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There are a number of types of residential tenancies in relation to which there are statutory provisions, as well as common law tenancies. This note provides a brief background to the law on renting residential property, before focusing on the main types of tenancy available. The law in this area will change under the Renting Homes (Wales) Act 2016 once fully commenced.
Background: the Rent Acts
The Rent Acts were the primary form of statutory protection in the private rented sector from 1915 until 1988. The purpose of the statutory protection afforded by the Rent Acts was to mitigate the hardship to tenants in the private sector which resulted from a scarcity of housing. The Rent Acts provided three types of protection: firstly, restrictions on rent being raised above a permitted statutory maximum; secondly, security of tenure as landlords required a court order, which was only granted on certain grounds, to evict a tenant; and thirdly, prohibiting the charging of ‘premiums’. A ‘premium’ is essentially a charge associated with the granting, continuation, renewal or assignment of a tenancy.
The Rent Acts were phased out, starting with the creation of assured and assured shorthold tenancies under the Housing Act 1988, such that only the Rent Act 1977 now continues to have effect. The protections afforded by the Rent Act 1977 now apply only to a minority of private sector tenancies which meet certain conditions and were entered into before 15 January 1989.
Secure tenancies are provided for by Part 4 of the Housing Act 1985 (HA 1985). These are the principal type of tenancy granted by local authorities and certain other public sector bodies. A tenancy under which a dwelling house is let as a separate dwelling is a secure tenancy where the conditions in sections 80 and 81 of HA 1985 are satisfied. Secure tenants in general have security of tenure, certain rights of succession, certain rights to assign their tenancies, and the right to buy their homes.
Upon commencement of the relevant provisions of the Renting Homes (Wales) Act 2016, secure tenancies will be abolished in relation to dwellings wholly in Wales and pre-existing secure tenancies will convert into occupation contracts. A community landlord, which is widely defined in the 2016 Act to include Local Authorities and Registered Social Landlords will in most cases, offer the same security of tenure currently afforded to ‘secure tenants’ through the issuing of ‘secure contracts’. There are exceptions to this, for example where a community landlord enters into an ‘introductory standard contract’ or where a standard contract becomes a prohibited conduct standard contract.
Security of tenure
Secure tenants have security of tenure. This means that the tenancy can only be brought to an end (and the tenants evicted) in certain ways (see section 82 of HA 1985):
- by an order of the court for possession of the house;
- by a demotion order; or
- where the tenancy is for a term certain, by an order determining the term certain (though even if a term certain is brought to an end, unless the court orders both termination and possession to take effect on the same date a periodic tenancy will follow).
The grounds on which the landlord can apply to the court for an order to bring the tenancy to an end can be found in sections 84 and 84A of, and Schedules 2 and 2A to, HA 1985. Section 84 provides that a court may not make a possession order on one of the grounds set out in Schedule 2 unless it is satisfied that it is reasonable, or that there is suitable alternative accommodation for the tenant available, depending on the ground which is being relied upon.
Section 84A provides that the court must make an order if it is satisfied the conditions in that ground, which relate to serious anti-social behaviour, are met. Although the court does not have any discretion to decide not to make such an order if the conditions are met, the court’s decision is subject to any available defence of the tenant which is based on their rights under the European Convention on Human Rights. There is also a requirement in section 85ZA that the landlord must, if the tenant requests it, carry out a review of their decision to seek possession on the grounds of serious anti-social behaviour under section 84A. This reflects case law, in particular the case of Manchester City Council v Pinnock  UKSC 45, which held that tenants of public authorities have the right to raise the proportionality of a decision to evict as a defence to possession proceedings.
There are notice requirements and procedures that need to be followed by a landlord in seeking possession (see sections 83 and 83ZA of HA 1985).
The Renting Homes (Wales) Act 2016 provides new notice requirements and procedures that must be followed in seeking possession under the ‘occupation contract’ regime.
Right to buy
Secure tenants of public sector landlords of public sector landlords previously had the right to buy, preserved right to buy and the right to acquire the freehold of their social housing property, dependent on the landlord with whom they have a tenancy agreement. However, this was abolished by the Abolition of the Right to Buy and Associated Rights (Wales) Act 2018. A tenant’s Right to Buy and the Right to Acquire the freehold of a social housing property in Wales was abolished on 26th January 2019.
Demotion orders were introduced by the Anti-social Behaviour Act 2003 which inserted section 82A into HA 1985. The effect of a demotion order is that the secure tenancy is brought to an end and is replaced by a demoted tenancy. A demotion order can only be ordered by the court if it is satisfied the tenant, or a person residing in or visiting the dwelling house, has engaged, or threatened to engage in:
- housing related anti-social behaviour (as defined in section 153A of the Housing Act 1996 (HA 1996)); or
- conduct to which section 153B of HA 1996 applies (unlawful use of premises); and
- it is reasonable to make the order.
