Court of Appeal Clarifies the Definition of ‘Landlord’5 Nov 2018 | William Ford
It is now not uncommon for home owners to enter into company let agreements with property companies who are authorised under the company let agreement to let to sub-tenants under assured shorthold tenancies. These agreements guarantee the owner a fixed rent each month and avoid many of the responsibilities of being a landlord. Such agreements also provide an opportunity for the company to make a profit by letting out the property to assured shorthold tenants at a higher rent than they are paying to the owner. This factual scenario means that the tenants have no contractual relationship with the owner of the property in which they live, and often will have never met the owner.
This was the factual scenario that arose in the case of Barrow and Amey v Kazim and others (2018) EWCA Civ 2414 where Mr Barrow and Ms Amey (“the Appellants”) were represented by Osbornes’ housing team. The Claimants (“the Kazims”) were the owners of a property that had been let to a company, Anthea Investment Ltd (“Anthea”). Anthea had then granted assured shorthold tenancies to various tenants including the Appellants. The Kazims decided not to renew the company let agreement with Anthea and served a notice to quit on Anthea on 12 January 2016 expiring on 19 March 2016 (thus providing just over 2 months’ notice). At the same time Anthea served the same notice to quit on all occupants of the building.
The Kazims then issued a possession claim against Anthea and the occupiers of the building. Anthea quickly agreed by consent to a possession order. The Kazims then tried to enforce that order against the occupiers, even though the possession order did not refer to the occupants. An eviction warrant was obtained and one of the occupiers applied to stay the warrant. The Kazims argued that the definition of the word “landlord” under s45 of the Housing Act 1988 was wide enough to include them at the date that the notice was served on 12 January 2016. Pursuant to s45 of the Housing Act 1988 the definition of the word “landlord”:
“includes any person from time to time deriving title under the original landlord and also includes, in relation to a dwelling-house, any person other than a tenant who is, or but for the existence of an assured tenancy would be, entitled to possession of the dwelling-house”.
At the first hearing the District Judge found that the definition of “landlord” under s45 of the Housing Act 1988 was wide enough to mean that “if you are the landlord of the superior tenant, you must be entitled to serve a notice to quit on the inferior tenant at the same time”. Possession orders were made against the Appellants. This decision was appealed to a Circuit Judge, but the original decision was upheld on appeal. On the first appeal the Circuit Judge found that the wording of the Housing Act 1988 did not require the landlord serving a s21 notice to be the landlord at the date of the issue of the notice. The Judge held that it was sufficient that the person serving the landlord would become the landlord on the coming to an end of the assured shorthold tenancy. The Judge found that on 19 March 2016 (the date of expiry of the notice) the superior landlord was entitled to possession “because the mesne tenancy had expired”.
There are a number of problems with this analysis. Firstly, pursuant to s5 of the Housing Act 1988 a tenancy does not come to an end upon the expiry of a s21 notice. It only comes to an end upon enforcement of a possession order. The Appellants argued that the identity of the landlord for the purposes of serving a s21 notice must be determined at the date of giving the notice. The Kazims argument would have meant that they were the landlords for the purposes of serving s21 notices on 12 January 2016 (the date of the notice) but Anthea would remain the landlord for all other purposes (for example, the duty of “the landlord” to provide information under section 20A of the 1988 Act) until 19 March 2016 (at which point the mesne tenancy was determined and under s18 of the Housing Act 1988 the Kazims became the Appellants’ landlord). In effect the Appellants would have had two landlords between 12 January and 19 March 2016. It would also have meant that superior landlords could serve s21 notices upon tenants with whom they had no contractual relationship, and with whom they have potentially had no contact at all before serving the s21 notice.
Osbornes assisted the Appellants in appealing to the Court of Appeal. There had not been any previous case law on this particular issue in the context of the scope of the definition of the word “landlord” under s45 of the Housing Act 1988. There had however been previous authorities analysing similar wording in the Rent Act 1977 and section 12 of the Increase of Rent and Mortgage Interest (Restrictions) Act 1920. The Court considered these authorities.
In upholding the appeal the Court of Appeal found that the Kazims were not landlords for the purposes of section 21 or any other purposes at the date that the s21 notice was served. The definition of the word landlord under s45 of the Housing Act 1988 could be understood by referring to what the position would be if at the particular time the assured shorthold tenancy did not exist. If it did not exist then the person entitled to possession would have ben Anthea. The wording of the statute did not require the Court to look to the future and who might become the landlord. The Court held the following:
- To be effective, a notice under section 21 of the 1988 Act must come from the “landlord” at the date that the notice is given;
- Where a mesne tenancy exists, the fact that it is to come to an end by the date specified in a section 21 notice will not render the head landlord a “landlord” at the date of the notice
- In this case the only “landlord” when the Kazims gave notice to the appellants was the Agency
- The notice served by the Kazims did not satisfy the requirements of section 21(1)(b) of the Housing Act 1988.
William Ford, Partner at Osbornes and expert housing lawyer dealing with this case comments:
“This case represents welcome clarification from the Court of Appeal on the meaning of the word “landlord” under s45 of the Housing Act 1988. It has become increasingly common to find property owners entering into company let agreements, whereby the company then lets out flats within the leased building to tenants under assured shorthold tenancies. This provides a fixed rental income to the owner and avoids many of the responsibilities of being a landlord. It would be fair to say that most tenants would be surprised, to say the least, if a party with whom they had no contractual relationship could end their tenancy by serving a s21 notice on them. It is therefore reassuring that the Court of Appeal gave fairly short shrift to this line of argument. I am also delighted to have been able to achieve a positive outcome for my clients in this matter after a long period of uncertainty”.