Subletting, Fraud and “Parting with Possession”

The Fraud Act added section 15A into the Housing Act 1988, which states that if an assured tenant “sub-lets” or “parts with possession of the dwelling-house”, the “tenancy ceases to be an assured tenancy and cannot subsequently become an assured tenancy.”

This is helpful for landlords as, if an assured tenant “sub-let” or “parted with possession” of a property, they cannot retain the assured status by returning to the property between service and expiry of the landlord’s Notice to Quit.

To fully utilise the Fraud Act’s new powers, a clear definition of “parting with possession” is required:

• Does this have to be for a specific length of time?
• Does the tenant have to remove all their belongings from the property?
• Does the new occupier have to have exclusive possession?
• What if the tenant has an intention to return at some distant point in the future?
• What happens if the new occupiers are friends or relatives of the tenant?

The interpretation of “parting with possession” was considered in our article ‘Overcoming the challenges of sub-letting by assured tenants’ in our Summer Newsletter.

Since then, the case of Poplar HARCA v (1) Begum (2) Rohim [2017] EWHC 2040 (QB), was decided in July 2017 and provides some much-needed guidance on the matter, although additional clarification is still needed.

In the Begum/Rohim case, the Respondents were assured tenants of social housing and occupied a two-bedroom flat with their children.  In August 2015, they moved out of the flat to live with the First Respondent’s mother and care for her ill brother.  They sublet the flat for £400 per month to a couple but retained one bedroom containing their children’s belongings.

At the trial, the landlord stated that the Respondents had parted with possession of the whole of the flat and had therefore lost security of tenure due to Section 15A of the Housing Act 1988.  In the alternative, it relied upon Grounds 10, 12 and/or 14 of the Housing Act 1988.

The Judge dismissed the landlord’s primary claim on the basis that the Respondents had neither sublet nor parted with possession of the whole flat and granted a suspended possession order based on the alternative claim.

This case, therefore, suggests that:

• Retaining a room within the property to store belongings might mean that a tenant has not parted with possession of the property;
• The reason for leaving the property might be relevant to whether or not the tenant had “parted with possession”; and
• The relationship between the tenant and the new occupier is potentially relevant.

The Judge’s decision was appealed and was held to be “fatally and demonstrably flawed”  because they had overlooked the fact that the Respondents were pocketing Housing Benefit to cover the rent on the flat they were no longer occupying in addition to “fraudulently harvesting an additional £400 from the occupiers Mr Ahmed”.  Whilst the appeal did not consider the Recorder’s “parting with possession” interpretation/decision, it nonetheless raises the question; if the rest of the Recorder’s decision was “fatally and demonstrably flawed”, was his interpretation of “parting with possession” similarly flawed?

We expect this will come up in another appeal soon.

For more information, please contact Katherine Raison.

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