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Cite as: [2006] EWLC 297(4)

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PART 4 TERMINATION OF OCCUPATION CONTRACTS

INTRODUCTION^[1]

4.1 At present, tenancy agreements may make provision for termination of the agreement. Nevertheless, whatever the agreement says, the tenant cannot be evicted unless statutory criteria ("grounds for possession") are proved to the satisfaction of a court.^[2] But there is no guarantee that the tenant will know from the agreement what the true legal position is. In many cases, they cannot find it out without a great deal of research or advice.

4.2 Part 6 of the Bill sets out fundamental provisions relating to the termination of occupation contracts, to be incorporated into the contract as fundamental terms. Thus, the circumstances in which the contract may be terminated are set out in the contract itself without the need to refer to other sources of information. This increased transparency is an important result of our consumer protection approach.

4.3 The discussion is divided into three sections:

(1) general rules;

(2) termination by the landlord; and

(3) rules applying specifically to occupation contracts where there are joint contract-holders.

GENERAL RULES

4.4 The discussion of the general rules falls under four heads:

(1) fundamental provisions applying to all occupation contracts;

(2) fundamental provisions applying to secure and standard periodic contracts;

(3) other provisions; and

(4) abandonment.

Fundamental provisions applying to all occupation contracts

4.5 The following fundamental provisions are incorporated as terms of all occupation contracts.

Termination before the effective date

4.6 The effective date of an occupation contract is the date on which the contract-holder is entitled to begin occupying the premises.^[3] A landlord and contract-holder can enter into an occupation contract where the effective date of the contract is some time after the date on which the contract is agreed. To give a common example, a student may, in February, enter into a contract to rent accommodation for an academic year starting in September. The effective date is months after the date of the agreement.

4.7 It is a fundamental term that, during this period, the contract can be terminated only by the contract-holder. The contract holder is entitled to terminate the contract by giving notice to the landlord,^[4] where the landlord has failed to give the contract-holder a written statement of the agreement.^[5] Where such notice is validly given, the contract-holder ceases to have any liability under the contract, and becomes entitled to the return of any deposit, rent or other consideration paid in advance to the landlord.^[6]

Termination on or after the effective date

4.8 On or after the effective date, the occupation contract may only be brought to an end:

(1) in accordance with fundamental terms of the contract which incorporate fundamental provisions in part 6 of the Bill, or other terms included in the contract in accordance with part 6 of the Bill; or

(2) in accordance with an enactment, including the consumer protection regulations.^[7]

Joint contract-holders

4.9 At present, where there is a joint tenancy agreement, the law provides that the contract is brought to an end where only one of the parties gives notice to quit to the landlord.^[8] The procedure is often used in cases of marital/partnership breakdown. The spouse/partner who has left the premises gives notice to quit to the landlord. This terminates the joint agreement, and leaves the party left behind with no rights to remain in the premises.

4.10 Often this may lead to a desirable outcome. For example, a local authority family dwelling should not remain occupied by the remaining partner, living there alone, when the premises would be better utilised accommodating a family. This outcome may be even more desirable where the partner who has left has been driven from the home by domestic violence.

4.11 However, reaching this result by this means is unsatisfactory. While, in the examples given, there may be general agreement that the outcome is fair, there are circumstances where the interests of a joint contract-holder are unfairly damaged by the act of another. Landlords must be able to seek possession in such cases; but they should do so in transparent fashion, not by the utilisation of arcane principles of common law. We set out below how landlords can achieve the same outcome, while providing the party left behind with a chance to argue the point.^[9]

4.12 Thus the new scheme provides that joint contract-holders cannot, acting by themselves, bring the contract to an end, unless they act jointly with all the other contract-holders.^[10]

Agreement

4.13 There is no reason why parties to a contract cannot agree that the contract is terminated. If they all agree, the contract ends when the contract-holder gives up possession of the premises, in accordance with the agreement.^[11]

Repudiation by the landlord

4.14 If the landlord repudiates the contract (such as by failing to repair premises that had become unfit and behaving in such a way as to suggest that the landlord was not bound by the covenant to repair ^[12]) and as a result the contract-holder gives up possession of the premises, the contract ends when possession is given up.^[13]

Death of the contract-holder

4.15 At present, general landlord and tenant law provides that where the tenant dies, (assuming there are no other tenants entitled to remain in possession) the tenancy nevertheless continues until the former tenant's personal representatives or the landlord formally end the tenancy. This rule causes considerable confusion in practice and can lead to unfairness, particularly if, as a result, the landlord pursues a claim for unpaid rent for the period between the death and the date of notification. We think clearer rules are needed, which maintain an appropriate balance between the interests of the family of the deceased, and those of the landlord.

4.16 We recommend that where a sole contract-holder dies, the contract ends either one month after the death of the contract-holder; or earlier if the landlord is given notice of the death.^[14] Notice of the death can be given to the landlord either by the personal representatives of the deceased contract-holder, or by the permitted occupiers of the premises aged 16 and over, acting together.^[15] The requirement for the occupiers to act together is to prevent one unfairly stealing a march on the others.

