Social Housing Speed Read – fixed term tenancies cannot be prematurely determined unless they contain a forfeiture clause
11th February, 2021
The Court of Appeal has confirmed the High Court's decision in Croydon London Borough Council v Kalonga that a fixed term tenancy can be terminated, using the usual statutory procedure, however only if the tenancy contains a forfeiture clause.
In this case, Croydon Borough Council brought a possession claim against the tenant, on Grounds 1 and 2 of Schedule 2 Housing Act 1985. The tenant was residing at the property under a five year fixed term flexible tenancy, which the High Court determined constituted a fixed term tenancy.
The Council argued they were entitled to seek possession in accordance with the following clauses of the tenancy agreement:
- Clause 3 said that the tenancy agreement could be ended by the Council by serving a notice seeking possession and applying for a possession order; and
- Clause 10 said that the Council could seek possession if the tenant breached any clauses of the agreement or satisfied any of the grounds in Schedule 2.
The High Court ruled that the Council could not terminate the tenancy on the grounds in Schedule 2 because the tenancy agreement did not contain a forfeiture clause. The High Court stated that it is “fundamental” that a “forfeiture provision should bring the lease to an end earlier than the “natural” termination date”. If there is no right for the landlord to determine the fixed term at any earlier date, then the lease does not fall within section 82(1)(b) or section 82(1A) Housing Act 1985 (HA 1985) and the landlord cannot prematurely determine the tenancy. A forfeiture clause was required before possession proceedings can be brought by the landlord.
The Council appealed to the Court of Appeal
When reading s 82 HA 1985, in conjunction with s 32 Housing Act 1980, the Court of Appeal found that it was the legislative intention of the Housing Act 1980 that a fixed-term tenancy could only be ended by obtaining an order for termination pursuant to a forfeiture clause. This is reiterated in s 82(3) Housing Act 1985 which states that a tenancy for a fixed term will be terminated upon a successful application for possession, but only where the tenancy has ‘provision for re-entry or forfeiture’.
In dismissing the Council’s appeal, the Court of Appeal confirmed the High Court’s judgment.
The decision makes it clear that if a landlord seeks to terminate a fixed term tenancy prior to the end of the fixed term, on statutory grounds in the Housing Acts, the tenancy must contain an express right to forfeit. You will not be able to successfully pursue possession proceedings against a tenant unless their tenancy agreement contains a forfeiture clause.
Although the majority of modern Registered Providers tenancy agreements do contain the required forfeiture clause, we would advise that all clients undertake a review of any fixed term tenancy agreements in operation, and check their precedent fixed term tenancy agreements, updating them where necessary. It is also vital that, prior to commencing the possession process against a fixed term tenant, during the fixed term, checks are undertaken to determine that the relevant agreement contains a forfeiture clause – preventing this issue arising further down the line will save you a lot of time and money!
If you have any questions on the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
This page may contain links that direct you to third party websites. We have no control over and are not responsible for the content, use by you or availability of those third party websites, for any products or services you buy through those sites or for the treatment of any personal information you provide to the third party.