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Ending a flexible tenancy during the fixed term

Posted on 30/06/22 in Housing Matters

Ending a flexible tenancy during the fixed term

In Croydon London Borough Council v Kalonga the Supreme Court set out how a local authority landlord can end a flexible tenancy during the fixed term.

Flexible tenancies

A flexible tenancy is a type of secure tenancy granted for a fixed period of time.

Flexible tenancies usually have a fixed term of at least five years. A local authority should only grant a shorter tenancy in exceptional circumstances, with a minimum term of two years.

A local authority can grant flexible tenancies if it has a tenancy strategy that allows for this.

Possession at the end of the fixed term

A local authority can bring possession proceedings without relying on a ground for possession if it decides not to renew the tenancy at the end of the term.

It must give the tenant at least six months' notice of non-renewal. The tenant has 21 days to request a review of the decision not to renew.

The local authority must also give the tenant at least two months' notice seeking possession. This does not have to be served at the same time as the notice of non-renewal but must be given on or before the date the fixed term ends.

The local authority can then bring a claim for possession. The court must make a possession order if the correct process has been followed.

Possession during the fixed term

During the fixed term, the same grounds for possession apply to flexible tenancies as are available for periodic secure tenancies.

The local authority must first obtain a termination order. This allows the local authority to bring the fixed term tenancy to an end before the expiry of the original term. A secure periodic tenancy arises automatically. The local authority can then seek a possession order using the secure tenancy grounds for possession.

Croydon Council v Kalonga

In Croydon London Borough Council v Kalonga [2022] UKSC 7 the Supreme Court considered whether a local authority must follow the forfeiture process to obtain a termination order and bring the tenancy to an end during the fixed term.

Forfeiture is a landlord’s right to end a tenancy early where a tenant has breached their obligations. There must a clause in the agreement that allows for this. A definition of a forfeiture clause was set out in Clays Lane Housing Co-operative Ltd v Patrick [1984] 17 HLR 188. A forfeiture clause is:

  • operated to bring the tenancy to an end earlier than it would naturally end
  • used in the event of some default by the tenant

Where a tenant has been served with a notice of forfeiture, the tenant can ask for relief from forfeiture from the court.

Background

Ms Kalonga had a five-year flexible tenancy. Croydon served Ms Kalonga with notice that it intended to seek possession of the property during the fixed term based on rent arrears and antisocial behaviour.

The Court of Appeal held that the only way to end a flexible tenancy during the fixed term was to use a forfeiture clause to obtain a termination order in lieu of forfeiture. It also held that the agreement did not contain a forfeiture clause.

Croydon appealed to the Supreme Court.

The Supreme Court's decision

The Supreme Court held that a local authority can only bring a flexible tenancy to an end during the fixed term by using either:

  • a break clause
  • a forfeiture clause

For grounds where a tenant is not at fault, such as when the local authority is seeking to carry out major works on the property, a break clause is the only way to end a tenancy during the fixed term.

The local authority can give notice in line with the clause. The fixed term then becomes subject to termination and the local authority can seek possession using the secure tenancy grounds.

For grounds where the tenant is at fault, such as rent arrears, the local authority can seek a termination order in lieu of forfeiture. The tenancy agreement must contain a forfeiture clause.

A successful forfeiture claim terminates the fixed term and a periodic tenancy arises. The local authority must bring a possession claim on grounds to end the periodic tenancy. It can do this at the same time.

The Court dismissed Croydon's possession claim. Croydon were seeking possession based on Ms K’s fault and the usual grounds for possession, and stated they were not relying on forfeiture.

The Court found that Ms Kalonga’s tenancy agreement contained a forfeiture clause. The agreement permitted Croydon to seek an order for possession from the Court at any time if the tenant breached the terms of the agreement.

Checking the tenancy agreement

A flexible tenancy cannot be terminated during the fixed term if the agreement does not contain a break clause or a forfeiture clause. 

Whether a clause in an agreement amounts to a break or forfeiture clause depends on the wording. A tenant's representative should carefully check the tenancy agreement to establish if there is an operative break clause or forfeiture clause.

Out of time review requests

Section 107E of the Housing Act 1985 states that a request for a review of the decision not to renew must be made within 21 days of the notice of non-renewal being served.

In a separate decision, the Court of Appeal held that a local authority does not have the power to extend the time limit for requesting a review of the decision not to offer a new fixed term at the end of a flexible tenancy.

In Kalonga, R (On the Application Of) v London Borough of Croydon (2022) EWCA Civ 670 the Court dismissed the argument that the local authority’s general powers of management under section 21 of the Act allowed it to extend the time limit to accept a review request.

Further resources

Shelter Legal

Local authority flexible tenancies

Flexible tenancy notice of seeking possession