4.17 There are two exceptions to these general rules.

(1) If, at the time of the death of the contract-holder, one or more persons are qualified to succeed the contract-holder, the contract does not come to an end.^[16]

(2) If, at the date of the contract-holder's death, a family property order^[17] has been made by a court which requires the contract-holder to transfer the contract to another, and the order has effect, the contract does not come to an end.^[18] If, after the contract-holder's death, the order ceases to have effect, and there is no person qualified to succeed the contract-holder, the contract ends when the order ceases to have effect, or, if later, at the time set out in paragraph 4.16 above.^[19]

4.18 In the case of fixed term standard contracts (only), on the death of a sole contract-holder, there may still be an asset – the remainder of the term of the contract – which the contract-holder may wish to leave to another by will. In this case, the Bill provides a means whereby the balance of a fixed term standard contract may be transferred to another person in the course of administration of the deceased person's estate, if the contract contained a term providing for this to happen. Where this happens, the rules set out above (paragraphs 4.15 to 4.17) do not apply.^[20]

4.19 Similarly, on the death of a joint contract-holder, a fixed term standard contract may provide that the joint contract-holder's interest in the contract may be transferred to another person in the course of administration of the deceased person's estate.^[21] If it does so, it must also provide that such a transfer cannot take place unless, before his or her death, the joint contract-holder has notified the other joint contract-holder(s).^[22] Further, it must also provide that the transferee is not entitled to occupy the premises without the consent of the other joint contract-holders.^[23]

4.20 Transfers are discussed more generally at paragraphs 6.36 to 6.60 and 6.74 to 6.76.

Fundamental provisions applying to secure and periodic standard contracts Contract-holder's notice

4.21 At present, an occupier under a periodic tenancy or periodic licence must give at least four weeks notice of their intention to terminate the tenancy.^[24] In Renting Homes^[25] we suggested that this four week rule should be retained as a statutory minimum.

4.22 We have changed our views on this. We now recommend that any minimum period should be set out as a supplementary term in the agreement.^[26] We recommend that the appropriate authority should prescribe a supplementary provision that will provide for a one month minimum, but this will be able to be modified or varied by the parties. Where a contract-holder is determined to leave the contract, it is better for the contractual term to be flexible, to encourage the contract-holder to act in accordance with it, rather than be inflexible, which may simply encourage the contract-holder to walk away from the agreement. Any modified or varied term must be fair.

4.23 Both secure and periodic standard contracts will contain a fundamental term that the contract-holder can give the landlord written notice of intention to give up possession of the premises on a date specified in the notice.^[27]

4.24 If the contract-holder gives up possession of the premises on or before the date specified in the notice, the contract ends on the date specified.^[28]

4.25 If the contract-holder gives up possession after that date, but in connection with the notice:

(1) the contract ends on the day the contract-holder gives up possession of the premises; ^[29] or

(2) if the case goes to court, and the court makes a possession order, the contract ends on the date determined in accordance with clause 154 (see paragraph 4.56 below).

4.26 If the contract-holder withdraws the notice before the contract comes to an end, and the landlord does not object in writing before the end of a reasonable period, the contract continues to have effect.^[30]

4.27 In order to recover possession from a contract-holder who does not move out, the landlord is able to make a claim to the court for recovery of possession.^[31] If the ground is made out, the court must order possession.^[32] Before starting proceedings, the landlord must give a possession notice to the contract-holder which specifies this ground for possession.^[33] The landlord can start the actual claim proceedings on the same day.^[34]

4.28 On the "use it or lose it" principle, it is specifically provided that a landlord cannot make a claim for possession more than six months after the date on which the possession notice has been given.^[35] In addition, a landlord cannot give a possession notice specifying the contract-holder's notice ground more than two months after the date specified in the contract-holder's notice as the date on which the contract-holder would give up possession of the premises.^[36]

4.29 A contract-holder under a fixed term standard contract does not have a statutory right to terminate the contract. Such a contract may contain a term which enables the contract-holder to terminate the contract before the end of the fixed term (a "contract-holder's break clause"). Where such a term exists, the contract-holder may give a notice in writing in accordance with this term. Again a landlord cannot give a possession notice more than two months after the date specified in the contract-holder's notice as the date on which the contract-holder would give up possession of the premises.^[37]

Other provisions

Death of the landlord

4.30 In general we have sought to ensure that our scheme applies to all occupation contracts, irrespective of whether they are tenancies or licences. Nonetheless, the lease-licence distinction remains important in a number of circumstances. The death of a landlord is one of them.

4.31 Where a landlord dies, the obligations under any occupation contracts, which are legally tenancies, transfer to those entitled under the landlord's estate under the normal principles of the law of succession. For the avoidance of doubt, the Bill specifically provides that where the contract is a licence, the licence comes to an end on the death of the landlord.^[38]

Expiry of fixed term

4.32 It has long been the policy of the Rent Act and Housing Acts that when a fixed term tenancy ends, it is transformed by operation of statute into a statutory periodic tenancy, unless a new fixed term has been agreed and taken effect. This is a sensible policy, as it reflects most people's expectations of what should happen on the expiry of the fixed term. We have retained this principle in the present Bill, adapted to fit the scheme we recommend.

4.33 On expiry of the fixed term, the following possibilities are contemplated.

(1) The landlord and contract-holder may agree to enter into a new contract relating to the premises (or substantially the same premises), which follows on the expiry of the old contract.^[39]

(2) If there is no such agreement, the landlord and contract-holder are deemed to have entered a new periodic standard contract in relation to the premises. It follows on immediately from the expiry of the fixed term contract. The rental period is the same as that for which rent was paid under the fixed term contract. All the fundamental and supplementary provisions applicable to a periodic standard contract are incorporated without modification. Subject to these points, the terms of the new contract are the same as those under the fixed term contract.^[40]

4.34 In order to protect the position of the contract-holder, the Bill provides that if, before the new occupation contract comes into effect, the contract-holder enters an obligation to do something that will cause the new contract to come to an end, the obligation is unenforceable. Similarly if the contract-holder gives notice or any other document which would cause the new contract to come to an end, the notice or document are to be of no effect.^[41]

Surrender and transfer

4.35 We wanted, as far as possible, to avoid the complexity of the rules relating to surrender and transfer found in landlord and tenant law. Indeed, the principal reason for recommending a new procedure relating to abandoned premises is the complexity of that law and the fact that many people may think they have abandoned their obligations under the agreement when, in law, they have not. Thus the common law rules on surrender and transfer do not apply to occupation contracts. Clause 152 of the Bill provides the only ways in which an occupation contract can be ended, namely, in accordance with:

(1) terms included in the contract in accordance with part 6 of the Bill (including fundamental terms incorporating fundamental provisions relating to termination); or

(2) an enactment (including in particular the Rented Homes Bill and the Consumer Protection (Distance Selling) Regulations 2000.^[42]

Rescission and frustration

4.36 Nonetheless clause 152 does provide that any right of the landlord or the contract-holder to rescind the contract (for example for misrepresentation or duress) is not affected; nor is the operation of the law of frustration.^[43]

Abandonment

4.37 One issue which emerged strongly from our consultation was the lack of any specific provision to deal with the not uncommon situation where a person who has been occupying premises simply walks away from their contractual obligations.

