Anent Daies & Monthis &c.: Minimum Notice Period Agreements in the New Private Residential Tenancy

Anent Daies & Monthis &c.: Minimum Notice Period Agreements in the New Private Residential Tenancy
2019-12-04

Dr Douglas Bain and Mitch Skilling here unpick an interesting tenants’ notice clause in a Private Residential Tenancy (PRT) under the Private Housing (Tenancies) (Scotland) Act 2016 and reach some broader conclusions.

In any university town, students will make up a large part of the private rented sector’s consumer pool. A natural consequence of being ‘the law of leases people’ on campus is that, from time to time, we are approached by students at the University of Aberdeen regarding problems with tenancy agreements. Since the coming into force of the 2016 Act, most of the agreements (or clauses of agreements, typically anonymised) we are shown are private residential tenancies.

As we have previously observed section 44 of the Private Housing (Tenancies) (Scotland) Act 2016 specifies that ‘[a] tenancy which is a private residential tenancy may not be brought to an end by the landlord, the tenant, nor by any agreement between them, except in accordance with this Part’.  The tenant under a PRT can terminate their tenancy by giving the landlord a notice which fulfils certain statutory requirements. Those requirements are described in sections 48 & 49 of the 2016 Act. It would be beneficial to give these sections a close read before scrolling down, in particular s49 as it outlines the requirements the tenant’s notice must fulfil, most notably the ability of the landlord and tenant to agree their own minimum notice period (MNP) the tenant must give before leaving.

We will also repeat here the point made in our previous blog post in respect of the observation by the advocate Adrian Stalker during the Bill stages of the 2016 Act in respect of what ultimately became the Part 5 ‘termination only on the basis of the provisions in this statute’ approach in the 2016 Act that “[t]his seems to rule out various ways in which a tenancy may terminate at common law, say by renunciation, the parties entering into a new agreement, the operation of a break clause, total or partial destruction of the subjects, and so on”. This seems also to bar termination by rescission following repudiation of the contract. This often came into play before when a tenant wanted to leave as a result of a landlord's failure to deal with dampness or disrepair, and students have come to Dr. Bain for advice having already taken on new leases, with months still unspent on their original one.  The First-tier Tribunal provides mechanisms for enforcing repairs, which is all well and fine in principle but does not allow for the breakdown in trust and faith issue.

Without common law termination, it would appear that leaving a PRT early with an agreed minimum notice period is trickier than it was under the old system, where a tenant could just say 'rescission' and leave the flat, leaving the landlord to either cut his losses or to pursue the tenant in small claims court, costing time and money, with the tenant then having their defence.  Now, the tenant would be in breach of a statutory provision and the Tribunal is far more accessible for the landlord.

(As an aside, whilst common law termination is impossible under a PRT, Mr. Skilling believes that this does not rule out common law extinguishment independent of the parties’ conduct, such as through confusio as seen in e.g. Serup v McCormack 2012 SLCR 189. This is a point he developed in his LLM thesis, available through the University of Aberdeen library via Primo).

We now come to the problem at hand. Twice this year, in totally unconnected tenancy agreements, we have seen the following clause, which appears to be part of a ‘house style’ lease devised by a letting agency. It is this clause that this post is concerned with. Quoted in full, it reads:

This tenancy may be ended by:

(i) The Tenant giving notice to the Landlord;

  • the Tenant giving the Landlord at least twelve months' notice in writing during the first month of the tenancy, at least eleven months' notice in writing during the second month of the tenancy, at least ten months' notice in writing during the third month of the tenancy, at least nine months' notice in writing during the fourth month of the tenancy, at least eight months' notice in writing during the fifth month of the tenancy, at least seven months' notice in writing during the sixth month of the tenancy, at least six months' notice in writing during the seventh month of the tenancy, at least five months' notice in writing during the eighth month of the tenancy, at least four months' notice in writing during the ninth month of the tenancy, at least three months' notice in writing during the tenth month of the tenancy, at least two months' notice in writing during the eleventh month of the tenancy and thereafter at least 28 days' notice in writing to terminate the tenancy, or any other minimum period as otherwise validly agreed between the Landlord and the Tenant. To end a joint tenancy, all the Joint Tenants must agree to end the tenancy. One Joint Tenant cannot terminate the joint tenancy on behalf of all Joint Tenants.

