Where a local authority terminates a flexible secure tenancy during its fixed term, is such termination valid where the tenancy document contains no obvious forfeiture clause?
In Croydon London Borough Council v Kalonga , the tenant was granted a flexible 5-year fixed term tenancy by the local authority landlord. The landlord served notice to terminate the tenancy and take possession of the property in the standard prescribed form, stating that the tenancy could be terminated due to a provision in the tenancy document which allowed re-entry or forfeiture. A covering letter was sent with the notice to state that the standard form did not in fact represent current law, as no specific contractual right to re-enter or forfeit was required under the Localism Act 2011. The tenancy in this case did not contain an obvious forfeiture clause.
At first instance, during possession proceedings, the Court referred the matter to the High Court for consideration of ‘the correct manner in which to determine a secure flexible tenancy during the fixed term’. The landlord referenced Housing Act 1985 s.82(1)(b), arguing that the tenancy was not limited to contractual forfeiture as a result of wording ‘tenancy for a term certain but subject to termination by the landlord’. The High Court disagreed and found in favour of the tenant. The landlord appealed.
The Court of Appeal upheld the decision of the High Court, finding in favour of the tenant. A flexible tenancy granted by a local authority must contain a forfeiture clause to be terminated during its fixed term.
The Court referenced s.82(1A)(a) Housing Act 1985, which states that a landlord may only terminate a secure tenancy through a possession order, or otherwise obtaining an order under s.82(3) which states that, if a secure tenancy is within its fixed term but contains a forfeiture clause, then the court will terminate the fixed term and a periodic tenancy commences. The landlord will then have to obtain a possession order to end this tenancy.
Flexible tenancies under the Localism Act 2011 similarly apply. A fixed term tenancy without a forfeiture clause cannot be terminated as prescribed under the Housing Act. The Court of Appeal advised that local authorities such as the landlord in this case began lobbying for a remedial statutory amendment; an appeal to the Supreme Court is unlikely.
Advice and action
This case is of particular note for local authority landlords granting flexible tenancies, many with no forfeiture or re-entry provisions.
The judgment means that local authorities will not be able to recover possession of premises within the fixed term of such tenancies unless the tenancy contains express forfeiture wording. Where forfeiture clauses are incorporated into the tenancy, landlords may apply for court orders to terminate the tenancy.
The Court of Appeal found in favour of the tenant. A flexible tenancy granted by a local authority must contain a forfeiture clause to be terminated during its fixed term.