The provisions relating to demoted tenancies can be found in Part 5 of HA 1996. The tenant will remain in occupation of the dwelling house and any arrears of rent payable at the termination of the secure tenancy become payable under the demoted tenancy. A demoted tenancy will generally last for one year, during which time it is easier for the landlord to seek possession of the dwelling house if requested to do so. The court must grant an order for possession of a demoted tenancy if the relevant procedural requirements have been followed under section 143D of HA 1996. Although not specifically stated, as in the case of possession for serious anti-social behaviour under section 84ZA of HA 1985, the Court will take into account any relevant defence the tenant has on the basis of their rights under the European Convention on Human Rights. This is a result of the law as established by Manchester City Council v Pinnock  UKSC 45, which held that tenants of public authorities have the right to raise proportionality as a defence to possession proceedings.
There are certain succession and assignment rights in relation to demoted tenancies; see sections 143H to 143K of HA 1996.
Renting Homes (Wales) Act 2016 will introduce ‘a prohibited conduct standard contract’ which broadly corresponds with the demoted tenancies. The court will be able to impose a ‘prohibited conduct standard contract’ where a landlord applies to the court for an order under section 116, seeking to end the secure tenancy due to anti-social behaviour, this being a term of contract reflecting the prohibited conduct provisions in section 55 of the Act. If such an order is made, the contract-holder will become subject to a 12 month probation period before the contract reverts to a secure contract. If the landlord has continuing concerns about the contract-holder during the probation period, then the landlord may seek to extend the probation period up to a maximum period of 18 months. The contract-holder can apply to the court for a review of any decision by the landlord to extend the notice period, if the contract-holder does not agree to the extension.
Once the relevant provisions of the Renting Homes (Wales) Act 2016 are in force, those demoted tenancies made under 143 HA 1996 and also under 20B HA 1988 will be converted into ‘a prohibited conduct standard contract’ (section 240 of, and Schedule 12 to the 2016 Act).
A local authority (or housing action trust) may elect to operate an introductory tenancy regime (see Part 5 of the Housing Act 1996 (HA 1996). If an authority is operating an introductory tenancy regime then instead of granting secure tenancies, a new tenant can be granted an introductory tenancy. An introductory tenancy lasts for a trial period of one year, extendable by six months after which the tenant will normally be granted a secure tenancy. In order to gain possession of a dwelling house subject to an introductory tenancy a landlord must follow certain procedural requirements: notice, including reasons, must be given and a review must be carried out by the landlord if requested by the tenant. As long as these requirements have been followed, the court must grant an order for possession if requested to do so (see section 127 of HA 1996). Although not specifically stated, as in the case of possession for serious anti-social behaviour under section 84ZA of the Housing Act 1985, the court will take into account any relevant defence the tenant has on the basis of their rights under the European Convention on Human Rights. This is a result of the law as established by Manchester City Council v Pinnock  UKSC 45, which held that tenants of public authorities have the right to raise proportionality as a defence to possession proceedings.
There are certain rights to succession and assignment of introductory tenancies, please see sections 131 to 134 of HA 1996.
Once the Renting Homes (Wales) Act is commenced, a new style of introductory occupation will exist in Wales in replacement to introductory tenancies. Although most community landlords will enter into a secure contract with their tenants, in some circumstances, a community landlord will issue a standard periodic contract for a period of 12 months (an introductory tenancy), to allow the community landlord to ascertain whether the contract-holder will be able to sustain a secure contract. Once the 12 month period elapses, the introductory tenancy will become a secure contract, unless the landlord seeks to extend the introductory tenancy using the proper notice requirements set out in Schedule 7 to the Renting Homes (Wales) Act 2016 Act. The contract-holder has recourse to the court for a review in the event that they seek to challenge the landlord’s decision to extend the introductory tenancy. Unlike current arrangements, where introductory tenancies are not available to Registered Social Landlords (who instead may issue assured shorthold tenancies for an introductory period), under the Renting Homes (Wales) Act all social sector landlords will be able to issue introductory tenancies.
The Housing Act 1988 (HA 1988) introduced assured tenancies. Assured, and in particular the related assured shorthold, tenancies are currently the standard tenancies in the private rented sector. An assured tenancy is granted where a house is let as a separate dwelling, and the tenant occupies the dwelling as their only or principal home, subject to certain exceptions (see section 1 of HA 1988). Schedule 1 to HA 1988 sets out the circumstances in which tenancies cannot be assured tenancies. This includes tenancies granted by certain landlords, for example local authorities (paragraph 12 of Schedule 1).
Assured tenants in general have security of tenure, certain rights of succession, certain rights to assign their tenancies, and the right to acquire their homes.