 

This rather unwieldy clause is intended to constitute a ‘valid agreement’ regarding the length of the MNP the tenant must give, required by s49(3) of the 2016 Act. A notice period agreed between the landlord and tenant can theoretically be of any length, with the caveat being that an invalid agreement or no agreement will result in the MNP being 28 days.

In both cases in which this clause came before us, all the co-tenants (co-tenancies also being a relatively common feature of student lets) wished to exit the tenancy at the earliest possible date without incurring any ongoing liability. This is a typical issue for students, who might wish to return to their family home during the summer months post-exams in order to save money (and presumably see their family as a fringe benefit). If this motivation is understandable from the position of the tenant, it is no less understandable from the landlord’s perspective that they might prefer to hold the tenants to the full twelve months, as to gain the full amount of income they expected to gain from an agreed one year tenancy.

Under the previous regime, these students would likely have had a short assured tenancy under the Housing (Scotland) Act 1988, running from 1st August to 31st July the following year. On the latter date, the ish date of the tenancy, it would be terminated if proper notice was given in the correct form. Otherwise, it would continue by tacit relocation. These two concepts, the ish and tacit relocation, have gone together like fish and chips for many centuries of leasing.

The PRT shook up this dynamic in the private rented sector. Section 4(a) of the Act states “[For the purposes of this Act] if an agreement would give rise to a tenancy but for the fact that it does not specify an ish, it is to be regarded as giving rise to a tenancy.”  The lack of an ish does not prevent a PRT from coming into existence but the Act does not abolish the concept of the ish itself. Tacit relocation, however, is effectively killed off, as the 2016 Act prevents the tenancy from being brought to an end by either party without an agreement in accordance with Part 5 of the Act. The 2016 Act is, like the Scottish Secure Tenancy under the Housing (Scotland) Act 2001 entirely statutory, and renders the old ‘contractual tenancy/statutory tenancy’ distinction that applied under the Rent (Scotland) Act 1984 (and its predecessor statues) and the Housing (Scotland Act 1988) defunct.

In the light of this, the survival of the ish is anachronistic. Its presence in a PRT agreement is vestigial, like the survival of the appendix or the tonsils in the human body.  They serve no positive purpose  but have the potential to do great harm where they go wrong (n.b. we are lawyers, not medics.  Medical vestigiality is not discussed in Stair, Erskine etc, though we accept that Wikipedia tells us ‘a vestigial structure may retain lesser functions or develop minor new ones. In some cases, structures once identified as vestigial simply had an unrecognized function.’ Let’s not get hung up on an analogy).

We shall now return to the notice clause given above and its plethora of notice periods that all point towards broadly similar, though not identical, dates. It is submitted that the above clause is an attempt to replicate the functions of an ish without actually specifying an ish date. The final part of the clause, “thereafter at least 28 days' notice in writing to terminate the tenancy, or any other minimum period as otherwise validly agreed between the Landlord and the Tenant,” could also replicate the concept of a tenancy renewing month-to-month by tacit relocation should it continue beyond the initial year the landlord wanted.

Under the old regimes, the tenant would be locked in for the year by the ish date alone. In the new one, the landlord has felt the need to exercise a degree of ingenuity to preserve their ability to do this, creating a lengthy and complicated clause for that simple purpose. The question that we were faced with was whether this clause would constitute a ‘valid agreement’ for an MNP per s49(3)(b)(i) of the 2016 Act.

