Obtaining Possession of your Property Let to Tenants
Most landlords let their property out as an investment. Often the easiest way to deal with a troublesome tenant is to evict them. The majority of short term residential tenants have an Assured Shorthold Tenancy.
Provided the correct procedures are followed, most landlords will be able to evict their tenants and recover possession. This leaflet describes the general process in a landlord obtaining possession. The process is often shortened where the tenant decides to leave the property.
A Shorthold Tenancy can only be ended by:
If tenant leaves early without landlord’s permission, there may be a claim for unpaid rent.
Landlord Serving Notice and Obtaining a Court Order
The tenancy will not automatically finish at the end of the term. Should the tenant refuse to go, the landlord must serve either a section 8 or 21 notice as specified below.
Serving Notice to Quit
No Fault Notice (section 21 notice)
Served any time after creation of the tenancy
- Gives the tenant at least 2 months to quit before court proceedings are started (specific rules apply to the date of expiry of the notice)
- Cannot obtain possession in fixed term granted by the tenancy or first 6 months
- Tenancy deposit must have been protected in a Tenancy Deposit Scheme and the prescribed information provided to the Tenant within 30 days of receipt
Possession for Rent Arrears (section 8 notice)
Failure to pay rent is the most common reason for a landlord to seek possession. While possession can be sought for any amount of arrears, the court is only obliged to grant possession if those arrears are substantial.
- Gives the tenant only 2 weeks to quit before court proceedings are started
- Possession will be granted if 2 months rent owing at the date of serving notice and any subsequent hearing (otherwise judge has discretion)
- Provided the tenancy allows, possession can be sought at any time including during the fixed term
No rent is due from the tenant unless the landlord has provided the tenant with an address for receiving notices.
Possession for Tenant Breach (section 8 notice)
The landlord can also seek possession where the tenant has breached the terms of the tenancy, caused a nuisance, neglect, been convicted of using the property for immoral / illegal uses, or there has been domestic violence.
Such claims are harder to prove and are often disputed by the tenant. Even if the grounds for possession are made out, the court has a discretion whether or not to evict the tenant. Many landlords do not rely on these provisions as save for serious misconduct, this discretion to evict is usually exercised in favour of the tenant
- Gives the tenant usually only 2 weeks to quit before court proceedings are started
- Provided the tenancy allows, possession can be sought at any time including during the fixed term
- Can be difficult to establish and no guarantee of possession
Other grounds for obtaining possession using a section 8 notice include owner occupier, mortgage lender repossessing the property, holiday and student accommodation, demolition, death, end of employment and provision of alternate accommodation.
If the notice to quit is ignored, the landlord must commence possession proceedings to evict the tenant.
Accelerated Procedure Possession Claim
Most landlords choose to obtain possession on the basis of the no fault section 21 notice and utilise the court’s accelerated procedure.
This can be used where:
- Possession sought following Section 21 Notice
- Tenancy in writing
- Cannot combine with a claim for rent or other breach of tenancy
- Serve section 21 notice, wait for expiry
- Claim then sent to court, usually processed in 2 weeks
- Court serves the claim on the tenant
- Tenant has 14 days to file a defence to the claim
- Judge considers the papers without a hearing. Usually considered in 2-3 weeks.
- Typically either grants the possession order or lists for an initial hearing (as per a standard possession claim)
- Only fixed costs ordered (see below)
Standard Possession Claim
The landlord must commence a standard possession claim if they seek possession on the basis of a section 8 notice or seek to combine their action with a claim for rent of breach of tenancy.
- Serve section 8 or 21 notice, wait for expiry
- Claim sent to court, usually processed in 2 weeks
- Court serves the claim on the tenant
- Tenant has 14 days to file a defence to the claim
- Case listed for initial possession hearing at court, usually 4 - 6 weeks from the claim being served
Initial Possession Hearing
- The court will usually only have 10 minutes to deal with each claim.
- If the claim is made out and there is no substantial dispute of fact the possession order will be made
- Otherwise the court will direct service of witness statements and evidence and list the matter for a trial to determine any dispute issues in 2 - 3 months time
The further delay and cost involved in taking the matter to trial is often prohibitive. Even if the landlord is entirely successful at trial, it is likely that the tenant will not be in a financial position to meet any costs order. This leaves landlords with unscrupulous tenants with little immediate remedy. Given this we understand the importance of, where possible, obtaining possession at the initial hearing.
