A recent possession case provides an important warning to landlords buying properties with tenants already in occupation

When a landlord purchases a property with an existing tenant, there are a number of legal and administrative steps which need to be dealt with correctly.

One of those steps is notifying the tenant of the change of landlord.

Two particularly important provisions are Section 3 of the Landlord and Tenant Act 1985 and Section 48 of the Landlord and Tenant Act 1987.

Both provisions are straightforward in principle. However, a recent possession hearing in which I represented the landlord demonstrated just how important it is to ensure that the correct landlord is named.

In that case, the property had been purchased with a tenant already living there. The new landlord was a limited company and subsequently sought possession because of rent arrears.

The problem?

The notices served on the tenant identified a different company as the landlord.

Although that company was part of the same corporate group, it was not the company that subsequently brought the possession claim.

The consequence was significant: the possession claim was struck out.

What does Section 3 of the Landlord and Tenant Act 1985 require?

Section 3 of the Landlord and Tenant Act 1985 deals with the situation where the landlord’s interest in a residential tenancy is assigned.

The legislation requires the new landlord to give the tenant written notice of:

• the assignment of the landlord’s interest; and
• the name and address of the new landlord.

The notice must generally be given by the next rent payment date, subject to the statutory time provisions.

This is not merely a matter of good practice.

The legislation makes failure to comply, without reasonable excuse, a criminal offence, punishable by a fine.

The purpose is understandable. A tenant is entitled to know who their landlord actually is.

If a property has been sold, the tenant needs to know who has acquired the landlord’s interest and who is now entitled to exercise the landlord’s rights and obligations under the tenancy.

What does Section 48 of the Landlord and Tenant Act 1987 require?

Section 48 serves a different, but equally important, purpose.

It requires the landlord to give the tenant an address in England and Wales at which notices, including notices in proceedings, may be served on the landlord.

This is particularly important where the landlord is a company or is based outside England and Wales.

There is also a significant consequence if the landlord fails to comply.

Under Section 48(2), rent, service charge or administration charge which would otherwise be due is treated as not being due during the period before the landlord complies with Section 48(1).

Importantly, this does not mean that the rent is necessarily lost forever. Once the landlord complies with Section 48, the rent can become due. The High Court considered this issue in Sunset Ltd & Anor v Al-Hindi [2023] EWHC 2443 (Ch).

What happened in the case at the recent possession hearing?

The property had been purchased by a new landlord with the tenant remaining in occupation.

The new landlord was a limited company.

Following the purchase, notices were served purporting to comply with Section 3 of the Landlord and Tenant Act 1985 and Section 48 of the Landlord and Tenant Act 1987.

The problem was that the company named as landlord in those notices was not the company that subsequently issued the possession proceedings.

The two companies were connected and were part of the same group.

But they were separate legal entities.

When the tenant subsequently fell into rent arrears, possession proceedings were issued in the name of the company that actually owned the property and was entitled to bring the claim.

At the possession hearing, the tenant was represented by a solicitor.

The tenant’s solicitor identified the discrepancy between the landlord named in the Section 3 and Section 48 notices and the claimant named on the claim form.

An argument was raised that the claimant’s identity did not correspond with the landlord identified to the tenant by the statutory notices.

The court accepted the issue raised by the tenant.

The possession claim was struck out.

“But they’re all part of the same group…”

This is perhaps the most important lesson from the case.

A group of companies is not one legal person.

It is perfectly possible for several companies to share:

• the same directors;
• the same shareholders;
• the same registered office;
• the same trading name;
• the same managing agent; and
• the same ultimate ownership.

They nevertheless remain separate legal entities.

If Company A owns the property, but Company B is named as the landlord in a statutory notice, the fact that Company A and Company B are connected does not automatically make them the same landlord.

That distinction can become critical when possession proceedings are issued.

Why the Section 3 notice matters

Section 3 specifically requires the new landlord to notify the tenant of the assignment and of the new landlord’s name and address.

Consequently, the identity of the company on the notice matters.