Assured tenancies are principally granted by registered social landlords (RSLs) (registered under Part 1 of the Housing Act 1996 (see section C1A)). Assured tenancies have a similar security of tenure (see section 5 of HA 1988) to secure tenancies in that they can only be brought to an end by:
- the landlord by obtaining a possession order from the court on certain specified grounds (see section 7 of, and Schedule 2 to, HA 1988) and by executing that order;
- the landlord obtaining a demotion order, which has the effect of making the assured tenancy an assured shorthold tenancy (see section 6A of HA 1988);
- in the case of a fixed term tenancy which contains power for the landlord to determine the tenancy in certain circumstances, the exercise of that power.
The grounds on which the landlord can apply to the court to obtain an order to bring the tenancy to an end are set out in Schedule 2 to HA 1988. Part 1 of Schedule 2 lists the grounds on which the Court must order possession if it is satisfied that the ground has been established, subject to any available defence of the tenant on the basis of their rights under the European Convention on Human Rights. Part 2 of Schedule 2 lists the grounds under which the Court may order possession if it considers it reasonable to do so.
There are also notice requirements and procedures that need to be followed by a landlord in seeking possession, see sections 8 and 8A of HA 1988.
Assured shorthold tenancy
An assured shorthold tenancy (AST) is an assured tenancy which can be terminated on notice, in other words without having specific grounds for obtaining possession. ASTs are often granted for a fixed term, often for 6 months or a year, on the expiry of which, an AST will automatically turn into a statutory assured periodic tenancy, operating on the same conditions as the fixed term tenancy if the tenant remains in occupation (see section 5 of the Housing Act 1988 (HA 1988)).
As an AST is an assured tenancy, the grounds for possession in Schedule 2 to HA 1988 are available to a landlord seeking possession, however, the landlord may also terminate the tenancy by giving the appropriate notice to obtain a court order for possession. This is provided for in section 21 of HA 1988 and is commonly known as serving a 'section 21 notice'. The landlord cannot give notice under section 21 unless, if a fixed term tenancy, the fixed term has expired, and the landlord is required to give at least 2 months notice of possession. Section 44 of the Housing (Wales) Act 2014 provides that a landlord must be appropriately registered and licensed in accordance with Part 1 of that Act, before being able to issue a ‘section 21’ notice.
In relation to an assured periodic shorthold tenancy, the court cannot grant an order for possession to take effect earlier than six months after the beginning of the tenancy.
Due to this flexibility ASTs are commonly granted in the private sector. In addition, Registered Social Landlords commonly use ASTs in a similar way to introductory tenancies, as a trial period for new tenants.
Any assured tenancy granted on or after the 28 February 1997 is automatically an AST, unless certain conditions are fulfilled (see section 19A of, and Schedule 2A to, HA 1988).
The Renting Homes (Wales) Act 2016 will abolish assured tenancies (ATs) and assured shorthold tenancies (ASTs). Existing ATs and ASTs will be converted into either a secure contract or a standard contract, in accordance with section 240 of, and Schedule 12 to, the 2016 Act. An occupation contract made with a private landlord will be a standard contract, unless the landlord gives the contract-holder a notice stating that the contract is a secure contract. Chapter 5 of the 2016 Act deals with the termination of a periodic standard contract. Either the landlord or the contract-holder can terminate the contract by giving notice in accordance with the fundamental terms of the contract (provided for in section 173). The landlord may not give notice to terminate the contract before the end of the period of 4 months. If a landlord is in breach of section 31 (duty to provide a written statement of contract) then the landlord is unable to serve a notice to terminate the contract under section 173 of the 2016 Act, until after the restricted period of 6 months has elapsed, from the date of providing a written statement to the contract-holder. A landlord can also seek to terminate a standard contract by making a possession claim for rent arrears.
Once ATs and ASTs are abolished under the 2016 Act, the rules on succession will also change. Under the new style of ‘occupation contract’ introduced by the 2016 Act, if a sole contract-holder dies and there is a person who survives the contract-holder who is qualified to replace or to ‘succeed’ the contract-holder then that surviving person will succeed to the occupation contract. There are different categories of successor; ‘priority’ successors and ‘reserve’ successors. A priority successor will succeed even if the there are ‘reserve’ successors. If there is more that one ‘priority successor, the means by which a successor is determined is set out at section 78 of the 2016 Act.
A tenancy will pass to a ‘reserve’ successor if there is no priority successor. There are two categories of reserve successors, family members and carers. In the event of their being more than one reserve successor, the person who succeeds is determined under section 78, the test being the same as for priority successors. If a reserve successor succeeds to the occupation contract, there can be no further succession, whereas, when a priority successor dies, and there are persons qualified to succeed as a reserve successor to the contract, one of those persons may succeed to the contract. However, there can be no further succession after that person succeeds to the contract.
If a priority successor succeeds to an occupation contract and elects to terminate that contract, within the first six months of the death of the preceding contract-holder, in such circumstances another successor will be entitled to succeed. If there is more than one qualified successor, this will once again be determined under section 78 of the 2016 Act.