Creating a short assured tenancy

A failure by the landlord, prior to 1st December 2017,  to follow the statutory procedural requirements in the creation of a short assured tenancy will result in the tenancy being an assured tenancy. [1]

It is important to note that in Scotland, the onus is on the landlord to follow the procedural requirements and clearly indicate that they intend to create a short assured tenancy. This is the opposite of the English position where, since 1997, an assured shorthold tenancy (the English equivalent of a short assured tenancy) is now the 'default' position. In other words, in England, landlords are always assumed to have intended to create an assured shorthold tenancy rather than an assured tenancy.

If all other criteria pertaining to the creation of an assured tenancy are met, the statute sets out two additional criteria that must be met in order for the tenancy to be deemed a short assured tenancy. These criteria are;

• the existence of a minimum period fixed term;

• and that an AT5 Notice is served before the creation of the tenancy.

A short assured tenancy in the first instance must be for a fixed period of not less than six months. [2] After the first six-month period, the short assured tenancy can continue for a lesser period under certain circumstances. [3] There is no limit on the maximum length of a short assured tenancy.

It's very important that the terms used to state the length of the lease are clear and unambiguous. In one case the term of the lease was to run from the 'date of entry' until the 28th of October 2011. The tenant signed the lease and took entry on the afternoon of the 29th of April. When the tenant was asked to leave they argued that the lease they had entered into was not a short assured tenancy because it fell short of the required six month minimum term.

Not taking into account the day of the 29th of April and including the day of the 28th of October, the lease ran for six months minus one day, one day short of the requirement for a short assured tenancy. However, because the lease did not state the specific time that the tenant was to take entry on the 29th, the judge held that the term of the lease began at midnight on the 28th of April. Therefore, the term of the lease included the whole day of the 29th of April and the lease ran for a period of not less than six months and so was a short assured tenancy. [4]

Complicated scenarios like this can easily be avoided by unambiguously setting out a term of not less than six months in wording of the lease.

The requirement that the tenancy be 'for a term not less than 6 months' [5] appears to prevent a landlord from inserting a 'break clause' that would allow them to bring the contract to an end earlier than six months after the start of the tenancy. If the agreement contains such a clause then it appears that such a tenancy will not be a short assured tenancy but instead an assured tenancy.

During the initial contractual period, a short assured tenancy behaves just like a normal assured tenancy until the ish (expiry date). Therefore, during the contractual period, the landlord can only apply for repossession on one of the grounds specified in Schedule 5 of the Housing (Scotland) Act 1988. [6] In such an action, the procedural requirements would be the same as those to obtain repossession from a contractually assured tenant. Please see the section on the repossession process for more details.

The Housing (Scotland) Act 1988 allows for a short assured tenancy to continue by tacit relocation [7] (see the page on lease automatically repeats for more information on tacit relocation). Where there is nothing stated to the contrary in the tenancy agreement, the period of tacit relocation will be the same as the original contractual term, up to one year. [8] It appears to be open to the landlord to have a clause within the tenancy agreement that allows the tenancy to continue for a lesser period (for example, on a month-to-month basis) after the original six-month period has been completed. [9] Although in the strictest sense this is not tacit relocation (because the tenancy agreement is not silent on the matter), a careful reading of the relevant statutes seems to offer this as an option. [10] For the avoidance of doubt: where a lease stipulates that the duration is for a certain period and monthly thereafter, this initial period must be of at least six months' duration. [11]

Where a tenancy continues in this manner, there is no requirement to serve another AT5. [12]

Short assured tenancies can continue in this matter until correctly brought to an end, however where there is any doubt please see the section short assured or private residential tenancy.

To prevent tacit relocation, the landlord must give notice that they wish to end the contract at the end of the fixed term. The common law requirements regarding a notice to quit must be adhered to by the landlord. [13] The notice to quit must be in the prescribed form. [14] If the lease is for over four months then 40 days notice is required, and for leases of four months or less, the period of notice is one-third of the duration of the let. This is subject to a statutory minimum of four weeks. [15] If the notice to quit is not served the correct number of days before the ish date then the tenancy will tacitly relocate. If the lease does not specify an ish, it will be assumed to fall on the date of entry or (in the case of leases of less than a year) on the same day of the month as the date of entry. [16]

