing the fixed term to an end early. Both should have the same effect, namely that if the occupier does not leave on the due date the agreement willcontinue in force, but the occupier will be liable to the landlord in damages for any losses suffered by the landlord.

                      10.55              We provisionally propose that the length of notice to be given by an occupier to exercise a break clause should be four weeks and that the default terms should contain a provision relating to the occupier’s notice.

                      10.56              In addition, both fixed term and periodic agreements should operate in the same way where the occupier does not leave after giving the notice or exercising the break clause. In a type II agreement, the failure to leave should entitle the landlord to take notice-only accelerated possession proceedings within the same period as if the landlord had given the notice. In a type I agreement it should entitle the landlord to issue a notice threatening proceedings for breach of the agreement (assuming that the agreement requires the occupier to leave after giving notice).

                      10.57              We further provisionally propose that in the case of both a occupier’s notice to quit and a occupier’s notice to exercise a break clause, the landlord should have the right to take proceedings against the occupier if he or she has not left the premises by the date stated in the notice. Pending the final departure of the occupier, the agreement should be deemed to continue, subject to the occupier’s liability in damages for any losses suffered by the landlord.

                      10.58              A separate issue is whether the occupier should be told in the agreement of their right to leave without notice in acceptance of a repudiatory breach by the landlord and whether the contract should provide a form of immediate notice for the occupier to signal their acceptance.[25]

                      10.59              This is a complex issue which may arise when the occupier feels the consequences of the landlord’s behaviour make conditions intolerable, enters another agreement and leaves without giving enough notice (or before the end of a fixed term).

                      10.60              Commonly the landlord retains the deposit and any rent paid in advance against the rent for the notice that should have been given. In those circumstances, the occupier should be able to see from the written agreement that he or she may be entitled to defend any claim for unpaid rent, or sue for return of any money retained by the landlord.

                      10.61              We provisionally propose that the compulsory terms of the contract should refer to the occupier’s right to treat the agreement as terminated immediately if the landlord has committed a repudiatory breach of contract.

                      10.62              Under landlord and tenant law, express surrender occurs when the landlord and tenant agree that the tenancy should end immediately without any need for notice. We believe that it should continue to be possible, as it is in other consumer contracts, for landlords to agree to release occupiers from their obligations early without the occupier giving any (or full) notice.

                      10.63              Currently express surrender can only validly be carried out by a deed. This is a formality which does not seem wholly appropriate in the context of housing agreements. We accept that surrender ought to be in writing to avoid uncertainty.

                      10.64              We provisionally propose that, in relation to the termination of fixed term agreements covered by our regime, the requirement for a deed for express surrender should be replaced by a requirement for writing.

                      10.65              A more difficult problem arises where the occupier does not give the landlord any notice of intention to bring the agreement to an end. In such cases, although the law may provide that the occupier remains liable under the terms of the agreement, the reality in many residential lettings is that it is not worth the landlord’s time and effort to bring proceedings against the delinquent occupier.

                      10.66              Yet the landlord may be left in the awkward situation of not knowing whether the agreement is still in existence or not. One of the problems is that the law on the abandonment is hedged around with complexity.

                      10.67              It has been suggested to us that a possible basis for seeking an order for possession, which might be available to the landlord, is to take proceedings for possession where it appears that the occupier has permanently left the premises. We are not convinced that this would be the best solution to this difficulty. It would only be available where the occupier had actually broken a term in the agreement.

                      10.68              Rather, we think that there needs to be available a summary procedure to deal clearly with abandonment. Such a procedure is now available in sections 17 to19 of the Housing (Scotland) Act 2001.[26] When the property appears abandoned, the landlord can first secure it and then regard the agreement as terminated on receiving no response to prescribed notices served on the property. The landlord can regain possession without threat of proceedings for unlawful eviction and harassment. Importantly it provides a mechanism for the occupier to apply to court to put right any mistakes.

                      10.69              We provisionally propose that a procedure modelled on sections 17 to 19 Housing (Scotland) Act 2001 should be created, allowing a clear simple procedure for repossession in abandonment cases with a procedure for the occupier to apply to court to put right any mistakes.