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Recent writingThe tenant has vanished – can I re-let, now, please? The credit crunch has changed the face of letting. After years of landlords calling the shots with regard to letting supply and demand , the sudden influx of properties from sellers unable to sell in today’s market, has given tenants the upper hand.
But there is more than one economic variable at work here. Labour market statistics show that unemployment in April 09 rose to 7.1%, up 0.8% over the quarter, and 1.8% on last year; the highest rate in years - and this trend is expected to continue to increase at least to the end of the year.
Higher unemployment means tenants will struggle to pay their rent. Result - tenant abandonment or surrender of a property is likely to increase.
Tenants may walk away from a property part way through their leases for any number of reasons. In today’s economic climate, they may have been made redundant, and not be able to afford the rent any longer; their work may suddenly transfer them elsewhere and they may not have the luxury of refusing to move if they want to keep their job. Or one flatmate suddenly ups and leaves, leaving the remaining flatmate/s unable to pay the total rent.
The tenants may not understand the legal weight of the agreement they have signed, and airily think a month’s notice is sufficient to deal with the situation.
What options does a landlord have to reclaim his property and re-let it?
There is a limit of four ways a landlord may reclaim the property he has signed an Assured Tenancy or an Assured Shorthold Tenancy on:
· at the natural expiry of the tenancy agreement
· by order of the court
· the tenant surrenders the property
· the tenant abandons the property
The landlord must keep in mind that tenants can’t be forced to leave a property, even at the end of a tenancy. They must either surrender the premises voluntarily or the court must order them to do so. Anything else is a breach of the tenant's rights under the Protection From Eviction Act 1977 and is a criminal offence.
Tenant surrender
A property is considered surrendered where the tenant breaches the contract by moving out of the property and stopping paying rent before the end of the tenancy agreement and the tenant notifies the letting agent or landlord in writing. The landlord must also accept the keys with the intention of accepting possession.
But there is no surrender when the tenant moves out before the end of the tenancy, and the landlord accepts the keys from the tenant ‘without prejudice’ or ‘subject to the re-letting of the premises’ as this is not a clear acceptance of surrender by the landlord. The tenancy is still subject to an event or action having to take place before termination can take effect.
The termination of an Assured or Assured Shorthold tenancy is provided for under Section 5(3) of the 1988 Housing Act, which reads in part as:
‘If an Assured or Assured Shorthold tenancy which is a fixed term tenancy comes to an end otherwise than by virtue of:
then the tenant is entitled to remain in possession of the dwelling-house’.
What happens if.....?
......the tenant wants to surrender the property part way through the AST
If the tenants indicate, for example, in month three, they wish to vacate the property immediately, there is three months of the AST remaining. The tenants are still liable for the remaining three months’ rent, and must pay it until
· the natural expiry of the tenancy, or
· a new tenant is found (assuming the landlord is agreeable to the early expiry of the tenancy).
If the landlord is agreeable to the early expiry of the tenancy, the agent must re-market the property immediately. The surrendering tenant will be liable for re-marketing costs and a ‘termination fee’, but the agent/landlord can’t financially benefit from the surrender. It is illegal to re-tenant the property and still collect the rent from the surrendered tenant.
......there are joint tenants
Where there is a joint tenancy, all of the joint tenants must agree to the surrender for it to be effective. If the tenants want to substitute one tenant for another, the usual tenant vetting process would apply. The substitution must be agreed by the landlord.
.......the tenant agrees to the surrender but does not vacate the property
In this case, the landlord must follow statutory procedures to terminate the tenancy and obtain a possession order through the courts. In the case of Saleem v Teji 1997, it was shown that subsequent eviction was found to be unlawful because the landlord did not.
Tenant abandonment
A property is considered abandoned where the tenant breaches the contract by moving out of or leaving the property and stopping paying rent before the end of the tenancy agreement, without notifying the letting agent or landlord, or returning the keys.The onus is on the landlord to prove the property has been abandoned, not on the tenant to prove it has not.
Sometimes it can be difficult for the landlord to decide whether or not the property has actually been abandoned. It is a standard clause in the Terms & Conditions on a tenancy that tenants notify the landlord/agent if they will be absent from the property for more than two weeks, but many tenants don’t. If they don’t, they breach the contract; the contract is now nullified. However, it is the landlord/letting agent’s responsibility to be proactive and show records that they have attempted to get in touch with the tenant.
The tenant may not be around, and not be paying rent, but there is still a contract in place. Under the ‘Protection from Eviction’ Act 1977, the landlord:
Steps to take to reclaim an abandoned property
Having decided the property is probably abandoned, the agent/landlord must wait 30 days before writing to the tenant, indicating he will attend the property in 30 days, giving the day and time. The agent takes a witness, the inventory, a camera, and two copies of the ‘notice of abandonment’ notice. The agent now has the right to change the locks at the tenant’s expense. If the locks are changed, there must be an abandonment notice served, generally by pinning it to the front door. This tells the absent tenant of the landlord’s intentions to take over the property and the reason why the locks have been changed and the property re-secured.
However, it is possible to change the locks sooner than this. If the state of the property renders it vulnerable to trespass or possible criminal activity, it is reasonable for the landlord to act as an ‘agent of necessity’ and take steps to secure the property and change the locks.
If the tenant comes back before the 30 days are up, the agent must give them the new key. The tenant is not obliged to pay the rent first. The agent would apply for rent arrears separately under Section 8 of the 1988 Housing Act. But more evidence than this is needed before the agent/landlord can prove that the tenant has abandoned the property.
Establishing abandonment has taken place
Evidence proving abandonment must be carefully documented by the landlord/letting agent in case it turns out that the tenant has not surrendered the property and he takes action against the landlord for unlawful eviction.
Abandonment would be considered proven if most of these conditions are met:
· the tenant’s personal effects have been removed
· food has been left to perish or gone mouldy over time in the fridge
· keys are not returned
· services and utilities have been discontinued. For example, gas, electricity and telephone have been cut off; unopened mail has piled up by the letter box and utility reminder bills are part of the unopened mail
· physical damage has been done to the property, or the landlord’s items of furniture have been removed (but burglary must be ruled out)
· neighbours tell you they last saw the tenants some time ago, (ask for an approximate date), or confirm the tenant has moved away. Friends of the tenant, if known to the landlord, could also be contacted to confirm abandonment. Any such information should be documented.
· rent is not paid
There has now been a breach of contract because the tenant has abandoned the property. The landlord may now repossess his property.
For the landlord/agent, the task of repossession a property which has been abandoned can be a tedious one. It is tempting, once it is obvious that the tenant has done a flit, for the landlord to simply move in, change the locks, and re-let the property. However, in the case of both abandonment and surrender, unless the correct steps as outlined in the legislation are taken, the landlord renders himself vulnerable to possible prosecution.
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