When is an AST not an AST?

When is an AST not an AST?

9:56 AM, 21st November 2011, About 12 years ago

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Answer? – When it’s an Assured Tenancy. Rubbish joke I know.

Most conversations I read on Property 118 and other websites centre on ASTs and the rules and regulations that surround them, but did you know that actually there are around 16 different types of tenancy and licence agreement?

AST – Assured Tenancies – Protected Tenancies – Secure Tenancies – Common Law Tenancies – Demoted Tenancies – Introductory Tenancies – Protected Shorthold Tenancies – Family Intervention Tenancies – Replacement Tenancies – Tied accommodation Tenancies – Periodic Tenancies – statutory Periodic Tenancies – Bare Licences – Excluded Licences – Contractual Licences.

Each has their own peculiar rules and requirements. For instance, most landlords know that there are 17 grounds for evicting Assured Shorthold Tenants, but did you know that there are different 18 grounds for evicting protected tenants and a further different 20 grounds for evicting Secure Tenants?

The tenancy types also have different notices that have to be served:

  • Section 21 (1) b
  • Section 21 (4) a
  • Section 8
  • Section 83
  • NTQ
  • 93 day notice of cessation of entitlement to occupy
  • Section 128
  • Reasonable Notice

All of the above have their own service rules, get them wrong and the landlord has to start proceedings all over again.

Tenancy or Licence?

Legally speaking, a licence of any kind is simply permission to occupy. There are no rights to transfer the licence or to sub let it or to exchange it and all that has to happen to end it is the landlord withdrawing permission for the occupant to stay there. Although note that with contractual licences a court order is still needed and for excluded licences, commonly lodgers, reasonable notice has to be given.

A Tenancy on the other hand is a legal entity that is capable of transfer to other parties, such as when a council tenant dies and their kids inherit the tenancy. This is also why social housing tenants can mutually exchange with other tenants. All tenants are entitled to a possession order before being made to leave against their will.

And here’s the interesting bit, in most cases the determination of what type they actually are has little to do with what the landlord calls them. I meet many tenants who tell me that they don’t have a tenancy because they don’t have a written agreement and landlords who say they didn’t create a tenancy for the same reason – think again.

Street v. Mountford 1986

This landmark case set out once and for all the basic conditions that would create a tenancy at common law that underpins the rest of them.

The landlord, Mr Street, gave Mrs Mountford a written agreement called a “Non Exclusive Occupation Agreement”. Take a look at the list above, there ain’t no such animal. In it he reserved the right to move anyone in with her that he liked and also reserved the right to visit without prior approval and survey the property.

The issue before Judge Templeman was;

Are these 2 requirements actually real or is the landlord simply trying to reduce Mrs Mountford’s security of tenure to that of a licensee who it is much easier to evict?

The judge held that for there to be a tenancy in place it is necessary to have 3 things;

  • Rent (or service due – as with cases where the accommodation goes with the job)
  • For a clear term (weekly or monthly etc)
  • Where the occupier has Exclusive use of the premises – in other words the right to exclude anyone they want.

According to the decision, if these 3 factors are in place between the landlord and tenant then a tenancy must exist and simply calling an occupation a ‘Licence’ doesn’t mean that a licence exists.

In typically judge-like fashion Judge Templeman said “The manufacture of a 5 pronged implement for manual digging results in a fork, even if the manufacturer, unfamiliar with the English language, insists he has made a spade”.

Which in plain language means it is the circumstances surrounding the grant of the letting that determines whether it is a tenancy or a licence, not what is written on the agreement. If the agreement says ‘Licence agreement’ on it but all 3 above factors are in place then the agreement is known as a ‘Sham Agreement’ and only the contractual clauses will have any value.

Tenancy types

Beyond Street v.Mountford you then look to the date the tenant moved and who the landlord is to find out what type of tenancy it will be. For instance, if the landlord is a local authority then it is likely to be a ‘Secure’ tenancy, because only councils can grant these.

If the landlord is a private landlord and the tenant moved in before the 15th January 1989 then the tenancy will be a ‘Protected’ Tenancy, the status of the landlord and the date of occupancy tells you what the tenancy type is.

Welcome to the world of the Housing Adviser. Now back to the title of this article.

Assured Shorthold or Assured?

In one circumstance it is possible for a tenant to have more security given to them by not having a written tenancy agreement.

ASTs came in on the 15th January 1989 but back then the default tenancy (in other words the tenancy that exists if there isn’t a written tenancy agreement) was an Assured Tenancy. If a landlord wanted to create an AST they had to serve a special notice at the start of the tenancy called a Section 20 notice. If a landlord didn’t serve a section 20 then they created an Assured tenancy by accident. From 1989 to around 1994 all you saw working in housing advice were AST agreements but with no section 20 notices, because landlords didn’t know about them.

With the Housing Act 1996 the government twigged to the fact that landlords actually wanted to create ASTs but were getting the paperwork wrong so they ditched Section 20 notices and changed the default tenancy to AST. So, from the 28th February 1997 if a tenant doesn’t have a written agreement it is automatically presumed that they are ASTs.

Section 20 notices still have power over old tenancies however, so in answer to the rather pathetic joke at the start of this article, tenants who moved in between the 15th January 1989 and the 28th February 1997 with no written agreement will have greater security of tenure than those occupiers with a more formal arrangement in place.

You see? It’s not all about ASTs. The housing law encyclopaedia which I have in my office consists of 6 volumes, is 2 feet thick and weighs 26 pounds when put on bathroom scales, I know, I am sad enough to have done this. That’s the world that landlords are in. You can’t be a passive investor when you are in this world.

And to make up for the lame joke I gave you at the start I’ll leave you with a good one;
How many social workers does it take to change a light bulb?
Answer? None….they just form a support group called ‘Coping with darkness’

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