4.38 We noted in Renting Homes that there was an important balance to be struck.^[44] On the one hand, where an occupation contract has been broken, the landlord should not be put to disproportionate trouble and expense to regain possession of their premises. On the other hand, the law should not make it so easy to do this that the unscrupulous landlord could circumvent the normal legal restrictions relating to regaining possession of premises. We were quite clear that the present law (under which the occupier, who leaves without giving the landlord notice of their intention to end the agreement, may remain liable under its terms, although in reality it may not be worth the landlord's time and effort to bring proceedings against the delinquent occupier) did not achieve the appropriate balance. The current law (relying on concepts such as implied surrender) is unfair on landlords as it is often unclear. Our recommendations offer a better balance, giving the landlord clearer procedures, while maintaining safeguards for the occupier.

Securing the premises

4.39 Where a landlord under an occupation contract which contains a term requiring the contract-holder to occupy the premises as their only or principal home believes that the contract-holder has abandoned the premises, the landlord can enter the premises subject to the contract to make them secure or to safeguard their contents and any fixtures or fittings. In so doing, the landlord may use reasonable force.^[45]

Recovery of possession

4.40 Possession may be regained by a landlord who follows the following process, as set out in the Bill.^[46]

(1) In order to recover possession, the landlord must give the contract-holder a written warning notice which:

(a) states that the landlord believes the contract-holder has abandoned the premises;

(b) requires the contract-holder to inform the landlord within the warning period^[47] if he/she has not abandoned the premises; and

(c) tells the contract-holder that the landlord intends to bring the contract to an end if satisfied at the end of the warning period that the premises have been abandoned.^[48]

(2) During the warning period, the landlord must make such inquiries as are necessary to satisfy him or herself that the contract-holder has abandoned the premises.^[49]

(3) At the end of the warning period the landlord may bring the contract to an end by giving notice in writing to the contract-holder. The contract ends at that point. The landlord may then recover possession, as against the contract-holder, without court proceedings.^[50]

(4) The landlord must give copies of any warning notice, or notice terminating the contract to any lodger or sub-holder of the contract-holder.^[51]

4.41 The appropriate authority may by regulations provide for the safeguarding and disposal of property – other than the landlord's – found on the premises when the contract has been brought to an end.^[52]

4.42 The contract-holder may, within six months from the date on which they were given the notice ending the contract, apply to court on one of the following grounds:

(1) that the landlord had failed to give a warning notice;

(2) that the landlord had failed to make the appropriate inquiries;

(3) that the contract-holder had not abandoned the premises and the failure to respond (or to respond adequately) to the warning notice was justified; or

(4) that when the landlord gave the notice ending the contract, the landlord did not have reasonable grounds for concluding that the contract-holder had abandoned the premises.^[53]

4.43 If the court finds that any one or more of these grounds are made out, it may either:

(1) make a declaration that the notice ending the contract is of no effect and that the contract continues to have effect; or

(2) order that the landlord provide suitable alternative accommodation to the contract-holder.

It may also make any other order it thinks fit.

^[54]

TERMINATION BY THE LANDLORD

4.44 Our recommendations regarding the termination of occupation contracts by the landlord largely reflect the current legal position. In order to terminate, the landlord must first give a notice setting out their intention to seek possession of the premises; second the landlord must ask the court for an order for possession. Where the ground for possession relied on is discretionary, the court can only make an order where it decides it would be reasonable to do so. Where the ground is mandatory, the court must order possession and has only very limited power to postpone the effect of the order.

4.45 Even though our recommendations broadly reflect the current position, there are important changes of detail.

(1) Long statutory lists of grounds for possession set out in the Housing Acts 1985 and 1988 are replaced by much shorter lists.

(2) The details of the grounds for possession are set out as terms in the contract, not in a separate body of statute law.

(3) Greater emphasis is given to the estate management grounds for possession.

(4) There is rationalisation of the periods of notice which the landlord must give before starting court proceedings for possession.

(5) We have adopted a general principle of "use it or lose it". If proceedings are not started within a defined period, the possession notice lapses.

(6) The discretion of the court is structured.^[55]

(7) The date on which any possession order brings an occupation contract to an end is different, to remove the problem of the "tolerated trespasser".

(8) The law relating to forfeiture, re-entry and notice to quit does not apply to occupation contracts.

Fundamental provisions relating to all contracts

4.46 As with the present law, there are two classes of grounds on which a landlord may terminate the contract and seek an order of possession from the court: discretionary grounds and mandatory grounds.

Discretionary grounds

4.47 Instead of long lists of discretionary grounds set out in legislation, the Bill incorporates fundamental terms in all occupation contracts providing that a landlord may seek to bring a claim to recover possession of premises (a "possession claim") on two discretionary grounds:

(1) breach of contract;

(2) one of the estate management grounds.^[56]

Mandatory ground

4.48 In addition, there is one mandatory ground which applies to all types of occupation contract.^[57] This is the where the contract-holder gives the landlord notice to terminate the contract^[58] but fails to give up possession of the premises.^[59]

Procedure – the possession notice

4.49 Any possession claim (except for claims under the notice-only ground applicable to periodic standard contracts, or where the landlord has given notice to end a fixed term standard contract under clause 180) must be preceded by notice of intention to bring the claim – the "possession notice".^[60] The notice must specify:

(1) the ground(s) on which the landlord seeks to rely;

(2) particulars of the ground(s);

(3) the date after which the landlord can start the claim.^[61]

4.50 Where the ground relied on is the contract-holder's notice ground, special rules apply.^[62]

The possession claim

4.51 As a general rule, a possession claim cannot be brought before one month from the date on which the possession notice was given to the contract-holder.^[63]

4.52 There are two exceptions to this. A possession claim may be made on the same day that the possession notice is given where the ground (or one of them) specified in the notice is:

(1) a breach of the fundamental term relating to prohibited conduct;^[64] or

(2) the contract-holder's notice ground.^[65]

4.53 In accordance with the "use it or lose it" principle, there are fundamental terms providing that a possession claim cannot be brought more than six months from the date on which the possession notice was given.^[66] Once that time has elapsed, proceedings cannot be brought until after a new possession notice is given.

