Break clauses, students and securing possession

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    Break clauses, students and securing possession

    Hi guys

    I'd like to thank the people who've contributed to the site in advance - i've found answers to so many queries here, i can't explain in words much how you've helped.

    I've recently begun some paralegal work but I've been thrown into the deep end because the past "legal work" was carried out by administrators.

    The company I work for lets to a large number of students. The student TAs are 50 weeks and they pay in 3 instalments.

    I'm worried about the number of students who don't pay for the first quarter and eventually disappear at end of the tenancy having paid nothing. I've looked at the wording of the rent schedule and I'm looking to reword it in such a way that it should be enforceable under s.8 - that is, assuming I see no payments at all, on the due date of the second quarter that a tenant is has unpaid rent (an occupation time of 6 months exactly) I can serve a s.8 notice for possession (my goal is a mandatory possession order).

    I'm also looking at introducing a break clause at month 6 to get tenants out as early as possible if they fail to honour the TA and pay rent when it is due (ie: serve before month 4 if they fail to pay the first quarter). My problem is that I don't know how s.21 and s.8 operate with regard to joint tenancies.

    My understanding of the law is that joint tenancies are not individually severable? Do I have to serve s.21 or s.8 on all the tenants and then have the good tenants sign another tenancy agreement?

    How does exclusive possession and joint tenancy work - for example, if I can get a tenant out under s.21 at month 6, can I have another tenant come in? Surely a new tenant would interfere with the existing JT and the tenants rights to exclusive occupation?

    Also, a little OT, but is it too onerous for me to add a clause to the guarantor agreement that permits a tenant to move properties within the portfolio without notification - in otherwords, if T wants to move to an adjacent property we manage, do we need a new guarantor deed, or can I simply refer to the tenancy agreement (not the property) and alter the agreement with the express permission of T and not G?

    Cheers

    Mawt

    #2
    Originally posted by mawt View Post
    I'm also looking at introducing a break clause at month 6 to get tenants out as early as possible if they fail to honour the TA and pay rent when it is due (ie: serve before month 4 if they fail to pay the first quarter). My problem is that I don't know how s.21 and s.8 operate with regard to joint tenancies.
    I can't answer the rest of your query but I will comment on that.

    If you only let to students, it is likely that a break clause will make your properties unattractive to students. It means the contract can be terminated at 6 months for any reason and I'm not sure many students would take that risk, once word got around about the implications of it.

    I speak from experience as a Student who rented a property with a 6 month break clause. I ended up having to leave at month 8 due to a rent scam made possible by a break clause.

    I'm not sure what others think of this but I'd be wary of including a break clause given your market.

    Comment


      #3
      Originally posted by mawt View Post
      The company I work for lets to a large number of students. The student TAs are 50 weeks and they pay in 3 instalments.

      I'm worried about the number of students who don't pay for the first quarter and eventually disappear at end of the tenancy having paid nothing. I've looked at the wording of the rent schedule and I'm looking to reword it in such a way that it should be enforceable under s.8 - that is, assuming I see no payments at all, on the due date of the second quarter that a tenant is has unpaid rent (an occupation time of 6 months exactly) I can serve a s.8 notice for possession (my goal is a mandatory possession order).
      I assume you've read Gr.8, Schedule 2, Housing Act 1988 - being the mandatory ground relating to overdue rent.
      Ground 8
      Both at the date of the service of the notice under section 8 of this Act relating to the proceedings for possession and at the date of the hearing—
      (a) if rent is payable weekly or fortnightly, at least eight weeks’ rent is unpaid;
      (b)if rent is payable monthly, at least two months’ rent is unpaid;
      (c) if rent is payable quarterly, at least one quarter’s rent is more than three months in arrears; and
      (d) if rent is payable yearly, at least three months’ rent is more than three months in arrears;
      and for the purpose of this ground “rent” means rent lawfully due from the tenant.
      The rent in the the students' case is payable [sort of] 'thirdly'?? and, if so, none of the options apply, therefore you couldn't use Gr. 8 unless you change the frequency of payments so that they are actually due every quarter (not just an approximation of quarterly).

      Also, you say "on the due date of the second quarter that a tenant is has unpaid rent...I can serve a s.8 notice". Wait till the day after to serve the notice. The due date doesn't end till midnight on that day.

      I have no experience of the niceties of student ASTs, but it strikes me that it is unwise to allow any tenancy to commence without taking the first rental payment and deposit in advance. Presumably, there is a good reason perhaps related to student loans as to why this may happen, but I would at least look into ways to get around it....? Also, you mention guarantors, so why can't you claim the unpaid rent from the guarantors for these students who disappear having paid nothing?

      I'm also looking at introducing a break clause at month 6 to get tenants out as early as possible if they fail to honour the TA and pay rent when it is due (ie: serve before month 4 if they fail to pay the first quarter). My problem is that I don't know how s.21 and s.8 operate with regard to joint tenancies.

      My understanding of the law is that joint tenancies are not individually severable? Do I have to serve s.21 or s.8 on all the tenants and then have the good tenants sign another tenancy agreement?
      In a joint tenancy, all the named tenants together comprise 'the Tenant' and it works exactly the same as if 'the Tenant' were a sole individual. If you serve any notice, it must be a single notice naming 'the Tenant' - in the case of a joint tenancy, that's all the JTs (and address the envelope to all JTs).

