Insights

Sit Up and Take Notice

Written by Catherine Hawkes
24/03/2014

Historically, landlords have felt confused as to which part of Section 21 should be applied when serving notice on a fixed term AST that has come to an end, and the courts have been aware of the problems this has caused.

The recent ruling in the case of Spencer v Taylor [2013] will simplify the way notice is served as it affirms that just two clear calendar months’ notice is required to end an AST after a fixed term expires.

Typically, ASTs have a fixed-term period of six or 12 months. During this time, a tenant can only be evicted if grounds for possession can be proved or if there is a clause inserted within the tenancy agreement.

However, once the fixed term expires, the AST doesn’t automatically terminate. In some cases, if the parties haven’t agreed to a new fixed term, a periodic tenancy will be created by default where the tenancy continues on the same terms as before.

Ending a tenancy agreement

Most property investors know that they must comply with Section 21 to terminate a tenancy. This process involves giving written notice to the tenant that possession is required at least two months before the AST expires.

Nonetheless, there has been a great deal of uncertainty about whether Section 21(1) (b) or Section 21(4) should be applied. This has frequently led to a delay for investors in gaining possession of the property, with detrimental effects on income streams.

Put simply, Section 21(1) (b) requires the landlord to give the tenant no less than two months’ written notice that possession is required. It doesn’t require the notice to expire on any particular day.

However, Section 21(4) is more specific and imposes additional requirements, such as the expiry date, especially in scenarios where rent is paid on a weekly basis or the tenancy period is unclear. Complications have been known to arise because the clause requires the notice to expire on ‘the last day of a period of the tenancy’ following an initial two-month period.

The Court’s decision in Spencer v Taylor has now brought clarification on the matter and it is thought that this new perspective could see more tenants evicted and fewer possession claims being thrown out of court.

Spencer v Taylor and the two-year court battle

  • The landlord, Mr Spencer, granted an AST to tenant, Miss Taylor, on 6 February 2006
  • The AST was for a fixed term of six months and rent was payable weekly
  • A periodic tenancy began at the end of the six-month fixed term, which ran weekly from Monday to Sunday. This made the last day of each period of the tenancy a Sunday
  • In October 2011, Mr Spencer served a Notice under Section 21(4) and gave an expiry date of 1 January 2012, which was a Saturday, in order to seek possession
  • Mr Spencer relied on the saving provision – a sentence included after the expiry date on the notice, which allows a landlord some flexibility if the notice was drafted incorrectly – contained in his section 21(4) notice. This stated that the tenancy would terminate “at the end of your [Miss Taylor’s] period of tenancy which will end next after the expiration of two months from the service upon you of this notice”
  • Miss Taylor argued that the date on the notice was wrong as it didn’t expire on the last day of a period of the tenancy, which should have been a Sunday
  • The tenant also argued that the section 21(4) notice was invalid on the basis that the combination of the 1 January 2012 date and the saving provision made the notice uncertain as it provided for two different dates.

Not persuaded by Miss Taylor’s arguments, the Court held that just two calendar months’ notice, as stated in section 21(1) (b), is all that is needed to end an AST after the end of a fixed term. Finally, property investors can act with some certainty where a tenant remains in occupation under an expired fixed term AST. What’s more, notice under section 21(1) doesn’t have to expire on a particular day as long as it expires two months from the date it was served.

Contact the Author

Catherine Hawkes

Gordon Dadds