In considering this contract clause, we proceed on the basis that all the co-tenants wish for an early exit from the tenancy and that the landlord does not wish to see them depart early.  In terms of s.48(4) the requirement that all the tenants must concur in giving notice is satisfied. We also proceed on the basis that the minimum notice period clause was agreed after the commencement of the PRT and that the clause is not otherwise defective.  If it were before, or was otherwise defective, it would not be valid, and the 28-day notice period would apply per s49(3)(b)(ii). This is an inversion of the SAT regime’s way of doing things, where everything had to be agreed before the start.

Let us assume that the tenancy began on 1st September 2019. The tenants in the first month agree that they wish to leave the subjects post-haste and give their notice on 15th September. In this case, they would find themselves faced with an MNP of 12 months.  The particular clause in this case talks in terms of ‘months’, and does not use the word ‘days’.  And that is its downfall, for the 2016 Act MNP provisions talk in terms of ‘day(s)’ but do not use the word ‘months’.   The word ‘month’ is defined in the 2016 Act for particular purposes – for example, in s.22 in connection with the landlord’s power to increase the rent, or in s.64 in relation to the six-month period in the case of landlord notices (no interpretation of ‘month(s)’ is given for tenant notices).  In respect of these, six months is interpreted as ‘a period which ends in the month which falls six months after the month in which it began, either - (a) on the same day of the month as it began, or (b) if the month in which the period ends has no such day, on the final day of that month.

In all cases, notwithstanding the fact that the 2016 Act does not contain a statute-wide interpretation of ‘month(s),’ it is clear that calendar months are envisaged. ‘Day(s)’ is not defined by the 2016 Act at all. However, by applying the standard definition of ‘month(s)’ to this exit clause, the tenants here with their September to August tenancy, who give notice in accordance with the Act on the final day of the eleventh (or indeed any preceding) month of the tenancy would actually be better off waiting until the first day of the twelfth month, as ‘two months’ on the 31st of July (month 11) would translate to an exit date of 30th September, but notice given on 1st August (month 12) would give an exit date of 29th August, 32 days earlier and saving them a full month’s rent. This latter scenario also benefits the landlord, who can take in a new batch of student tenants ahead of the commencement of their studies in the coming September, getting a seamless change-over with no disruption to their rental income.

It is submitted that this issue ultimately boils down to a question of statutory interpretation, the words to be interpreted being ‘day’ and ‘days’ in ss.48-49, for example, s.48(2) ‘A tenancy comes to an end in accordance with subsection (1) on the day on which the notice states (in whatever terms) that it is to come to an end.’ Where a notice period is stated in terms of months and not days, in eleven month-based variations, is it possible to find a specific number of agreed days between the landlord and tenant?

We here submit that in considering this question, regard must be had to the overarching rule in s44 of the Act, under the heading ‘No termination by parties except in accordance with this Part’: A tenancy which is a private residential tenancy may not be brought to an end by the landlord, the tenant, nor by any agreement between them, except in accordance with this Part.  This clearly signals that the terms in Part 5 of the Act should be interpreted strictly.  In construing ‘day’ and ‘days’ one might work through a sequence of possible resources.  The explanatory notes do not help. 

There does not as yet appear to be any authoritative relevant judicial precedent on the matter – the statute is new, as is the judicial forum and line of appeal wherefrom (i.e. the First-tier Tribunal Housing and Property Chamber. Furthermore, the decisions page in the FTT website is organised based on the Tribunal rule each decision is founded in rather than by keyword, which combined with a lack of general reporting of First-tier Tribunal decisions (Adrian Stalker’s Housing Law Updates in SCOLAG being a notable exception if you have access to it) can make decisions difficult to find.

Being so different from its predecessor private residential sector tenancy regimes, there is no useful Rent Act or 1988 Act authority that might get cited by way of analogy.  In terms of legal commentary, the most up-to-date textbook – Robson and Combe’s Residential Tenancies (4th ed) does not touch upon the question, which is not surprising, for all the reasons referred to above and because it’s still early days with plenty to still crawl out of the woodwork of the 2016 Act. 

