Sham Property Sales
The UT recently considered the FTT’s decision to refuse a wrongful termination application notwithstanding its finding that the landlord’s intention to sell was contrived.
Background
Landlords served a notice to leave informing their tenant of the landlords’ intention to sell (Ground 1 of sch 3, 2016 Act). The tenant moved out following receipt. The landlords marketed the property for sale and held viewings but did not accept offers to purchase. Instead, they relet the property to another tenant at a higher rent. The tenant considered she had been misled into vacating and sought a wrongful termination order.
Having heard evidence from the parties, the FTT stated that “it was not satisfied, on the basis of the evidence before it, that the Respondents had any intention of going through with a sale of the property… the tribunal was satisfied that the situation was contrived for the benefit of the Respondents”.
Nonetheless, the FTT did not grant a wrongful termination order due to its narrow interpretation of the Ground 1 (2)(b) which provides
“The First-tier Tribunal may find that the ground … applies if the landlord
(a) is entitled to sell the let property,
(b) intends to sell it for market value, or at least put it up for sale, within 3 months of the tenant ceasing to occupy it, ….
The FTT considered that the act of marketing the property for sale meant the tenant was not misled. The FTT held “just having the intention of putting the property up for sale was sufficient to establish the Ground”.
The Tenant appealed. The UT held that the FTT erred in law in its interpretation of Ground 1 (2)(b). In particular, Sheriff Collins held “the eviction ground is established by demonstrating a genuine intention to sell the let property and the expression “put it up for sale” must be read and understood in that context”.
The above decision ensures that a landlord cannot evade the protections of the wrongful termination provisions available to tenants simply by putting the property on the market for sale. Landlord must have a genuine intention to sell the property. The UT accepted there will be situations where landlords do genuinely have those intentions but later change their minds and that it would be wrong to penalise such landlords.
Accordingly, it will be for the Tribunal to distinguish, based on evidence, those with genuine unfulfilled intentions from the sham sales contrived to rid landlords of difficult tenants.