If the property has been acquired by:

ABC Properties Ltd

but the Section 3 notice identifies:

ABC Holdings Ltd

those are not simply two versions of the same name.

They are different legal persons.

The same applies if the difference is between companies such as:

ABC Property Management Ltd

and

ABC Property Investments Ltd.

Even if both companies belong to the same group, they are separate companies.

Why the Section 48 notice matters

The same caution applies to Section 48.

The notice must furnish the tenant with an address in England and Wales at which notices, including notices in proceedings, may be served on the landlord.

It is therefore important that the notice correctly identifies the landlord to whom the address relates.

A Section 48 notice is not simply a generic “contact address” for a property management company.

The statutory requirement relates to service on the landlord.

That distinction can be particularly important where a property is owned by one company but managed by another.

The consequences can be serious

The case demonstrates that statutory compliance should not be treated as a box-ticking exercise.

A landlord may have:

• purchased the property correctly;
• registered the property correctly;
• collected rent correctly;
• instructed a managing agent correctly;
• issued the correct possession notice;
• calculated the rent arrears correctly; and
• prepared the court claim correctly.

Yet an error in the earlier statutory notices can still become a significant issue at the possession hearing.

In this case, the discrepancy was identified by the tenant’s solicitor and ultimately resulted in the claim being struck out.

That meant the landlord had incurred the time and expense of bringing possession proceedings only for the claim to fail because of an issue concerning the identity of the landlord.

The lesson for landlords buying occupied properties

When purchasing a property with a tenant already in occupation, the new landlord should carefully check the statutory notices before they are served.

In particular, check:

1. Who actually purchased the property?

Check the precise legal name of the purchaser.

2. What is the company’s registered name?

Do not rely on a trading name or shortened company name.

3. Is the correct company named in the Section 3 notice?

The notice should identify the actual new landlord.

4. Is the correct landlord identified in the Section 48 notice?

The notice should relate to the landlord and provide the required address in England and Wales for service.

5. Is the claimant in any future possession proceedings the same legal entity?

The company bringing the claim must be the company entitled to bring the claim.

6. Are there multiple companies within the same group?

If so, take particular care. Similar company names can easily result in the wrong entity appearing on paperwork.

A simple company-name mistake can become a major litigation problem

The important point is that these documents are not merely administrative correspondence.

They are statutory notices.

Section 3 places a specific obligation on a new landlord to tell the tenant who the new landlord is, and failure to comply without reasonable excuse is a criminal offence.

Section 48 requires the landlord to provide an address in England and Wales for service of notices and proceedings, with the statutory consequence that rent and certain other sums are treated as not being due during the period of non-compliance.

Getting the landlord’s identity wrong can therefore have consequences far beyond a spelling mistake.

Conclusion

This recent case is a useful reminder that the identity of the landlord matters.

Where a property has been purchased through a limited company, landlords and their agents should take particular care when preparing Section 3 and Section 48 notices.

A company within the same corporate group is not necessarily the same legal entity.

The company named in the statutory notices should be checked against the company that actually acquired the landlord’s interest and, where possession proceedings are subsequently required, the company that is entitled to bring the claim.

A possession claim is often the end of a long process.

The temptation can be to concentrate on the rent arrears, the tenancy agreement and the Section 8 notice.

But the foundations of the claim matter too.

Get the landlord’s identity right at the beginning.

Otherwise, an apparently minor error in a statutory notice can become a very significant problem when the case reaches court.

This article is based on a recent possession hearing in which I represented the landlord. The circumstances have been anonymised and some details have been changed. It is intended as general information and should not be treated as legal advice on any particular case.

The author of this post is Philip Nam, Director of White Collar Legal. Philip is NOT a Solicitor, Barrister, Legal Executive and is NOT authorised to conduct litigation or exercise a right of audience under the Legal Services Act 2007. Philip attended the hearing under the instructions and supervision of an authorised person.

You can contact Philip Nam on 07943 163 877 or philip@whitecollarlegalandadmin.com. You can also contact our office on 0151 230 8931