Finally, the Interpretation and Legislative Reform (Scotland) Act 2010 does not assist in terms of ‘day’ but defines ‘month’ at schedule 1 as meaning, unless the contrary intention appears, calendar month, which is consistent with the Interpretation Act 1978, but the word ‘month’ herein discussed is taken from a tenancy contract and not a statute, meaning that the 2010 Act isn’t really much help.

One source does help.  Stair Memorial Encyclopaedia vol. 22, Time, discusses both ‘month’ and ‘day’ at 813 and 814.  It suggests that at common law level, ‘month’ means calendar month, and ‘day’ means a period of 24 hours, beginning at midnight.

The 2016 Act requires in respect of termination by the tenant and the MNP an appointed ‘day’ – an identified 24-hour period on which the tenancy is to end.  The MNP ends of a ‘day’ – a specified 24-hour period ‘such number of days after it begins as the landlord and tenant have validly agreed between them’, failing which, 28 days after the notice is received by the landlord.

A month-based notice period, based on the passage of calendar months, creates variability as to the actual number of days that pass between the giving of notice and the end of the minimum notice period. Thus, what is ‘agreed’ between landlord and tenant is not a precise number of days, but rather a calculus by which a period of days can be found. It is not an exact number, but a means to one.

Looking at the required notice periods for a landlord’s notice, the notice period itself is given as either 28 or 84 days (three lunar months in old money), the latter applying if the tenant has occupied the let property for 6 months (as interpreted by s64 of the Act as running from day X to the same day in 6 calendar months time). Whilst the formula for calculating the notice period is expressed in months, the notice period itself is strictly in days. (This is why, when Mr. Skilling appeared as a contestant on an episode of BBC Radio 4’s The 3rd Degree, currently unavailable on the BBC Sounds app, and was asked what said longer notice period was, he answered in days rather than months, even if the non-legally qualified host would have accepted three months as the answer for the purposes of the quiz. We do not in any way cite Steve Punt as legal authority). The inference, it is submitted, is that notice periods must be a definable and precise number of days.

It is therefore submitted that the tenancy clause considered in this article, though novel and interesting, is not valid.  It is submitted that it fails because to fails to identify a specific ‘day’ and number of ‘days’ in terms of the provisions at sections 48 and 49, and that these provisions should be interpreted strictly in the light of the overarching statement of principle at s.44. 

This might perhaps be a marginal issue and this article may perhaps be a case of much ado about nothing, but there is an underlying legitimate theme here of new territory in the law of residential tenancies to be explored, and also, that in the 2016 Act, we have a statute that poses as many questions as it answers.

 

Published by School of Law, University of Aberdeen

Comments

  1. #1
    Angus Johnston

    Your conclusion implies that if the same clause were reworded to include a specific number of days (in the first calendar month of the tenancy, 330 days notice; in the second calendar month, 300 days notice etc) that the clause would be "valid", yes?

    However, s.49(4) specifies that such an agreement is not valid if "entered into before the tenancy became a private residential tenancy." Is my understanding correct that a tenancy does not exist until occupancy is granted (ie. keys exchanged on check-in day); and as such any terms signed in advance with a minimum term other than 28 days would not be "valid" and if so would revert to the 28 days anyway?

    Are you suggesting that there would be a way for a Landlord/Agent to enforce a minimum term longer than 28 days, if they could only get the wording airtight? Does this not defeat the purposes of the entire clause in the Act?

  2. #2
    Douglas

    Hello Angus,
    Our view is that 'day' means 'day' - a single specified 24-hour period, with the emphasis on 'single'. And yes, we agree that a PRT does not come into existence, notwithstanding any prior agreement, until occupation is commenced; and that the provision in s.49(4) is relevant where an earlier-agreed contract clause purports to impose a minimum term other than 28 days (but, post 'occupation taken', a tenant might have reasons for agreeing to a longer MNP). It is our view that attempts to come up with enforceable forms of wording such as the one discussed in our article are holed beneath the waterline on the basis of statutory provisions, and it is not our intention to suggest anything otherwise. Dinna misdoot, we're aa singin' fae the same sangsheet here.

    Mitch and Dougie

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