Tenant holding over at end of lease was tenancy at will, not protected yearly tenancy

Where a tenant remains in property after the expiry of a lease which has been contracted out of security of tenure, the tenant is generally a “tenant at sufferance” until the landlord consents to the tenant remaining. At that point the tenant will become at the very least a tenant at will.

The tenant’s continuing to pay the rent is still consistent with that tenant remaining a tenant at will with that tenancy being terminable immediately on notice by either party.

This applies even if the rent payable under the expired lease was an annual rent.

The payment of rent gives rise to no automatic presumption of a yearly or other periodic tenancy.

Instead the parties’ contractual intentions are to be decided by looking objectively at all relevant circumstances.

In the Court of Appeal case of Erimus Housing Ltd v Barclays Wealth Trustees (Jersey) Ltd & Ors [2014] EHL stayed on after expiry of a lease which had been contracted out of security of tenure. But BWT contended that EHL held over under a periodic yearly tenancy which could not be terminated except by at least six months’ notice served to expire on 31 October 2013.

So by May 2012 it had been too late for them to serve an effective contractual notice for 31 October 2012.

In June EHL had served a notice to end the lease on 31 August 2012.

BWT said that the periodic yearly tenancy arose between January 2010 and June 2011 when the negotiations for a new tenancy to be contracted out of security of tenure had stalled.

However an e-mail of 16 November 2010 confirmed that both parties had continued to work on the assumption that a new lease would be granted.

Though the negotiations were painfully slow, they were never given up. In fact in June 2011 they reached agreement on the terms for the new lease.

None of this squared with the creation of a new yearly tenancy in advance of the grant of a new lease and certainly not with one which would be protected under the Landlord and Tenant Act 1954.

The key fact here was that the parties were in negotiation for the grant of a new formal lease.

Here the courts will tend to infer that the parties did not intend to enter into any intermediate contractual arrangement inconsistent with remaining parties to ongoing negotiations.

In most cases it will be concluded that the occupier remained a tenant at will pending the execution of the new lease.

The inference is likely to be even stronger when any periodic tenancy would carry with it statutory protection under the 1954 Act.

In the present case the intended new lease, like the old lease, was to be contracted out. This made the last point an even stronger inference against BWT’s contention that there had been an intermediate periodic tenancy as opposed to a tenancy at will.

This blog has been posted as a matter of general interest. It does not remove the need to get bespoke legal advice in individual cases.