Effect of possession order

Removing the tolerated trespasser

4.54 One of the problems with the current law is that, where a suspended possession order is made, and the tenant breaks one of the terms of that order (such as to pay arrears of rent), this brings the tenancy to an end, by operation of law. In practice, the former tenant often carries on living in the premises. The former tenant then enters a form of legal limbo – living there, but with no specific contractual entitlement to be there.

4.55 The courts have dealt with this by creating a new form of legal status – the "tolerated trespasser".^[67] In legal logic, this is an impossibility; a trespasser by definition has no rights to be on the land and therefore cannot be tolerated. We want to abolish this troublesome concept.

4.56 The Bill provides that, where a court has made a possession order, the contract comes to an end:

(1) where the contract-holder gives up possession of the premises on or before the date specified in the order, on that specified date;

(2) where the contract-holder gives up possession of the premises after the date specified in the order but before the order is formally executed, on the date the contract-holder gives up possession;

(3) where the contract-holder does not give up possession of the premises until the order is executed, on the date when the order is executed.^[68]

(4) where the court makes a possession order against joint contract-holders, and it is a condition of the order that the landlord offers a new contract of the same premises to one or more (but not all) of them, the occupation contract in respect of which the possession order is made comes to an end immediately before the effective date of the new contract.^[69]

Fundamental provisions relating only to standard contracts

Landlord's notice

4.57 An essential feature of the present law is that a private landlord may bring an assured shorthold tenancy to an end, merely by issuing a notice to that effect. The ability of the landlord to do this is irrespective of any fault on the part of the tenant. This principle is brought into the present Bill.

4.58 The landlord under a periodic standard contract may give the contract-holder written notice that he/she must give up possession of the premises on the date specified in the notice. The date specified must be at least two months from the date on which the notice was given.^[70] This simplifies the present law, which requires the period of a notice also to be linked to a rental period.^[71]

4.59 The contract ends:

(1) where the contract-holder gives up possession of the premises on or before the date in the notice, on the date specified in the notice;^[72]

(2) where the contract-holder gives up possession of the premises after that date, but in connection with the notice, on the day the contract-holder gives up possession of the premises;

(3) where the landlord obtains a court order for possession, on the date determined by clause 154 as the date on which the contract ends.^[73]

4.60 If the landlord's notice is withdrawn before the contract ends, and the contract-holder does not object in writing before the end of a reasonable period, the notice ceases to have effect.^[74]

4.61 In relation to fixed term standard contracts, two different landlord's notice grounds are available:

(1) The landlord may serve a notice before or on the last day of the fixed term requiring the contract-holder to give up possession of the premises on a date specified in the notice.^[75]

(2) The contract may contain a "landlord's break clause" allowing the landlord to serve a notice requiring the contract-holder to give up possession on a specified date before the end of the fixed term.^[76]

4.62 If the landlord has given a notice under paragraph 4.61(1) above, but the fixed term contract has ended and become a periodic contract ^[77] the landlord can nevertheless pursue a possession claim based on the notice which was given before the fixed term came to an end.^[78] In this situation, the landlord may continue to rely on events that occurred while the fixed term contract was in force.^[79]

4.63 The same rules apply to notices given by the landlord at the end of the fixed term or under the break clause as apply to a landlord's notice under a periodic standard contract.^[80]

Mandatory grounds

4.64 In addition to the grounds for possession available generally, landlords under standard contracts have two other mandatory grounds for possession available to them. They are:

(1) where the landlord has given a landlord's notice to which the contract-holder has not responded by voluntarily giving up possession of the premises;^[81] and

(2) where the contract-holder is in serious arrears of rent.^[82]

Possession claim – time restrictions

4.65 A claim for possession under the landlord's notice ground, either under a periodic standard contract, or in relation to a fixed term standard contract, cannot be made before the end of the period of the notice, which must be at least two months.^[83]

4.66 Applying the principle of "use it or lose it", a claim for possession cannot be brought more than four months after the end of the two-month period of the notice.^[84]

4.67 A landlord under a standard contract who seeks to use the landlord's notice ground, but has failed to provide a written statement of the contract within two weeks from the effective date of the contract,^[85] may not make a possession claim until the end of a period of six months from the date on which the written statement was given to the contract-holder.^[86]

Forfeiture, notice to quit and re-entry

4.68 Under landlord and tenant law, the most common means of bringing fixed term tenancies to an end is through application of the law of forfeiture or re-entry. Periodic tenancies are brought to an end by notice to quit. In line with our general aim of reducing the dependency of the law of residential lettings on principles of landlord and tenant law, the Bill specifically provides that:

(1) a landlord under an occupation contract may not rely on any provision in a contract for re-entry or forfeiture in relation to the premises subject to the contract;

(2) a landlord under an occupation contract may not rely on any enactment or rule of law on re-entry or forfeiture in relation to any premises subject to the contract;

(3) a landlord may not serve any notice to quit the premises subject to the contract; and

(4) any provision in an occupation contract for re-entry, forfeiture or notice to quit is of no effect.^[87]

Estate management grounds

Introduction

4.69 Existing schemes of statutory protection contain provisions which provide opportunity for landlords to provide suitable alternative accommodation to tenants. Because most private tenancies currently operate under the assured shorthold tenancy regime, and in future will be standard contracts, in practice private landlords do not need particular assistance with estate management. They can regain possession of their premises with relative ease.

