Contractual Periodic Tenancy or Statutory Periodic Tenancy?

SanMiguel80

Hi, I will be grateful if anyone with some good knowledge could confirm if the below clause in an Assured Tenancy Agreement (AST) determines if the AST is a Contractual Periodic Tenancy or a Statutory Periodic Tenancy?

The AST included a rent review clause and the landlord issued and implemented a Section 13 rent increase. It is my understanding that you cannot issue a Section 13 rent increase notice if it is a Contractual Period Tenancy agreement with a rent review clause and by issuing a Section 13 rent increase therefore the LL invalidated the existing AST.

I have included some wording below and a link (which I am hoping it allows me to post) which gives the definition of the differences and I have read it many times and to me it appears it is a Contractual Periodic Tenancy. Unfortunately the LL solicitor is saying it is a Statutory Periodic Tenancy!

Rent Due Date: 28th day of each month

Term: 6 months

Commencement Date: 28th day of September 20xx

Expiry Date: 27th day of March 20xx and thereafter from month to month

Guide to Contractual and Statutory Periodic Tenancies | NRLA

What is a contractual periodic tenancy?

At its simplest, a contractual periodic tenancy means that the tenancy runs from month to month, week to week, etc, agreed as part of the tenancy agreement. This will mean that a clause will be present in the tenancy agreement saying that periodic tenancy will follow on from the fixed term. 

Typically, these tenancies are written as continuations of the fixed term. They will use phrases like 'continue on as a periodic tenancy' or 'carry on from month to month after the end of the fixed term'. In these cases, the fixed term and the periodic portion are all part of the same tenancy, which is very important for council tax purposes. Reference to contractual periodic tenancies in this guide are to this type of periodic tenancy clause.

What is a statutory periodic tenancy?

Many tenancy agreements do not contain any clause specifying how the tenancy will continue after the end of the fixed term at all.

For these type of tenancies, Section 5 of the Housing Act 1988 steps in to create a brand new tenancy agreement known as a statutory periodic tenancy.

This tenancy will run from month to month, week to week, etc based on the last rent paid. For example, if the tenant pays monthly in the fixed term, then the periodic tenancy will run from month to month. Or if your tenant pays 5 months up front and then makes one monthly payment in the fixed term, then it will run from month to month.

The key point to understand about a statutory periodic tenancy is that it is a brand new tenancy that is separate from the original fixed term. This is very important for council tax, deposits and the service of documents.

anselld

The incorrect use of section 13 notice would not “invalidate the AST”.  If the new rent has already been accepted by being paid it would not even invalidate the rent increase as it has been accepted already through action of the Tenant.
I don’t think the status of Contractual vs Statutory has any relevance but it can only be determined by reading the AST.  If there are clauses describing the continuation of the contract after fixed term then it is Contractual.  If it is silent on continuation then it becomes Statutory.

SanMiguel80

anselld said:

The incorrect use of section 13 notice would not “invalidate the AST”.  If the new rent has already been accepted by being paid it would not even invalidate the rent increase as it has been accepted already through action of the Tenant.
I don’t think the status of Contractual vs Statutory has any relevance but it can only be determined by reading the AST.  If there are clauses describing the continuation of the contract after fixed term then it is Contractual.  If it is silent on continuation then it becomes Statutory.

Many thanks for your reply. The new rent was not accepted by the tenant and he refused to pay it which led to his eventual eviction leaving rent arrears. The AST contained a rent review clause for the rent to raise in line with RPI annually, the LL chose to ignore this and instead implemented a 25%+ rent increase by serving a Section 13 rent increase notice on the tenant. I understand that there is nothing to prevent a LL issuing a Section 13 notice, therefore my question would be, has the LL broken and effectively ripped up the AST agreement in force at the time by not adhering to the rent review clause within the AST?

My involvement in this is that I was the guarantor for the tenant which had a Deed of Guarantee and an AST, the LL solicitors are now trying to claim from me not only the arrears for the rent level I initially agreed to in the AST but also the increased 25%+ rent which I didn't consent to either. I am looking at this situation from my position and not the former tenants. 

During a previous consultation I had with a solicitor, he stated that the Deed of Guarantee and the AST are part of the same agreement and any changes made to the AST without my consent (the rent increase would be one of them) would end any further obligations I had under this agreement, which would include the Deed of Guarantee.

Unfortunately the LL solicitors don't seem to be accepting any of this and have bounced from pointing out my obligations within the AST to then my obligations under the Deed of Guarantee.

Could the line in the AST after the dates of the fixed term "thereafter from month to month" be considered as a clause describing a continuation?

By considering this AST as a "Contractual Periodic Tenancy Agrement" (if correct), and the LL issuing a Sec. 13 notice on an AST with a rent review clause, I am hoping this would be another example of where the LL has broken the agreement.

silvercar

My involvement in this is that I was the guarantor for the tenant which had a Deed of Guarantee and an AST, the LL solicitors are now trying to claim from me not only the arrears for the rent level I initially agreed to in the AST but also the increased 25%+ rent which I didn't consent to either. I am looking at this situation from my position and not the former tenants. 

Why are there rent arrears at the original rent?

SanMiguel80

silvercar said:

My involvement in this is that I was the guarantor for the tenant which had a Deed of Guarantee and an AST, the LL solicitors are now trying to claim from me not only the arrears for the rent level I initially agreed to in the AST but also the increased 25%+ rent which I didn't consent to either. I am looking at this situation from my position and not the former tenants. 

Why are there rent arrears at the original rent?

Sorry I should have made this a bit clearer. The LL is claiming for arrears from me at the new higher rate they implemented (without my consent and the tenant refused to agree to) and not at the original lower rate I originally agreed to and as stated in the AST. There were no arrears by the tenant prior to this 25%+ rent increase.

