29 May, 2013
Since the rulings in Manchester City Council v Pinnock and Hounslow v Powell, a tenant facing possession proceedings has been able to defend proceedings by claiming that eviction is 'disproportionate' under Article 8 ECHR. In the latest case raising this defence the position for tenants who have entered into an option to purchase scheme has been clarified.
Ms Ker entered into an assured shorthold tenancy under Optima's FlexiBuy scheme in February 2009. The scheme granted tenants an assured shorthold tenancy at a market rent, along with an option to purchase at a later date under shared ownership. The tenant would then benefit from a contribution from the landlord towards the purchase price, representing the difference between the market rent, which the tenant had been paying, and the amount the landlord would have received from a social housing tenant. This is known as the deposit incentive.
In the beginning of 2010 Ms Ker began to accumulate substantial rent arrears and in April 2011 Optima began possession proceedings under s.21 Housing Act 1988. Ms Ker defended the proceedings, arguing that her eviction would be disproportionate and a breach of Article 8 ECHR, relying on the case of Manchester City Council v Pinnock. The trial judge, however, rejected Ms Ker's defence and made the possession order. Ms Ker then appealed the decision, claiming that the trial judge had viewed the tenancy agreement incorrectly and therefore the possession order was disproportionate. The Court of Appeal dismissed the appeal.
This case gives landlords some comfort following the Manchester City Council v Pinnock case, as it does not give shared ownership tenants the ability to defend proceedings under Article 8 ECHR. This case acknowledges the need of housing associations to retain property in order for it to be used as part of a shared ownership scheme by allowing landlords to secure possession where the tenant is no longer upholding the terms of the shared ownership agreement.
The case also highlights the importance of clearly constructed shared ownership agreements. Housing Associations must ensure that such agreements clearly state the circumstances in which the agreement can be terminated, how rent is to be apportioned and, in the case of option to purchase schemes, when the option can be exercised. The absence of a clearly constructed agreement could give rise to arguments over the intentions of the parties. This case also emphasises the importance of tenants both reading and understanding agreements that they enter into. The fact that Ms Ker had read and understood the agreement was mentioned several times in this judgment, highlighting the importance of obtaining a statement from tenants confirming that they have read and understood the agreement that they are entering into.
In summary it is vitally important that housing associations review their shared ownership and home buy agreements to ensure that the terms of the agreement are clearly constructed and there is confirmation that tenants have read and understood the agreement they are entering into in order to minimise the risk of the agreements causing legal problems in the future and to reserve the right to secure possession of shared ownership properties when needed.