4.70 For social landlords and others who provide accommodation with long term security of tenure, currently afforded by the secure and assured tenancy regimes, in future by the secure contract, the situation is different. Accommodation provided with the assistance of public funding represents a substantial social investment that must be properly managed in the public interest, as well as in the private interest of the people occupying the premises. It is obviously important that contract-holders under secure contracts have their accommodation rights properly protected. But ensuring that accommodation rights are properly protected is not the same as ensuring that any particular contract-holder should be entitled to go on residing in any particular home indefinitely.

4.71 To give two obvious examples:

(1) where a contract-holder is head of a family with a number of children, it is right they should be allocated a family home; but when the children have left home and a partner has died, it is a poor use of public resource if the accommodation continues to be occupied by the sole remaining occupant;

(2) where accommodation has been converted to special use by a disabled person, it is a poor use of public resource if – when the disabled person no longer needs that unit of accommodation – another who had been living with the disabled person continues to reside there.

4.72 In practice, community landlords keep these matters under review and are often able to negotiate transfers of accommodation to ensure a proper match between occupant and accommodation. Nevertheless, there are occasions on which good estate management needs to be underpinned by statutory provisions. Our scheme provides that one of the grounds on which a community landlord may seek possession arises from their need to use their housing stock efficiently. This is balanced with the need to provide security and respect for home and family life, as well as avoiding disrupting the sustainability of communities by unnecessarily moving those who have created an established community.

4.73 We could have taken a broad approach to this and simply allowed the court to make a possession order where "suitable alternative accommodation" is available to the contract-holder, and where the court considers it reasonable to make an order. This is – in essence – the position that currently applies to landlords of assured tenancies.^[88] Alternatively, we could have taken a more structured approach, based on the position currently applicable to secure tenancies. This defines more precisely the circumstances in which possession may be sought against an existing occupier.^[89]

4.74 The overall thrust of our recommendations relating to the development of the secure contract has been to align assured tenancies with secure tenancies. We therefore think that the circumstances in which a secure contract may be terminated on estate management grounds should be set out clearly, but with some flexibility to cover cases where there is a substantial estate management reason which does not fall precisely into another specific category. For a landlord to be able to use the estate management grounds:

(1) "suitable alternative accommodation" must be available; and

(2) in addition, being a discretionary ground for possession, a court must be satisfied that it is reasonable to make any order for possession.^[90]

4.75 If a court makes an order on an estate management ground (but no other ground), the landlord must pay to the contract-holder a sum equal to the reasonable expenses likely to be incurred by the contract-holder in moving from the original premises.^[91] This does not apply where the ground is one of the two "redevelopment" grounds (see below, paragraph 4.79).^[92]

The estate management grounds

4.76 The Bill sets out the detailed circumstances in which the estate management grounds come into operation. There are nine such grounds set out in schedule 6, part 1 of the Bill. They may be grouped into the following categories:

(1) redevelopment grounds (grounds A and B);

(2) special accommodation grounds (grounds C to F); and

(3) under-occupation grounds (grounds G and H).

4.77 In addition, however well considered legislation may be, there will always be circumstances which fall outside specific instances set out in a list. There is therefore a final, more general ground "where it is desirable for some other substantial estate management reason that the landlord should obtain possession of the premises" (ground I). Were this ground to be utilised, it would clearly be necessary for the landlord to demonstrate and the court to accept that the particular circumstances in which possession was sought were closely analogous to the specific grounds listed in the schedule.

4.78 The details of the grounds are set out in the Bill. Here we summarise their principal features.

THE REDEVELOPMENT GROUNDS

4.79 There are two such grounds:

(1) ground A applies where a landlord intends to redevelop the premises and cannot achieve this without first obtaining possession of the premises;

(2) ground B applies where the premises are located in an area which is the subject of an approved redevelopment scheme.^[93]

4.80 There are four such grounds:

(1) ground C applies where the landlord is a charity and the contract-holder's continued occupation would conflict with the objects of the charity;

(2) ground D applies to accommodation adapted for the physically disabled, where there is no longer such a person living in the accommodation;

(3) ground E applies to accommodation specifically provided for those difficult to house, where there is no such person living in the accommodation, or that person has been offered a secure contract to occupy other premises;

(4) ground F applies to accommodation designed for persons with special needs, where there is no longer such a person living in the premises.

THE UNDER-OCCUPATION GROUNDS

4.81 We considered whether there should be a general ground to enable a landlord to seek possession on the basis that accommodation was under-occupied. In the event we concluded that this was not necessary, not least because of rules contained in the housing benefit scheme which have the effect of putting pressure on occupiers in these circumstances to scale down the size of their accommodation.^[94]

4.82 We recommend two grounds should fall into this category. In both cases, the current accommodation must be more extensive than is reasonably required by the contract-holder.

(1) Ground G applies where a "reserve successor"^[95] succeeds to the property and the landlord gives a possession notice more than six months but less than 12 months after the contract-holder's death. (These time periods (set out in clause 186(4)) are designed: to enable the successor to continue in the premises for a reasonable period after the death; to give the landlord a chance to move the new contract-holder after the period of mourning has elapsed; but to limit the window of opportunity available to the landlord so that any threat of proceedings can be lifted if nothing is done by the anniversary of the original contract-holder's death).

