When the Private Residential Tenancy (PRT) was introduced, one of the main concerns landlords had was the loss of section 33 – the wrongly described “no fault ground”. This created a desire for landlords, where they could, to preserve existing short-assured tenancies (SATs) beyond 1 December 2017 (the date after which no new short-assured tenancies could be created). At the time, there was some concern about the changes made to section 32 of the Housing (Scotland) Act 1988 (the 1988 Act) and whether existing SATs could be renewed for further contractual periods (except where tacit relocation applied). This led to the Scottish Government issuing “savings provisions” to clarify the position. In short, for existing short-assured tenancies, the rules that applied prior to 1 December 2017 were preserved. These rules are that any new contractual term must:
- come into being at the ish of an existing short-assured tenancy;
- relate to the same or substantially the same premises; and
- the landlord and the tenant are the same as before.
The default position being that, if these rules were not met when renewing a lease, then the underlying tenancy would become a PRT.
The advantages of retaining short-assured tenancies have perhaps lessened due to section 33 becoming discretionary like all other grounds for possession. In fact, there may be some advantages in seeking to convert an existing SAT to a PRT due to the grounds for possession available to PRTs, especially whilst the current eviction moratorium is in place (although the ability to rely on contractual rent increase clauses to avoid the current rent freeze may incentivise their retention). However, there has been a recent Upper Tribunal case where the Upper Tribunal looked at the savings provisions and considered the question of whether an underlying lease had continued as a SAT or had become a PRT.
The case is Boyle v Ford UTS/AP/22/0007.
Whilst there were other areas that the appeal dealt with, including looking at what a First-tier Tribunal should consider when deciding on the question of the reasonableness of issuing an eviction or possession order, the point this blog will focus on is the question of whether the landlord and the tenant were the same as at the date a new contractual tenancy had been entered into – rule 3) mentioned above.
The background to the case
The relevant background to this case is that the tenants had originally entered into a lease with a Hiram Ford back in October 2010. This had been extended on various occasions with the last written extension coming to an end on 30 September 2018. Sadly, Mr Ford died on 22 November 2017 and his wife was appointed by the court as his executor (she subsequently became the owner of the property). On 1 October 2018, in her capacity as her husband’s executor, she entered into a new lease which purported to be a SAT that took effect on 1 October 2018, thereby meeting at least 1) and 2) of the rules stated above.
It seems that, on or around 22 July 2020, Mrs Ford decided she wished to sell the property and, presumably on the basis of advice she received, treated the lease as a PRT and served a Notice to Leave on the tenants.
Thereafter, an application was raised and the First-tier Tribunal decided that it was a PRT and that it was reasonable to grant an eviction order to allow the property to be sold. It was that decision that was appealed by the tenants.
The meaning of “landlord”?
The Upper Tribunal looked in detail at the meaning of “landlord” for the purpose of considering whether the landlord was the “same” when the most recent lease was created by Mrs Ford as her husband’s executor. In doing so, the Upper Tribunal looked at the wording of both section 32(3) as it was and section 55 of the 1988 Act.
Section 55 allows for an extended meaning of “landlord” in the 1988 Act as including “any person from time to time deriving title from the original landlord”. This is caveated by the statement that this is to be the case unless “the context otherwise requires”.
Applying this “extended” definition of “landlord”, the Upper Tribunal decided that, as the Mrs Boyle’s title derived from Mr Ford, the requirements of section 32(3) were met, and the underlying lease remained a SAT. That being the case the Notice to Leave served was invalid and that the original decision by the First-tier Tribunal was wrong in law.
In fact, the Upper Tribunal went further and suggested that, when looking at the extended meaning of “landlord” for the purposes of section 32(3), it will always be the case that the landlord will be treated as being the same even where the landlord obtains their interest in any tenancy “by gift, purchase, or succession or in any other way that title passes”, but that will not always be the case for a tenant.
What lessons can be learned?
Whilst some have criticised the decision by suggesting that the context of 32(3) means a more restricted definition should be applied, this is a decision of the Upper Tribunal and it is binding on any First-tier Tribunal. That means, landlords will either have to act in accordance with the decision or accept that, if they do not, they will have to appeal any decision of the First-tier Tribunal made in accordance with it to the Upper Tribunal or beyond hoping to overturn it. Alternatively, if there is a desire to have an older tenancy treated as a PRT, landlords could look at agreeing with tenants to convert an existing lease to a PRT in terms of section 46A of the 1988 Act. That comes with advantages and disadvantages as mentioned already.