Information for Tenants

There are a number of things that a tenant should consider before entering into a tenancy agreement. A tenant should know whether by entering into the Assured Shorthold Tenancy Agreement the landlord is in breach of the mortgage agreement for the property. This is important as if the landlord fails to pay their mortgage the lender can initiate proceedings to regain the possession of the property.

Since many landlords tend to avoid informing the lender about their AST, as they fear to lose prospective owner/ occupier mortgage rates which are generally more promising compared to the one gained under buy-to-let mortgage this can be a common problem.

Once the lender proposes to the court for order of the property repossession, anyone who occupies the property but the borrower is considered as “illegal occupant”. Then, immediately the tenant will get is the N54 “notice of eviction” form from the lender 14 days in advance of the hearing notifying that there are possession proceedings against the landlord going on. But, practically the tenant is too weak to stop the order.

The reasons why the problem is hard to cope with are:

Borrower/ landlord will not get the loan if lenders find that there are ASTs occupying the property which can impede lenders to gain their security if the borrower defaults.

Lenders find it difficult to insist the landlord on providing its tenant with the details of its mortgage agreement, particularly regarding the AST.

There should be an additional clause to the AST agreement to require the landlord not to violate its mortgage agreement, even though in reality it is hard to enact and investigate.

A tenant still can do the last effort for the matter that is by initiating civil proceedings for deteriorations against the landlord though it may be costly, time consuming and a far cry from success.

It does not affect the tenants’ position even though the landlords who are not in breach of their mortgage agreement with an AST failed to settle the mortgage payment, unless;

The tenant has already occupied the property when the mortgage was granted

The lender has no objection to recognize the tenancy in some way.

In case this occurs, the tenant may refuse the order for possession and ignore to leave the property. However, the tenant will get little from doing so if it cannot ensure that there is binding protection included in the tenancy once the lender becomes the new landlord. So, the lender who becomes new landlord can evict the tenant anytime using the section 21 accelerated possession procedure (see note, on ending a tenancy agreement).

What are the rights that a tenant enjoys in an assured short hold tenancy?

A tenancy that gives a tenant the legal right to live in a property for a fixed period of time may be defined as an assured short hold tenancy. It might be set for a period of say, six months, as in the case with a fixed term tenancy, or it might even roll on a weekly on monthly basis, as is the case with a periodic tenancy.

Now, there are certain rights that a tenant has in an assured short hold tenancy. They are as follows:

The right to live in the accommodation undisturbed.
This law guarantees the tenant the exclusive right to reside in the landlord’s let out property without being disturbed. The tenant has the right to enjoy control over his rented property, which ensures that the landlord and other people cannot enter their home at their own will. If a landlord interferes with the tenant’s right to accommodation, then he could be found guilty of harassment.

The right to live in a property in good repair
This law ensures that the landlord is bound to keep the structure and exterior of the property let out in good condition. Here it must be mentioned that the structure includes the following: the roof, the guttering, walls, windows and doors. Provision for gas supply, electricity, heating, sanitation and water are to be provided herewith. He is, however, not liable to provide internal decoration to his tenant. The tenant too has to be responsible enough for the upkeep of the property, like unblocking the sink or changing a fuse whenever necessary.

Right to information
A tenant enjoys the right to demand a statement of the terms of their tenancy, in case it was started after March 1997. The statement must include the following points:
• The date on which the tenancy began
• The amount of the rent and the date by which it must be paid
• How and under what circumstances the rent may be changed
• The length of the tenancy
• Provision of a rent book in case weekly rent payment
It is noteworthy that all information is to be provided within 28 days of a request made in writing by the tenant.

Protection from eviction
Tenants in a fixed term tenancy

The landlord must have a reason to evict the tenant in case of a fixed term tenancy. It could be any one of the following:

• There has been rent arrears on the part of the tenant
• Regular delay in rent payment by the tenant
• The tenants has broken the terms and conditions of the tenancy
• The tenant has allowed deterioration of the property
• Repossession of the rented property
• Nuisance caused by the tenant

If a landlord wishes to evict his tenant before the fixed term ends, he will first have to apply to the court for a possession order. However, it is mandatory to first serve the tenant a Section 8 notice specifying the grounds for early repossession.

It is also noteworthy that the court will examine whether the ground that the landlord has provided with is valid or not. The court further considers if the tenant should be evicted at all.

Another instance is that the landlord can give two months’ period to the tenant without having any reason at all. However, it is to be remembered that the notice cannot run the before the fixed term ends.

[For more information on notice, refer to Section 21 Notice to Quit]

Periodic tenants
If a periodic tenancy or fixed term agreement has come to an end, and no new agreement has been made, then it becomes fairly easy to evict a tenant. Such a situation does not require the landlord to provide grounds for eviction to the court. He should, however, be able to prove that the tenancy is an assured short hold one and that the Section 21 notice to quit has been served.

In this case, the notice must be either two months calendar time or the same period for which the rent is paid, whichever is longer. It has to be seen that the notice ends on the last day of the term of the rental period. The landlord can apply for a court order in case the tenant refuses to leave by the end of the notice period.

At prima facie, eviction seems to be a fairly easy process in a periodic tenancy. However, the tenant does enjoy certain rights in such a situation as well.

The first point is that a tenant cannot be evicted unless the landlord has obtained a possession order from the court. To put it otherwise, the court must agree that landlord should regain possession of his property. Generally, a possession order can be obtained of the correct order is followed. In such cases, tenants can at the most delay the processes of the court by six weeks if they can successfully show the exceptional hardship that is to be faced by them on being evicted. However, if a tenant refuses to leave even after a court order has taken effect, the landlord can ask bailiffs to apply physical strength to remove the tenant.

The tenant may be evicted by proceedings initiated by the lender in case the landlord grants an AST in breach of its mortgage agreement and then defaults on its payments.
The deliberate choice made by the landlords of withholding information from the lender that they have set up an AST leads to this problem being very common. The landlords choose not to inform the lender as they risk losing favourable owner/occupier mortgage rates, which are better than those obtained under a buy-to-let mortgage.

A case of “unlawful occupant” arises, if anyone other than the borrower is living in the property, once the lender seeks a court order for repossession of property. The N54 “notice of eviction” form sent by the lender 14 days before the scheduled hearing, is the first notification a tenant is likely to get, informing him that proceedings regarding possession have been initiated against the landlord. There is almost nothing that can be done on the part of the tenant to stop the order from being granted.
However there are a number of obstacles faced making the solution to this problem not so simple:

If there are assured short hold tenants occupying the property, then the lenders would not lend their money because they would not be able to realise their security. In case of an AST, it would be extremely burdensome for a landlord to provide the tenant with the details of the mortgage. Although difficult to enforce and investigate, adding a clause to the AST to make sure that the landlord will not breach the mortgage agreement could be another solution. This would leave the tenant only with the option of opting for civil proceedings for damages against the landlord, but without any guarantee of success, cost or time.

Landlords, who default on the mortgage payments and are not in breach of their mortgage agreement by granting an AST, leave their tenants in no better position unless:
At the time of mortgage, the tenant was already living in the property. The tenancy has been specifically agreed to or been recognized by the lender in some way. This gives the tenant the right to remain in the property and resist the order for possession. But the tenant gains little by resisting the court order if the tenancy offers binding protection after lender becomes the tenant’s landlord. The tenant can be evicted without notice using section 21 accelerated possession procedure if lender becomes the landlord ( see note, On expiry of the fixed term of the tenancy).