(2) Ground H applies where a joint contract-holder has withdrawn from the contract or been excluded from the contract, and either the accommodation is more extensive than the remaining contract-holders need, or (where the landlord is a community landlord) the remaining contract-holder(s) do not meet the landlord's criteria for allocating housing accommodation. A landlord seeking to use this ground must serve the requisite possession notice within six months from the date on which the joint contract-holder withdrew or was excluded.^[96]

4.83 Both these cases could involve some quite difficult choices in balancing the public and private interest. Thus in determining whether or not it is reasonable for the judge to make an order for possession in such a case, there are specific provisions relating to how the judge's discretion should be structured in such cases.^[97]

JOINT CONTRACTS – TERMINATION

4.84 Our general objective in relation to joint contracts is that each joint contract-holder should as far as possible be treated as an individual. We have therefore made special provision to deal with a number of issues that arise in practice where the present law is unclear or unsatisfactory. The topics we consider here are:

(1) termination by the joint contract-holder;

(2) termination by the landlord;

(3) termination by other joint contract-holders.

4.85 The objective of the provisions is to enable all parties – landlords and other joint contract-holders – to know where they stand in relation to their rights and obligations.

Termination by the joint contract-holder

4.86 The following rules adapt for joint contract-holders the rules, discussed above,^[98] which relate to sole contract-holders.

Secure and periodic standard contracts

4.87 All secure and periodic standard contracts contain a fundamental term that a joint contract-holder may withdraw from the contract by giving notice – a withdrawal notice – to the landlord.^[99] The notice must specify the date – the withdrawal date – after which he/she intends no longer to be bound by the contract.^[100] The joint contract-holder must give a written warning to the other joint contract-holders when giving the withdrawal notice to the landlord, and must attach a copy of the withdrawal notice.

4.88 On receipt of the notice the landlord must, as soon as reasonably practicable after receiving the withdrawal notice, warn the other contract-holders about this. The landlord must write to the others, attaching a copy of the withdrawal notice.^[101] We are imposing warning requirements on both the landlord and the joint contract-holder seeking to withdraw in order to offer the remaining joint contract-holders the fullest opportunity to seek a replacement for the departing joint contract-holder to take over that person's share of the rent.

4.89 The joint contract-holder's rights and liabilities under the contract cease on the withdrawal date, though this does not remove any rights and liabilities accruing before that date.^[102]

Fixed term standard contracts

4.90 A fixed term standard contract may include a term permitting the contract-holder to bring the contract to an end before the completion of the fixed term by giving the landlord written notice.^[103] It may also provide that where one or more joint contract-holders (but not all) gives notice in writing, it is to be treated as a withdrawal notice. In such a case, the landlord must – as above – warn the other joint contract-holders in writing. The treatment of the rights and liabilities of the withdrawing contract-holder are also as set out in the previous paragraph.^[104]

Termination by the landlord

4.91 A landlord may believe that a joint contract-holder who, as a term of the contract, is required to occupy the premises as their only or principal home,^[105] does not in fact occupy the premises and does not intend to occupy them. In this case, the landlord may bring their rights and obligations to an end in accordance with the following procedure.^[106] This procedure is, in effect, an alternative to the use of possession proceedings, to be used in situations similar to those where a sole contract-holder has abandoned premises.^[107]

4.92 The landlord must first give the relevant joint contract-holder an (initial) notice in writing which:

(1) states that the landlord believes the joint contract-holder does not occupy and does not intend to occupy the premises;

(2) requires the joint contract-holder to inform the landlord in writing, within four weeks, if they intend to occupy the premises; and

(3) tells the joint contract-holder that a failure to respond will result in the landlord taking steps to terminate their interest under the contract.^[108]

4.93 During the four-week warning period, the landlord must make such inquiries as are necessary to satisfy him or herself that the joint contract-holder does not occupy the premises and does not intend to do so.^[109]

4.94 If at the end of the period the landlord is so satisfied, the landlord may bring the joint contract-holder's rights and obligations under the contract to an end by sending a (final) notice to that effect.^[110] The rights and obligations cease eight weeks later, though no right or liability accruing before that date is removed or waived.^[111]

4.95 During the eight week period following service of the final notice, the joint contract-holder may apply to the court for a declaration that the final notice is of no effect. The grounds on which the court may make such an order are that:

(1) the landlord failed to give the initial notice;

(2) the landlord failed to make the necessary inquiries;

(3) the joint contract-holder occupied or intended to occupy the premises and the failure to respond to the initial notice was justifiable; and

(4) when the landlord gave the final notice, the landlord did not have reasonable grounds for being satisfied that the joint contract-holder did not, and did not intend to, occupy the premises.^[112]

^[113]

Prohibited conduct

4.96 In addition to removing a joint contract-holder who appears to have walked away from the agreement, the Bill enables a landlord to take action against a joint contract-holder who is in breach of the prohibited conduct ^[114] term in the agreement.^[115] Unlike the position just discussed, where the landlord does not need a court order to bring the joint contract-holder's rights and obligations to an end, here proceedings – analogous to possession proceedings – are required.

4.97 In common with other possession claims, the landlord must first give the joint contract-holder notice in writing which:

(1) states that the landlord believes the joint contract-holder has broken the prohibited conduct term;

(2) specifies the particulars of the breach; and

(3) states that the landlord may apply to the court for an order bringing the joint contract-holder's rights and obligations to an end.^[116]

^[117]

4.98 The court may make the order applied for if it would have done so, had the two following circumstances been satisfied:

(1) the joint contract-holder was in fact a sole contract-holder; and

(2) the landlord had made a possession claim against the joint contract-holder on the ground of breach of the prohibited conduct term of the agreement.^[118]

4.99 If the court makes the order, it must specify the date on which the joint contract-holder's rights and obligations end.^[119] This does not remove any right or waive any liability accruing before that date.^[120] This procedure would enable a community landlord, for instance, to evict a man who has been violent to his wife or partner (a breach of the prohibited conduct term), without also having to evict the victim.

Exclusion by another joint contract-holder

4.100 Finally, where a joint contract-holder has disappeared, the other joint contract-holders may want to determine whether or not that person is still a party to the contract. The Bill provides that where a joint contract-holder (C) believes another joint contract-holder (J) (who as a term of the contract is required to occupy the premises as their only or principal home):^[121]

(1) does not occupy the premises; and

(2) does not intend to occupy them,

^[122]

4.101 The procedure for achieving this is very similar to the procedure that must be followed by the landlord (see paragraphs 4.91 to 4.94 above) and is as follows.