      Any possession order would apply to 'good' and 'bad' JTs alike. Similarly, you can pursue any or all of the JTs for the whole amount of any unpaid rent, even the 'good' tenant who's paid their 'share' (legally, there is no such thing as a share of the rent).

      As roryl says, it would be advisable to research the implications of introducing a break clause if these are not usual in student lets, as it may deter potential tenants. If you nail the s.8 side of things, it's just as as effective as a s.21.

      How does exclusive possession and joint tenancy work - for example, if I can get a tenant out under s.21 at month 6, can I have another tenant come in? Surely a new tenant would interfere with the existing JT and the tenants rights to exclusive occupation?
      As per previous comment, you can't get just one 'bad' tenant out via s.21, you'd have to end the tenancy for all. Having done so, you could then agree a completely new contract with any of the old joint tenants who wanted to remain, and at that stage negotiate a new incoming JT.

      If one JT wanted out voluntarily, then, *if* LL and all JTs agree, you could assign their place in the joint contract to a new incoming JT.

      Comment


        #4
        Another possibility would be to move over to individual ASTs whereby each tenant has exclusive occupation OF THEIR ROOM ONLY and use of shared facilities elsewhere in the building.

        Tenants would only be responsible for their own rooms, so maintainance / damage and cleaning of the communal facilities would be the landlords responsibility, but rents are usually higher to take this into account.

        This has the advantage that you can start and end tenancies at different times and open up a pool of prospective tenants who haven't turned up for University with a ready-made bunch of housemates.

        Comment


          #5
          Big thanks Snorkers, westminster, and roryl

          Originally posted by Snorkerz View Post
          Another possibility would be to move over to individual ASTs whereby each tenant has exclusive occupation OF THEIR ROOM ONLY and use of shared facilities elsewhere in the building.

          ...

          This has the advantage that you can start and end tenancies at different times and open up a pool of prospective tenants who haven't turned up for University with a ready-made bunch of housemates.
          I considered this and it seems like a good idea but I can't decided upon the form. I don't think it wordable as a JT... TiC sure, but not a JT. I have my mind on enforcement, hence I need joint liability so I have more than one guantor to pursue (note to others: check your guarantors exist! there are so many fradulent deeds out there)


          Originally posted by westminster View Post
          As per previous comment, you can't get just one 'bad' tenant out via s.21, you'd have to end the tenancy for all. Having done so, you could then agree a completely new contract with any of the old joint tenants who wanted to remain, and at that stage negotiate a new incoming JT.

          If one JT wanted out voluntarily, then, *if* LL and all JTs agree, you could assign their place in the joint contract to a new incoming JT.
          Cheers. You cleared up my questions. I guess my aim is to bring enforcement during T's period of occupation rather than leave it until they've left and become untracable.

          Because I can't frame rent to meet the text of Sch 2 I can't use s.8. I can use s.21 as a matter of course, and I think I'll try and introduce a break clause anyway. I shall phrase it as a Landlord's break clause, only exercisable for unpaid rent or damage in excess of the deposit - I'll see if the boss will retain a solicitor to word that property.

          My aim is to offer the good students the option of continuing, introducing a new tenant or paying an increased rent. In favour are the negotiation options - good Ts will probably give statements supporting the move (which I imagine will be helpful in court if I ask for a s.21 order) because I can offer them a clear rent with no future pursuit, no further interest, and agree a lower amount than their existing joint liability if there is no new T.

          I imagine that the bad T will contest a s.21 order. If this happens then the tenancy will continue and I'll pursue everyone involved - admittedly this is no different to the incoming cases I have now.

          My outstanding questions are whether or not it is possible to grant a new tenancy [of exclusive occupation] to the good Ts when the bad T is still resident... Will the new TAs for the good Ts need a clause that acknowledges the bad Ts occupation? Will I get an order under the Accelerated Possession Procedure to evict just one tenant from one room?

          Cheers
          mawt

          Comment


            #6
            You really are overcomplicating things.

            Tenants (even students) would be crazy to get involved in a joint-liability scenario with co-tenants that they have never met and have no idea of their reliability. I suspect that a 'joint and several' claim against a 'good' tenant or his guarantor could easily fail in court in this scenario.

            If you want joint and several - they arrive together and they go together, unless one or more of the tenants assigns their rights to a replacement tenant. This is the exception rather than the rule because deeds of assignment confuse liability etc and would require new inventories and refunding/re-protecting of deposits.

            If you want the freedom to treat the tenants as individuals, then it is individual ASTs. Okay, only one guarantor, but if that guarantor is properly referenced etc then it shouldn't be an issue under normal circumstances.

            You are not barred from using s8 - just ground 8. You could always try grounds 10 & 11, although these are at the judges discretion because they are less specific.

            WESTMINSTER: Would an AST with specific one month tenancy periods but with rent due "4 months in advance" bring the agreement under s8, ground 8?

            Out of interest, do your properties require HMO licenses, and do they have them?

            Comment

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