Periodic tenancy: one tenancy or many?
Author: David Perry and Charlotte Walker
Applies to: England and Wales
A periodic tenancy is a single tenancy and not a series of tenancies.
This was the decision of the County Court in the recent case of Walcott v Jones.
The case concerned a property in Surrey occupied by the Joneses. They had originally occupied it on an oral monthly tenancy given in August 2007. They had stayed in occupation and in June 2016 the landlord, Ms Walcott, served notice to quit on the tenants and subsequently brought possession proceedings based on that notice.
The Joneses defended the action claiming that the notice for possession was invalid. This was based on requirements now contained in the Housing Act 1988 that before a valid notice to quit can be served, the landlord must have furnished the tenants with a gas safety certificate, an energy performance certificate (EPC), and the DCLG 'How to Rent Booklet'. However, this legislation only applies to tenancies granted on or after 1 October 2015.
The issue before the court was whether it could be said that a periodic tenancy is one continuous tenancy or whether a new tenancy is repeatedly being granted. The Joneses argued that the periodic nature of their tenancy meant that a new tenancy was granted repeatedly. On that basis, the rules introduced in 2015 would apply, meaning that the new statutory requirements had not been met and so the notice to quit was invalid. At first instance the judge agreed and dismissed the possession claim.
Decision on appeal
Ms Walcott appealed to the Central London County Court. On appeal, the judge concluded that it is inherent in the agreement by which a periodic tenancy is granted that it will continue beyond the original period granted, unless notice to quit is given by one or other party. That continuation might be regarded as either a deemed re-letting or an extension of the original tenancy, but he did not think that either interpretation meant that a new tenancy had actually been granted or that Parliament had intended that it should.
In practice, this meant that the periodic tenancy should be construed as one tenancy and so the rules that apply to tenancies granted on or after 1 October 2015 did not apply. The first instance judge was found to have erred in law and the appeal was allowed.
This was a residential case, although it may be relevant for commercial properties as well. Fewer periodic tenancies are expressly granted in the commercial property market than in the residential sector, although it is commonly the case that a periodic tenancy might arise through unregulated occupation. This means that the outcome of this case is of interest to both commercial and residential landlords. It affects the termination of those tenancies - which was at issue in the case - but it also has wider implications.
Landlords of residential and commercial properties are subject to a range of requirements on the grant of a new tenancy. These obligations may differ according to the nature of the property but common to both is the requirement on a landlord to provide any prospective tenant with an EPC. Moreover, from 1 April 2018, the Minimum Energy Efficiency Standard (MEES) will be introduced making it unlawful for any landlord to let a property that has an energy performance rating below an E, without first making any required cost-effective energy efficient improvements, unless one of the exemptions applies.
At the outset, these obligations will apply only to new lettings. Landlords of periodic tenancies can take some comfort from the decision in Walcott v Jones that a periodic tenancy is continuous and so a new tenancy is not granted at the end of each period. MEES will therefore not be an issue each time that a periodic tenancy rolls over. However such tenancies may become subject to MEES in the future when the continue to let obligations take effect (1 April 2020 for residential properties and 1 April 2023 for commercial properties).
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.