Voyager2002

I think this is a question for Shelter... start using their live chat service early in the morning and just accept that you have to wait in the queue to get their advice.

To get something better than a Shelter advisor you would need to speak with a solicitor who is a specialist in this area of law. Although I suspect that there is no straightforward answer: if the issue came to court then the judge would probably want an extended hearing to consider all aspects of the case and make a considered decision.

Do you have any kind of insurance that would pay your legal costs?

As I said on your previous thread, this kind of legal argument can become extremely expensive so taking something like this to court is extremely risky. The landlord obviously has access to legal advise: I think the best way forward for you is a game of "chicken". Make it clear to the landlord (via his solicitors) that you have legal advice and that you know that there are complicated issues and so would defend the matter. His solicitors would then advise him that taking it to court would be too risky, that you are not going to 'roll over' and pay up.

Personally I think it would be worthwhile paying your solicitor to send a letter setting out some of these legal issues and stating that you would defend any court action. The landlord might conclude from this that you have insurance paying your legal costs, meaning that it would be very stupid for him to take action. Like all bullies, he is likely to go and look for a different target once you make it clear that you are able to stand up to him.

theartfullodger

The only way to find out definitely would be by a judge in court.  All other views are a guess, even from a KC...

saajan_12

SanMiguel80 said:

Could the line in the AST after the dates of the fixed term "thereafter from month to month" be considered as a clause describing a continuation?

No - It does not outline any terms, which you would need for a CPT. So where do you get the notice period etc from - the statutory terms, hence SPT. However regardless:

SanMiguel80 said:

By considering this AST as a "Contractual Periodic Tenancy Agrement" (if correct), and the LL issuing a Sec. 13 notice on an AST with a rent review clause, I am hoping this would be another example of where the LL has broken the agreement.

Even if it was a CPT (it wasn't) then issuing a S13 isn't a breach.
Even if it was a breach of one term (it wasn't) then it doesn't invalidate the rest of the agreement, which would continue as normal (imagine if a tenant paid 1 day late, that doesn't mean they no longer have a tenancy). 

Overall this is a entirely unhelpful argument for your case. 

SanMiguel80 said:

anselld said:

The incorrect use of section 13 notice would not “invalidate the AST”.  If the new rent has already been accepted by being paid it would not even invalidate the rent increase as it has been accepted already through action of the Tenant.
I don’t think the status of Contractual vs Statutory has any relevance but it can only be determined by reading the AST.  If there are clauses describing the continuation of the contract after fixed term then it is Contractual.  If it is silent on continuation then it becomes Statutory.

The AST contained a rent review clause for the rent to raise in line with RPI annually, the LL chose to ignore this and instead implemented a 25%+ rent increase by serving a Section 13 rent increase notice on the tenant. I understand that there is nothing to prevent a LL issuing a Section 13 notice, therefore my question would be, has the LL broken and effectively ripped up the AST agreement in force at the time by not adhering to the rent review clause within the AST?

Possibly the better argument is the rent review clause taking precedence - please quote the rent review clause in full. If its specific enough then arguably the new rent post RPI increase would apply instead of the S13. That's still within the bounds of the tenancy you guaranteed, so you'd still be liable for the RPI based arrears. 

The other thing I'd look at is whether the guarantee was valid in the first place - executed as a deed and witnessed? 

Bookworm105

as above, the issue is not has the AST been invalidated (it hasn't) but rather was the S13 rendered void by the existence of a pre-existing contractual rent increase clause.

SanMiguel80

saajan_12 said:

Possibly the better argument is the rent review clause taking precedence - please quote the rent review clause in full. If its specific enough then arguably the new rent post RPI increase would apply instead of the S13. That's still within the bounds of the tenancy you guaranteed, so you'd still be liable for the RPI based arrears. 

The other thing I'd look at is whether the guarantee was valid in the first place - executed as a deed and witnessed? 

Many thanks for your replies. The below is copy and paste from the AST.

"Rent review.  It is agreed that the rent as defined in this Agreement will be reviewed on the anniversary of this Tenancy and upon each subsequent anniversary in line with the change in the Retail Prices Index (RPI) for the previous 12 months and the rent varied accordingly either by way of an upward or downward adjustment."

The guarantee was executed as a deed and it was witnessed. Although it was presented to me with the witnesses signature already in place before I had signed, and we never actually met at the time. But I signed it and submitted it to the LA so I doubt I have much of an argument with this.

Bookworm105

SanMiguel80 said:

saajan_12 said:

Possibly the better argument is the rent review clause taking precedence - please quote the rent review clause in full. If its specific enough then arguably the new rent post RPI increase would apply instead of the S13. That's still within the bounds of the tenancy you guaranteed, so you'd still be liable for the RPI based arrears. 

The other thing I'd look at is whether the guarantee was valid in the first place - executed as a deed and witnessed? 

Many thanks for your replies. The below is copy and paste from the AST.

"Rent review.  It is agreed that the rent as defined in this Agreement will be reviewed on the anniversary of this Tenancy and upon each subsequent anniversary in line with the change in the Retail Prices Index (RPI) for the previous 12 months and the rent varied accordingly either by way of an upward or downward adjustment."

The guarantee was executed as a deed and it was witnessed. Although it was presented to me with the witnesses signature already in place before I had signed, and we never actually met at the time. But I signed it and submitted it to the LA so I doubt I have much of an argument with this.

the contract says your rent goes up or down every anniversary (and pedantically there is no option to agree on no change either).
An S13 notice cannot suggest a different amount to that per the contract calculation as the contract remains valid and the tenancy ongoing under it.

the witness is of your signature, not theirs, so given what you say the deed is invalid as your signature was not witnessed.