Since the Superstrike tenancy deposit case, much discussion has been had about what happens at the end of the fixed term of an assured shrothold tenancy.
For full details and the best action to take at the end of a fixed term, see our article here
In a nutshell, Superstrike said that when a fixed term assured shorthold tenancy ends and a statutory periodic tenancy arises, this statutory periodic tenancy is a brand new tenancy and therefore in that case, the landlord had re-received a deposit in relation to this ‘new’ tenancy. As the ‘new’ periodic tenancy was after the tenancy deposit legislation took effect, the landlord should have protected the deposit. All this despite the landlord actually receiving the money deposit before 6 April 2007 when the legislation started.
As a result, it is suggested (with good reason) by many commentators that tenancy deposit prescribed information must be given not only at the time when the deposit was received but also when the tenancy turns statutory periodic.
This principle that a statutory periodic tenancy is a brand new tenancy was further confirmed by the Upper Tribunal in a recent council tax decision CT v Horsham District Council (HB)  UKUT 617 (AAC) where it was said:
… The Judge held that the periodic tenancy which arose after the fixed term was a new tenancy or leasehold interest rather than a continuation of the fixed term. That seems to me to be correct.
It matters for council tax purposes because if a tenant vacates without giving notice where the tenancy is periodic, the only time the tenant remains liable is if they have a ‘material interest’. There is only a ‘material interest’ if the tenancy was granted for 6 months or more.
Because a statutory periodic tenancy is a brand new tenancy, it was held that this new tenancy is NOT granted for six months but instead is only for one month (or whatever the period might be in any particular case):
… A yearly periodic tenancy would appear to suffice, in that the initial grant will have been for a term of least a year. However, the periodic tenancy in the present case will have been either a monthly or weekly one (see s.5(3)(d) of the 1988 Act), and therefore it in my judgment was not a tenancy granted for a term of at least 6 months.
Therefore, in the case of a tenant vacating without notice during a statutory periodic tenancy, the landlord will be liable for council tax in most cases (depending on local discount schemes) despite not being able to enter the property to recover possession without first obtaining a court order to end the tenancy.
Thankfully for Guild members, back in June 2013, immediately after Superstrike, we changed our tenancy agreements to rid the statutory periodic tenancy arising and instead make it continue so a new tenancy wasn’t created. As a fortunate consequence, this change should also mean that tenants will continue to be liable for council tax even if they leave without notice depending on individual circumstances and local schemes.
A tenancy which contains a clause continuing the tenancy does not ‘end’ and as such section 5 Housing Act 1988 which provides for a statutory periodic tenancy does not take effect because it only takes effect when an assured [shorthold] tenancy which is a fixed term tenancy comes to an end.
The main case which says a tenancy which continues is only one tenancy and not two separate tenancies is... Please login or signup to continue reading this content
Are there any disadvantage’s of the tenancy not ending and continuing as a contractual periodic tenancy?
The main disadvantage and why we didn’t do it before is explaining to a judge that a statutory periodic tenancy does not arise because the tenancy has not ended.
Most people understand the basic principle of a statutory periodic and that it happens automatically at the end of the term allowing the the tenant to remain on a rolling contract. Trying to explain this didn’t happen and in fact a contractual periodic has arisen achieving in essence the same result is a little mind boggling for many when actually it doesn’t really matter how the periodic is achieved.
It’s a bit like trying to explain a break clause. Why would someone give a one year tenancy but either party may give notice anytime after six months when all they had to do was give a six month fixed term and achieve exactly the same thing? It’s difficult to explain despite in essence the two things being the same but they were just created in two different ways.
Also, statutory periodic was better for explaining because you could point at a piece of legislation and explain it that way. Now that’s no longer possible.
Other than this, there is no difference whatsoever. I think the secret will be to keep quiet about the contractual periodic element for now and let judges assume what they want to assume. Only when it matters (such as a Superstrike type case) will we then point out the differences. That way we only create confusion when we need to.
Guild of Residential Landlords
Well done Adrian, a great re leaf to know that we are covered by our Guild AST document provisions. Unfortunately Superstrike has made it all so complicated
Member No. 1.
The reason we converted to using a contractual periodic agreement was because we were faced with tenants leaving at the end of the fixed term and giving absolutely no notice or indication. This gave us no chance to find a new tenant which was annoying. As the term now does not end the tenant has to actually serve notice to terminate the agreement. It minimises voids.