Many practitioners were, to put it mildly, shocked by the decision of the Court of Appeal in the case of Spencer v Taylor which was heard at the end of November. The judgment in this case has turned on its head our understanding of which notice to serve when terminating an assured shorthold tenancy (AST).
In order to end an AST a landlord has to serve a Section 21 notice on the tenant which gives the tenant at least 2 months’ notice to vacate the property. It is perhaps not so widely known that there are two notices to choose from, notice pursuant to section 21(1)(b) of the Housing Act 1988 and notice pursuant to section 21(4) of the Housing Act 1988.
On the face of the notice, the differences are fairly subtle, the only real difference being that the section 21(4) notice contains some additional wording regarding calculating the date for the end of the tenancy; the saving provision.
Until this case, it was always thought that you could only serve notice pursuant to section 21(1)(b) if you were terminating the tenancy at the end of the fixed term of the tenancy. If the end of the fixed term had passed, the tenancy would have become a periodic tenancy, and notice would have to be served pursuant to section 21(4).
The key difference between the two notices is that, under section 21(1)(b), the notice has to be served at least 2 months prior to the date in the notice, but there is no requirement for the date to be the end of a rent period. In contrast, a section 21(4) notice has to give at least 2 months’ notice, but the date specified in the notice has to be the last day of a period of a tenancy.
By way of an example, if the periodic tenant paid its rent on the second day of every month, the notice would need to specify the first of the month at least 2 months from the date of service of the notice. Unfortunately, not all tenants pay their rent on regular dates which can make it difficult to work out which date would be the end of a period. For that reason, the section 21(4) notice contains the saving provision. Essentially, it means that if the date in the notice is not the end of a rent period, the tenancy will, instead, come to an end on whichever later date the period of the tenancy expires upon. This requirement to ensure the notice expires at the end of a rent period can cause a real delay for landlords seeking to terminate, particularly where rent is paid monthly, as is usual.
In Spencer v Taylor, the Court of Appeal held that you could serve notice pursuant to section 21(1)(b) as long as, at some point, the tenancy which you are seeking to terminate was a fixed term tenancy. Whilst this may only seem interesting for the lawyers or scholars, the impact is actually huge and results in a significant benefit for landlords. This judgment means that the majority of tenancies will be able to be terminated by giving the tenant only 2 months’ notice to vacate the property; there is no longer a requirement to wait until the end of a rent period.
If you would like to discuss any of the issues in this article in more detail, please contact Michael Clark, OTB Eveling’s specialist property litigator.