Change of Landlord – Notice required to the Tenant?

January 23, 2014 11:28 am - Categorised in: ,

Buying a property with an existing tenant in place can often be an attractive investment. Not only is rental income available immediately after completion of the purchase, there is no need to incur additional time and expense finding a tenant.

During the course of the purchase, there are legal requirements which the buyer’s solicitors ought to investigate and comply with. Many are obvious, such as checking that the tenancy deposit has been properly registered and that it will be transferred to the buyer, or checking that a gas safety check has been carried out.

However, there is one important requirement which is often overlooked, even by solicitors. Under Section 3 of the Landlord and Tenant Act 1985, if the landlord’s interest is transferred, the buyer must notify the tenant in writing of the transfer. The notice must include the new landlord’s name and address, and there is a deadline of two months after the date of purchase in most cases. The notice must be given even if the previous landlord has already sent a similar notice to the tenant.

It is a criminal offence for the buyer not to comply with this requirement and the legislation sets out a maximum penalty of £2,500. Why on earth did the parliamentary draftsmen think that making a simple oversight a criminal offence would be sensible or proportionate? We wonder who actually benefits from this? What is the likelihood of the police prosecuting a landlord for not sending this notice, especially if the tenant already knows who their landlord is and is paying rent to him?

So can landlords ignore this requirement? On the one hand, tenants may not care about receiving such a letter. However, if a landlord wishes to evict the tenant and gives the required two months’ written notice to quit (a section 21 notice), this could aggrevate the tenant. They might try petitioning the police to act. Do you want to run the risk of a policy enquiry?

Perhaps more importantly, if the tenant refuses to leave after receiving the section 21 notice, the landlord will need to apply for a court order before taking back possession. Usually, the Court will use the accelerated procedure, and will grant a possession order without a hearing. However, if the tenant informs the Court that the landlord did not send out the notice when he purchased the property, and has therefore committed an offence, this could prejudice the landlord’s case, and the Court could order that the case be decided at a formal hearing. This process would be lengthier and far more costly, and could mean several more months with a non-paying tenant living in the property. All this is easily avoided by simply sending the required letter to the tenant.

Finally, it should be noted that the requirement to notify tenants of the change of landlord also applies to transfers between family members or group companies, which may be less obvious to both landlords and tenants. Worth double-checking on your next purchase?

If you require any further information, please contact Ben Bourne on 0115 922 1591 or e-mail : b.bourne@ellis-fermor.co.uk

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About Ben Bourne

Ben Bourne is one of our directors and works within our Commercial Litigation and Charity Law departments. Ben is a member of the Charity Law Association and has also served on a number of Charity Trustee Boards.

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