(1) C must give J an initial notice which:

(a) states C's belief that J no longer occupies and does not intend to occupy the premises;

(b) requires J within four weeks to inform C if J intends to occupy the premises; and

(c) tells J that if at the end of the warning period C is satisfied that J does not occupy, and does not intend to occupy, the premises, J's rights and obligations may be brought to an end.^[123]

(2) C must give a copy of the notice to the landlord and any other joint contract-holders.^[124]

(3) During the four week period, C must make such inquiries as are necessary to satisfy himself that J does not occupy the premises and does not intend to occupy them.^[125]

4.102 At the end of the four week period, C may apply to the court for an order bringing J's rights and obligations under the contract to an end. If the court is satisfied that, indeed, J does not and does not intend to occupy the premises, the court may make the order. This must specify the date on which J's rights and obligations terminate.^[126] The order does not remove any right or waive any liability accruing before that date.^[127] The court may not make an order if it is satisfied that the reason that J does not occupy and does not intend to occupy the premises is attributable to C or another joint contract-holder breaching certain parts of the prohibited conduct term.^[128]

4.103 J can seek a remedy from the court within six months of the date on which the order is made. J may apply to the court for a declaration that the final notice is of no effect. The grounds on which the court may make such an order are:

(1) that C failed to give the initial notice;

(2) that C failed to make the necessary inquiries;

(3) that J occupied or intended to occupy the premises and the failure to respond to the initial notice was justifiable; and

(4) that when C gave the final notice, C did not have reasonable grounds for being satisfied that J did not, and did not intend to, occupy the premises.

If the court finds that one of these grounds is made out, it may rescind the order and declare that the contract continues to have effect. It may also make any other order that it thinks fit.

^[129]

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Note 1    Termination of agreements is discussed in Part 9 of Renting Homes (2003) Law Com No 284.    [Back]

Note 2    Cl 192 limits the courts power to order possession to certain grounds for possession. Some of these grounds are mandatory in which case the court will have no choice but to order possession if it believes the ground has been made out. Others are discretionary. The court will have to be satisfied not only that the ground is made out but also that it is reasonable to order possession.    [Back]

Note 3    Cl 235.    [Back]

Note 4    Cl 156(1)(a).     [Back]

Note 5    The contract-holder’s notice must be given under cl 156(2). The written statement of the agreement is required by cl 24.    [Back]

Note 6    Cl 156(3).    [Back]

Note 7    Cl 152(1)(b). The consumer protection regulations are defined in cl 236(2) as the Consumer Protection (Distance Selling) Regulations 2000 (SI 2000 No 2334).     [Back]

Note 8    Hammersmith and Fulham LBC v Monk [1992] 1 AC 478.    [Back]

Note 9    See paras 4.82 to 4.83 below.     [Back]

Note 10    Cl 155.    [Back]

Note 11    Cl 157.    [Back]

Note 12    The facts in Hussein v Mehlman [1992] 2 EGLR 87.    [Back]

Note 13    Cl 158.    [Back]

Note 14    Cl 159(1).    [Back]

Note 15    Cl 159(2). The position where there is a surviving joint contract-holder, or where the rules relating to succession to the contract apply are discussed below in Part 7.    [Back]

Note 16    Cl 159(3). The right of succession is discussed below in Part 7.    [Back]

Note 17    Defined in cl 237.    [Back]

Note 18    Cl 159(4).    [Back]

Note 19    Cl 159(5).    [Back]

Note 20    Cl 133.    [Back]

Note 21    Cl 136(1).    [Back]

Note 22    Cl 136(2).    [Back]

Note 23    Cl 136(3).    [Back]

Note 24    Protection from Eviction Act 1977, s 5.    [Back]

Note 25    (2003) Law Com No 284, para 9.110 onwards.    [Back]

Note 26    Cl 172.    [Back]

Note 27    Cl 167.    [Back]

Note 28    Cl 170(1).    [Back]

Note 29    Cl 170(2)(a).    [Back]

Note 30    Cl 170(3).     [Back]

Note 31    Cl 168(1)    [Back]

Note 32    Cl 168(2).    [Back]

Note 33    Cl 169(1).    [Back]

Note 34    Cl 169(2).    [Back]

Note 35    Cl 169(3).    [Back]

Note 36    Cl 169(4).    [Back]

Note 37    This is the result of the interaction of cls 171(2) and 169(4).    [Back]

Note 38    Cl 164.    [Back]

Note 39    Cl 165(6).    [Back]

Note 40    Cls 165(1) to (5).    [Back]

Note 41    Cl 165(7).    [Back]

Note 42    SI 2000 No 2334.    [Back]

Note 43    Cl 152(2).    [Back]

Note 44    (2003) Law Com No 284.    [Back]

Note 45    Cl 163.    [Back]

Note 46    Cl 160.    [Back]

Note 47    Four weeks: cl 160(8).    [Back]

Note 48    Cl 160(3).    [Back]

Note 49    Cl 160(4).    [Back]

Note 50    Cl 160(5) to (7).    [Back]

Note 51    Cl 160(9).    [Back]

Note 52    Cl 161.    [Back]

Note 53    Cl 162(1) and (2).    [Back]

Note 54    Cl 162(3). Sch 5 applies to determine whether accommodation is a suitable alternative: cl 162(4).    [Back]

Note 55    This is discussed in Part 5.    [Back]

Note 56    Cls 183 and 185. Sch 6 sets out the estate management grounds , which are discussed in detail, below at paras 4.69 to 4.83.    [Back]

Note 57    Other mandatory grounds apply to periodic standard contracts.    [Back]

Note 58    Discussed above, at paras 4.21 to 4.28.    [Back]

Note 59    Cls 168 and 195(2)(a).    [Back]