The tenant may wish to prevent tacit relocation operating and should therefore serve the landlord with a notice to quit. This does not have to be in a prescribed form. However, if a tenant gives notice but then continues to live in the property without any disturbance from the landlord, "the parties may be presumed to have changed their purpose and tacit relocation will revive". [17] However, in one case it was held that continued possession by a tenant barred him from relying on a letter giving up the premises, and that he was liable for a further year's rent as a result of tacit relocation. [18]

The landlord may wish to alter the terms of the contract in a short assured tenancy, such as the length of stay or rent level, unilaterally. This can be done by preventing tacit relocation operating and terminating the tenancy at its ish. The landlord can then create a new contractual short assured tenancy which can be of a period of less than six months, provided the agreement refers to 'substantially' the same premises and the landlord and tenant are the same. [19] There is no requirement for a landlord to serve a new AT5 in such circumstances.

Short assured tenancies can continue in this matter until correctly brought to an end, however where there is any doubt please see the section short assured or private residential tenancy.

A notice, in a prescribed form, [20] stating that the tenancy is a short assured tenancy [21] must be served by the landlord (or one of the joint landlords) on the person who is to be the tenant [22] before the tenancy is created. In the case of joint tenants, each of them should receive this notice separately. [23] The notice is known as an AT5 notice.

A tenancy may be created before the written tenancy agreement is signed, provided the common law requirements are met (see the section on leases for details of these requirements). If, for example, a tenant has moved into a house without signing any agreement, or having an AT5 notice served on them, any subsequent serving of an AT5 would be ineffective as it would have been served after the creation of the tenancy, which in this case is likely to have been the date of entry. [24] It appears from English case law that serving the AT5 on the same day that the tenancy starts is acceptable (as long as this is done before the tenancy agreement is signed) and that the question of whether the notice was served before the creation of the tenancy is a matter of pure fact. [25]

An AT5 can be delivered to the signee in person, left at their last known address or posted there by recorded delivery. [26] The most common form of service is in person, immediately before the lease is signed. Delivery to the signee's last known address is rarely used in practice. The prospective tenant does not have to sign the AT5 notice, although this is often a way of proving that they have received it. It is essential that the AT5 notice is served before the tenancy is created.

In terms of the Housing (Scotland) Act 1988, "tenant" equals "joint tenants". [27] Where a joint tenancy is being created, the joint tenants should each be served an AT5 separately. Where this has not happened, it would be possible to argue that an assured tenancy, rather than a short assured tenancy, is in existence.

The AT5 form should be properly completed. If it is not properly completed, it may be argued that the tenant has an assured tenancy. There is no Scottish case law on this, but in England the existence of specific errors has been enough for the courts to accept that there has been a failure to create an assured shorthold tenancy under the Housing Act 1988, as a result of which the tenants have enjoyed the greater security of an assured tenancy. These errors are:

• an incorrect date on the notice [28]

• the failure to include details of ways in which tenants may obtain advice [29]

• the failure to include the landlord's name, address or telephone number [30]

• a misspelling of the landlord's name and failure of the landlord or their agent to sign the notice. [31]

However, English courts have also stated that even if a notice has a technical defect, it will still be valid if it clearly informs "the proposed tenant of the special nature of an assured shorthold tenancy" and they would not misled by it. [32] In the following cases from the English courts, concerning tenancies that began before the assured shorthold tenancy was the 'default' position, the courts decided that the notice was valid in spite of errors, and therefore assured shorthold tenancies had been created:

• A notice that had the correct start date but the wrong end date: the court held that a notice is valid even if it contains a minor mistake, if "read in its context is sufficiently clear to leave a reasonable recipient in no reasonable doubt as to the terms of the notice". [33]

• A notice that had the termination date with the wrong year and omitted a prescribed note concerning Council Tax in relation to rent assessment: the court held that the wrong date was merely a clerical error. [34]

• A notice that gave a commencement date for the tenancy that was earlier than the date on which the tenancy had in fact been granted. [35]

• A notice where the expiry date of the tenancy was out by one month. [36]

• A notice where parts of the text of the notice differed from the wording of the prescribed form. [37]

A new AT5 notice does not need to be served where the tenancy automatically repeats itself (ie continues by way of tacit relocation) or where, at the expiry of a short assured tenancy, a new tenancy is entered into without a break in occupation. [38]