Possession Order and Exceptional Hardship
The court will typically order possession within 14 days of making the possession order. If the tenant alleges exceptional hardship this can be increased up to 6 weeks. In our experience most exceptional hardship applications are granted when sought.
If the possession order is made in the tenant’s absence, they can seek to have the matter reopened.
Bailiffs - Failure to Comply with the Possession Order
Should the tenant not comply with the possession order the county court bailiff can be instructed to evict them. The bailiff cannot be instructed until the date for possession has passed and there can often be a delay (2 - 8 weeks) in obtaining an appointment.
The landlord or their agent must attend the eviction with the bailiff. If it is thought that the tenant will cause difficulties on being evicted the police are often notified. We advise instructing a locksmith to attend so that you can secure the premises.
In the rare occurrence that the bailiff is unable to obtain possession, the matter is brought back to court.
Unless the tenancy provides for costs or the matter is dealt with at trial, the landlord will only be entitled to fixed costs on obtaining possession. Fixed costs means the fees paid to the court and bailiff and £79.50 for an accelerated procedure claim or £126.75 for a standard possession claim.
Arrears of Rent / Other Action
Where the deposit is insufficient to cover any losses and provided the claim is not being brought on the accelerated procedure, a claim for rent or other breach of the tenancy (such as for damage to the property) can be combined with the claim for possession.
You will need to weigh up with our advice the cost of including such matters against the likely of recovery from your tenant.
Claiming and disputing Service Charges
Service charges and their recovery are a common reason for disputes. This leaflet is a brief overview of the landlord and leaseholder’s rights and obligations.
Most long leases of flats provide that the landlord, or a management company, will maintain the structure of the building and common areas subject to the contribution by the leaseholders of the shared expenses by way of service charge.
As set out below, there are a number of restrictions on what can be recovered as service charge and the process for collection.
Leaseholder, Flat owner, Lessee, Tenant interchangeably used to describe the person who owns the long interest in the flat.
Freeholder, Landlord, Lessor interchangeably used to describe the person or company who owns the freehold land.
The starting point for determining whether service charges are payable is the Lease. This is the contract between Landlord and Leaseholder and should set out:
- What the Landlord and Lessee covenant (promise) to do
- What sums the Landlord may recover
- The process for levying the service charge
- Provision for sinking funds and payments on account
Whenever a new lessee buys his flat (or new Landlord buys the freehold), they are bound by the covenants within the lease.
If the lease does not contain a provision for the Landlord to charge for a specific item, he is precluded from doing so. For example many leases only permit the cost of repairing, rather than improving the building.
Service Charge is only payable if the Landlord sends a written demand accompanied by a prescribed notice entitled “Service Charges – Summary of Tenant’s Rights and Obligations”. The demand must contain the landlord’s name and address for service.
A similar notice is required if the demand contains any administration charges (such as charges for late payment or grant of an approval).
If no demand and accompanying notice has been sent, the Tenant has no obligation to pay the service charge.
Service charge is only payable in so far as it has been reasonably incurred by the Landlord and if the services or works are of reasonable standard. This means that if any element of service charge is not reasonable the Landlord cannot recover it. The court / tribunal will look at a range of factors in determining what is reasonable.
Consultation on Major Works
The Landlord must serve a series of notices (‘section 20 notices’) consulting with the lessees in relation to:
- Works costing more than £250 per flat
- Service agreements for a period of more than 12 months and costing more than £100 per flat
Should these provisions not be followed, the Landlord may only be able to recover £250 for major works or £100 for long term contracts in respect of each flat.
The Landlord must demand the service charge within 18 months of incurring the cost. If this is not done he cannot recover this sum.
Insurance Where the Landlord has an obligation to insure the building, the lessee can demand a written summary of the insurance policy or an opportunity to inspect and take copies of the policy.
Notice of Ground Rent Ground rent demands must amongst other requirements detail the sum payable, include the Landlord’s name and address for service and give the tenant a date to pay between 30 to 60 days of the date of the notice.
Summary and Inspection The Lessee can demand the Landlord provides a summary of the service charge for the last 12 months or accounting period and then inspect the accounts, receipts and other documents relating to this. Failure to comply is a criminal offence.