Note 60    Cls 153(2), 169(1), 184(1), 186(1) and 188(1). For the powers of the court in cases where the landlord fails to give the possession notice, see below at para 5.6.    [Back]

Note 61    Cl 153(2).    [Back]

Note 62    See above, at paras 4.27 and 4.28.     [Back]

Note 63    Cls 184(3), 186(2)(a) and 188(2)(a).    [Back]

Note 64    Cl 184(2). Prohibited conduct is defined in cl 51 discussed below in Part 10.    [Back]

Note 65    Cl 169(2), discussed above, at paras 4.21 to 4.28.    [Back]

Note 66    Cls 169(3), 184(4), 186(2)(b) and 188(2)(b).    [Back]

Note 67    Burrows v Brent LBC [1996] 4 All ER 577, by Lord Browne-Wilkinson at 584.    [Back]

Note 68    Cl 154(1).    [Back]

Note 69    Cl 154(2) and (3). Further principles relating to the termination of occupation contracts with joint contract-holders are discussed below at para 4.84 onwards.    [Back]

Note 70    Cl 173 and 174.     [Back]

Note 71    Housing Act 1988, s 21.    [Back]

Note 72    Cl 179(1).    [Back]

Note 73    Cl 179(2). Cl 154 is discussed above, at para 4.56.     [Back]

Note 74    Cl 179(3).    [Back]

Note 75    Cl 180.    [Back]

Note 76    Cl 182.    [Back]

Note 77    Under cl 165, discussed above, at paras 4.32 to 4.34.    [Back]

Note 78    Cl 181(1).    [Back]

Note 79    Cl 181(3).    [Back]

Note 80    Cls 181(2) and 182(2).    [Back]

Note 81    Cls 175 and 195(2)(b).    [Back]

Note 82    Cls 187 and 196. Serious rent arrears are defined by reference to the rental period. Where rent is payable monthly at least two months rent must be unpaid on the date the landlord gives the possession notice, and on the date on which the court hears the possession claim arising from that notice: cls 187(2) and (3). Cl 187(2) specifies the level of arrears required on those dates where the rental period is a week or fortnight (at least eight weeks’ rent unpaid), a quarter (at least one quarter’s rent unpaid) and a year (at least three months rent unpaid). This mirrors the Housing Act 1988, sch 2, part 1, ground 8.    [Back]

Note 83    Cls 176(a) and 182(2).    [Back]

Note 84    Cl 176(b).    [Back]

Note 85    See cl 24 discussed above, at paras 3.34 and 3.35.    [Back]

Note 86    Cls 177 and 182(2).     [Back]

Note 87    Cl 166. The Law Commission is currently reviewing the law of forfeiture of tenancies and is expecting to publish a Report and Bill on Termination of Tenancies for Tenant Default later this year. The project is of particular importance in relation to commercial tenancies and long residential tenancies.    [Back]

Note 88    Housing Act 1988, sch 2, part 2, ground 9.    [Back]

Note 89    Housing Act 1985, sch 2, parts 2, 3 and 4.    [Back]

Note 90    Cls 185(2)(a) and 200(2). We recommend that the discretion be structured: see Part 5.    [Back]

Note 91    Cl 185(3).    [Back]

Note 92    Cl 185(4).    [Back]

Note 93    See also cl 189.Detailed provisions relating to the approval of a redevelopment area are set out in the Bill in sch 6 part 2.    [Back]

Note 94    The amount payable by way of housing benefit is reduced in circumstances where the extent of the accommodation is greater than that required by the occupier: see Rent Officers (Housing Benefit Functions) Order 1997 (SI 1997 No 1984) art 3 and sch 1, part 1 – power to make size and rent determinations.    [Back]

Note 95    Defined below, at paras 7.20 to 7.22.    [Back]

Note 96    Cl 186(5).    [Back]

Note 97    Sch 7 paras 11 and 12. Discussed in detail in Part 5 below.    [Back]

Note 98    See paras 4.21 to 4.29.    [Back]

Note 99    Cl 112(1).    [Back]

Note 100    Cl 112(2). Where one or more (but not all) joint contract-holders have given notice under cl 167 (which is for use by a single contract-holder) this is to be treated as a withdrawal notice: cl 112(6).    [Back]

Note 101    Cl 112(4).    [Back]

Note 102    Cl 112(5).    [Back]

Note 103    Cl 171.    [Back]

Note 104    Cl 114.    [Back]

Note 105    Cl 115(2).    [Back]

Note 106    Cl 115(1). These provisions are analogous to the provisions relating to abandonment, where the premises have been left completely empty, though here the remaining joint contract-holders remain in the premises.    [Back]

Note 107    For abandonment, see above, at paras 4.37 to 4.43.    [Back]

Note 108    Cls 115(3) and (4).    [Back]

Note 109    Cl 115(5).    [Back]

Note 110    Cl 115(6). The landlord must send a copy of both the initial notice and the final notice to the other joint contract-holders: cl 115(8).    [Back]

Note 111    Cls 115 (7) and 111(3).    [Back]

Note 112    Cl 116.    [Back]

Note 113    Cl 116(3).    [Back]

Note 114    See Part 9 below.    [Back]

Note 115    Cl 119(1).    [Back]

Note 116    Cl 119(2). A copy of the notice must be given to any other joint contract-holders: cl 119(3).    [Back]

Note 117    Cl 119(4).    [Back]

Note 118    Cls 119(5) and (6).    [Back]

Note 119    Cl 119(7).    [Back]

Note 120    Cl 111(3).    [Back]

Note 121    Cl 117(2).    [Back]

Note 122    Cl 117(1).    [Back]

Note 123    Cls 117(3) and (10).    [Back]

Note 124    Cl 117(4).    [Back]

Note 125    Cl 117(5).    [Back]

Note 126    Cls 117(6), (7) and (9).    [Back]

Note 127    Cl 111(3).    [Back]

Note 128    Cl 117(8).    [Back]

Note 129    Cl 118.    [Back]

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