Renting Homes: The Final Report - Law Commission

TRANSFERRING THE CONTRACT 58
6.36 Long leaseholders, whose interest in land is akin to that of the owner-occupier,
need to be able to deal with that interest. Otherwise they would find themselves
trapped. The transfer of leases from one tenant to another is achieved by the
process of assignment, usually for a premium. This is a key feature of the law of
landlord and tenant.
6.37 In the rental market, these considerations are less important. Landlords enter into
agreements with particular individuals on the basis that those individuals will
meet the obligations of the tenancy (such as to pay the rent) or, in the case of
social housing, have a proven social need for that accommodation. Landlords
must control the identity of the tenant in a way that does not apply with long
leaseholders. For this reason, as noted at the start of this Part, the starting point
for our scheme is that contract-holders cannot deal with their contracts, other
than as permitted by their contracts (or in accordance with family property
orders).
6.38 Nevertheless, current law provides for some circumstances in which rights under
a tenancy may be transferred. We have adapted these to our recommended
scheme. We think they strike the right balance between the interests of the
landlord and the contract-holder.
6.39 As regards formalities, we think that the formalities of assignment are too
complex to fit into our consumer approach. Similarly, in relation to licences,
where transfer depends on contractual principles of novation and the assignment
of benefits of contracts, the rules are complex and poorly understood. Thus we
have created a process of transfer which is set out in the Bill.
Transfer to potential successor 59
6.40 At present, secure tenants are able to assign their secure tenancy to a potential
successor. 60 This enables a frail parent to transfer their secure tenancy to a
member of the family before going into residential care.
6.41 In accordance with the principle of landlord-neutrality, we think this right should
apply to all secure contracts, not just those entered into by local authorities. The
Bill provides that, subject to the consent of the landlord, 61 it is a fundamental term
of a secure contract that any sole contract-holder can seek to transfer their
contract to a person or persons who would have the statutory right to succeed if
the current occupier died. 62 This also enables a contract-holder to pass their
contract on to a carer-successor.
58
Transferring rights of occupation is discussed in Part 13 of Renting Homes (2003) Law
Com No 284.
59
Cl 131. The right of succession, and the definition of who can be a successor, is discussed
below, at paras 7.8 to 7.30.
60 Housing Act 1985, s 91(3)(c).
61 Landlord’s consent is discussed below, at paras 6.61 to 6.76.
62 Cl 131.
108