Due to the complexity of Landlord and Tenant law, service charge disputes can be long winded and expensive affairs if not dealt with carefully. Most disputes can be resolved by correspondence and negotiation.
Application to the Tribunal
Either the Landlord or Leaseholder may make an application to a Tribunal (the First Tier Tribunal Property Chamber, formerly known as the Leasehold Valuation Tribunal) to determine whether service charge is reasonable.
The Tribunal is more informal than the court. Hearings can be dealt with on the papers alone and the costs are usually lower.
Service charge and ground rent is often paid quarterly in advance on the historic quarter days:
25 March Lady Day
24 June Midsummer Day
29 September Michaelmas
25 December Christmas
The Landlord may sue the Leaseholder in the County Court for unpaid service charge.
Where questions of reasonableness are raised in defence the matter may be transferred to the Tribunal.
Forfeiture of the Lease
Most leases include a clause permitting the Landlord to forfeit the lease – that is re-enter the property and bring the lease to an end. This historic right has been greatly limited in recent years:
- A landlord cannot commence forfeiture proceedings or serve a forfeiture notice (‘a section 146 notice’) unless the lessee has admitted the breach or this has been determined by the Court, an arbitrator or the Leasehold Valuation Tribunal.
- The Landlord cannot forfeit a lease for non payment of rent, service or administration charges unless the sum exceeds £500 or has been outstanding for more than 3 years
- The Landlord is not allowed to physically re-enter residential property unless he has first obtained a court order.
The Landlord can waive his right to forfeit by treating the lease as continuing, for example by acceptance of further service charge or ground rent.
Many leaseholders will have bought their flat with the benefit of a mortgage. It is a standard term in mortgage agreements that the leaseholder must abide by the terms of the lease.
If a leaseholders fails to pay their service charge, the Landlord may ask their mortgage lender to pay this and add it to the mortgage.
- If the matter never proceeds to court or tribunal, the lessee rarely recovers his legal costs.
- At the Tribunal both sides usually bear their own costs save where a party has acted unreasonably.
- At Court hearings where the service charge is less than £10,000 both sides must usually bear their own costs - apart from fixed fees ordered by the court. If the claim is for a larger sum and the matter proceeds to trial, the winning party will usually recover a proportion of their costs from the losing party.
- The lease may provide that the Landlord recovers his costs from the defaulting leaseholder or through the service charge. The court or tribunal can order that the Landlord bears these himself and will often do so where the Landlord loses their case.
Where leaseholders are unhappy with the way the Landlord or management company are running the block there are other options which we can advise you about.
Right to Manage
The lessees collectively have the right to set up a Right to Manage company which can take over the Landlord’s management functions at the flats.
There are a number of restrictions on the Right to Manage and 50% of the lessees must participate, but the lessees need not prove mismanagement or obtain the Landlord’s consent.
Enfranchisement - Buying the Freehold
The lessees may also collectively have the right to force the Landlord to sell them the freehold of the property. The price, if not agreed, will be determined by the Tribunal.
With the exception of remortgages where a simplified procedure applies, there are three stages of the conveyancing work involved in the sale or purchase of a property. These are:
- From commencement until exchange of contracts
- From exchange of contracts until completion, when ownership is transferred
- The post-completion formalities
A. Commencement to exchange of contracts
- The Estate Agents handling the sale send out a memorandum of sale to both parties and their solicitors.
- The Seller’s Solicitor obtains the title deeds from the client or, if the property is mortgaged, from the Bank or Building Society by whom they are held.
- The Seller will be asked to fill in a questionnaire about the property and a fixtures and fittings form.
- The Seller’s Solicitor, having received the title deeds, prepares a draft Contract which is then sent to the Buyer’s Solicitor together with the forms completed by the Seller as in Para 2 and other relevant information relating to the property.
- The Buyer’s Solicitor, having received the bundle of information sent to him by the Seller’s Solicitor, checks it through and despatches a Local Search to the relevant District Council for any Local Land Charges registered in respect of the property. (Please note this only provides limited information and in particular does not automatically give details about potential development in the vicinity. If the Buyer is concerned about this, he or she should visit the Planning Office for the Local Authority and ask the Planning Officer about any planning applications pending in the area).
- The Buyer’s Solicitor will consider the documentation received and, at this stage, makes such further enquiries as may be necessary with regard to matters such as the title and the boundaries. Please note that boundaries are often very indistinctly drawn on legal documents and if there is any uncertainty on the ground, this should be reported to the Buyer’s Solicitor so that proper enquiry can be made.
- We strongly advise that all Buyers have a survey carried out of the property they are buying. This should preferably be a full structural survey (especially where the property is elderly or there are possible defects) or at the very least, a Homebuyers Valuation and Report which should highlight any defects that exist. An electrical check, timber infestation survey or structural engineer’s report may be advisable in certain instances.
- If the Buyer is to obtain a mortgage in connection with the purchase, it is essential that a satisfactory offer is received before contracts are exchanged and regard made to any special conditions. (Please note it may be possible to save a double fee by using the mortgagee’s surveyor to carry out the survey referred to in Para 7, but it is insufficient to rely on the mortgagee’s own valuation survey).
- The Buyer will be required to pay his Solicitor a deposit in good time for exchange. That is normally 10% of the purchase price, although in certain circumstances this can be negotiated downwards to 5% for example where the Buyer is obtaining a higher mortgage or there is a chain of transactions. However, it is essential that you let us know if you are unable to provide a 10% deposit, so that we can make appropriate arrangements as soon as possible. Mortgage monies cannot be used for the purpose of a deposit.
- Once the Buyer’s Solicitor is satisfied with the enquiries he has made, the Buyer is satisfied with his or her survey report and (if appropriate) a satisfactory mortgage offer received, the Seller and Buyer each sign a copy of the Contract and these are then exchanged (which is effected normally by telephone) and the contract then becomes legally binding. The deposit is paid to the Seller’s Solicitor. It is at this stage that the completion date is fixed. It is usually about 2-3 weeks later and can only take place on a working day (ie not Saturdays, Sundays or Bank Holidays). The Seller must vacate the property on or before the completion date.
B. Exchange of Contracts to Completion
- As soon as Contracts have been exchanged, you should confirm your removal arrangements (it is advisable to arrange them provisionally beforehand).
- Please note that it is the Buyers responsibility to insure the property he is buying with effect from the exchange of Contracts.
- The Buyer’s Solicitor reports to the lender, if applicable, the date of completion and requests the mortgage advance. A completion statement is sent to the Buyer, setting out the monies required on completion, which must be received at least three working days beforehand.
- The Buyer’s Solicitor also prepares the Transfer deed and any Mortgage deed and these will be executed. The final searches are carried out.
- If a property is being purchased in joint names a decision will need to be made at this stage as to the form of joint ownership, ie whether the property will be owned as joint tenants or as tenants in common and if as tenants in common, in what shares.
- The Seller’s Solicitor will obtain details of any monies due to existing mortgages in respect of the property which have to be redeemed on the day of completion.
- On the day of completion itself, the balance of the purchase money is telegraphically transferred to the Seller’s Solicitor. The keys will not be released until that money is received.
C. After Completion
- The Seller’s Solicitor will repay any mortgage in respect of the property and generally pay the estate agent’s account out of the proceeds of sale and send the title deeds to the Buyer’s Solicitor. The Buyer is required by the Inland Revenue to submit a Land Transaction Return Form to the Inland Revenue, together with payment of the appropriate Stamp Duty within 30 days. The Buyer’s Solicitor will register the Buyer as the person entitled to the benefit of any guarantees relating to the property (if applicable) and then register the Buyer as the new owner of the property at HM Land Registry and at the same time, register details of any mortgage on the property.
- Once these matters have been completed, the title deeds will then either be sent to the lender where there is a mortgage (in which case copies of the Register Entries will be given to the Buyer). If there is no mortgage the deeds can be passed to the Buyer, or retained by the Buyer’s Solicitors or Bank for safekeeping (a Bank will usually make a charge for this service). It is not advisable to keep the original deeds within your own property.
- A copy of the land transaction return form will be sent to the Buyer and should be retained for a period of 21 years as the Revenue reserve the right to raise requisitions on it for that length of time.
- Occupying for business purposes
- Not excluded
Most business tenant’s leases are protected by the Landlord and Tenant Act 1954. The main exclusion is the tenant contracting out of the Act by signing a declaration prior to the lease being granted. This will be referred to in the lease.
What does it mean?
At the end of the fixed term, the lease will continue at the same term and rent until the tenant gives 3 months’ notice to quit or the procedure below is commenced.
Either Landlord or Tenant may apply to the Court to set an interim rent pending the lease renewal / termination.
Right to a New Lease
Subject to Landlord’s rights of opposition, the Tenant has the right to a new lease.
The process is commenced by either landlord or tenant serving notice.
The Landlord or Tenant can start the process of lease renewal / termination by serving a notice. The notice must specify a nominal termination date for the existing lease after the contractual term in 6 to 12 months’ time. It is vital the correct notice is used and time limits adhered to.
Opposing New Lease
Landlord’s Notice s25
Landlord sets out ground(s) for not granting a new lease.
- Failure to Repair
- Persistent Delay in Paying Rent
- Substantial Breach of Other Obligation
- Alternative Accommodation
- Subletting of Part
- Demolition / Reconstruction. Landlord has firm intention to de-molish / reconstruct / carry out substantial works to the premises.
- Landlord to occupy for Business Purposes. Landlord must have owned property for 5 years.
Not Opposing New Lease
Landlord’s Notice s25
Landlord provides proposals for new rent, length, other items. Negotiations commence between the parties’ surveyors as to the terms of renewal.
There is no requirement for the tenant to serve a counter notice.
Seeking New Lease
Tenant’s Notice s26
Tenant provides proposals for new rent, length, other items.
Landlord’s Counter Notice
If opposed to a new lease, the Landlord can within 2 months serve notice opposing a new lease and setting out grounds(s) for termination (as per ‘Opposing New Lease’ to the left).
If there is no opposition to a new lease, the landlord need not serve counter notice and may proceed to negotiate the terms.
Negotiations and Next Steps
Initial negotiations are usually conducted by the parties’ surveyors with the renewal rent typically the principal area for disagreement. By the Termination Date in the notice one of the following steps must be taken or the Tenant will lose their right to a new lease:
Extension to Negotiations
The parties can agree to extend the period for negotiations provided this is in writing prior to the termination date.
It is not unusual for the parties to leave negotiations to the last minute or for there to be multiple extensions agreed.
Apply to Court
Most parties sensibly seek to avoid taking the matter to court, but if the terms of the new lease cannot be agreed or the tenant seeks to challenge the landlord’s ground for terminating the lease, an application must be made to the court prior to the termination date (or any agreed extension).
The court will set a timetable for exchange of evidence clarifying what remains in dispute supported by reports from the parties’ surveyors. Our leaflet on Court Claims provides more detail.
Court proceedings can substantially delay the grant of a new lease and it is common for an application for an interim rent to be made at the same time. Costs remain at the court’s discretion and are usually awarded to the winning party.
Renewal Lease or Termination
No Renewal Lease
If the tenant does not challenge an opposed renewal or the landlord is successful at court in establishing a ground of opposition, no renewal lease will be granted and the tenant must vacate.
Compensation for Tenant
If the landlord successfully obtains possession on grounds e, f and g, the tenant will be entitled to compensation from the landlord equal to the rateable value of the property.
Where the tenant has been in occupation for 14 years this increases to double the rateable value.
Any agreement to exclude compensation, often included in the lease itself, will be ineffective where the tenant has been in occupation for 5 years.
New Lease Granted
Most lease renewals are dealt with by agreement without the involvement of the court. The terms of the renewal lease are nonetheless guided by the order a court would likely make.
If agreement is not reached, the new lease will commence 3 months after the conclusion of court proceedings.
Rent set at an open market rent
Property included the landlord has the choice to re-let the premises as per the existing lease or offer those parts the tenant occupies for business purposes. The tenant will likely lose renewal rights in respect of sublet property.
Duration whatever is reasonable, up to 15 years, taking into account amongst other things the length of existing lease and any continuation tenancy, the landlord’s plans for the property and past relationship between parties.
Other Terms as per the existing lease, subject to the parties agreeing new terms or reasonable inclusion of new terms.
Our specialist property solicitors provide advice on a variety of service charge & lease issues such as:
- service charges and arrears recovery
- Section 20 notices
- First Tier Tribunal (Property Chamber)
- Breach of Covenant and lease interpretation