All change for landlords and letting agents!

Why is 1 October 2015 so significant? It is a key date for anyone involved in the rented property sector in England as new legislation, which makes fundamental changes to the law relating to assured shorthold tenancies, comes into force. In this post I am going to look at these changes and how they are likely to make a massive impact.

Introduction

The changes are a result of: (a) the Deregulation Act 2015 (‘the 2015 Act’), as to which please see my earlier post; and (b) the concisely named The Assured Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (SI 2015 No. 1646) (‘the 2015 Regulations’), the full text of which can be viewed here.

Preventing retaliatory eviction

The provision of sections 33 and 34 of the 2015 Act come into effect for all new assured shorthold tenancies granted on or after 1 October 2015.

The end date for section 21 notices

Calculating the end date for a section 21 notice has often caused landlords a headache, especially when the notice is served pursuant to section 21(4)(a); indeed, it has led to a number of reported cases such as McDonald v. Fernandez [2003] EWCA Civ 1219.

Section 35 of the 2015 Act deals with this issue by introducing a new section 21(4ZA) into the Housing Act 1988 (‘the 1988 Act’) which removes the need for any section 21 notice for property in England to expire on the last day of a period of the tenancy. This means that when dealing with a statutory periodic tenancy a landlord will only need to give two months’ notice (assuming, of course, a weekly or monthly rent period).

Time limits in relation to section 21 notices and proceedings

Section 36 of the 2015 Act inserts new sections (4B) to (4E) into the 1988 Act, meaning that for property in England:

• A section 21 notice cannot be served in the first four months of a tenancy or, in the case of a replacement tenancy, within four months beginning with the date on which the original tenancy began;
• Proceedings for possession cannot be commenced after the end of the period of six months beginning with the date on which notice was given pursuant to section 21(1) or 21(4) of the 1988 Act;
  Where a section 21(4)(b) notice has been served and the date in the notice is more than two months after the date the notice was given, proceedings for possession cannot be commenced after the end of the period of four months beginning with the end date specified in the notice.
• The effect of these new provisions is to do away with the habit of many landlords and letting agents of serving a section 21 notice at the commencement of the tenancy and leaving it in place like the sword of Damocles.

Prescribed form of section 21 notice

Section 37 of the 2015 Act provides for a new prescribed form of section 21 notice. The form is introduced by the 2015 Regulations (it is set out in the Schedule) and must be used for all assured shorthold tenancies starting on or after 1 October 2015; it may also be used for existing tenancies.

Compliance with prescribed legal requirements

Section 38 of the 2015 Act introduces a new section 21A into the 1988 Act, which requires landlords to comply with prescribed legal requirements before a section 21 notice can be served.

By paragraph 2 of the 2015 Regulations, the tenant must be provided with: (a) the Energy Performance Certificate for the property; and (b) a current gas safety certificate. Absent this, no section 21 notice can be served.

Requirement for landlord to provide prescribed information

Section 39 of the 2015 Act introduces a new section 21B into the 1988 Act, which provides that no section 21 notice can be given unless the landlord has given the tenant the prescribed information.

Paragraph 3 of the 2015 Regulations explains that the prescribed information is the Department for Communities and Local Government booklet ‘How to Rent: the checklist for renting in England’.

By paragraph 3(3) of the 2015 Regulations, the booklet can be provided in hard copy or, where the tenant has given an email address for service of notices, by email.

By paragraph 3(4) of the 2015 Regulations, once the landlord has complied with this requirement it is not required to supply a further copy each time a different version is published during the tenancy.

Paragraph 3(5) of the 2015 Regulations states that this requirement does not apply: (a) where the landlord is a private registered provider of social housing; or (b) where the tenancy is a replacement tenancy (as defined in section 21(7) of the 1988 Act), the information was provided under the earlier tenancy and the version of the information provided under the earlier tenancy is the same version that is in effect on the first day of the new tenancy.

Repayment of rent where the tenancy ends before the end of a period

Section 40 of the 2015 Act introduces a new section 21C into the 1988 Act, which entitles an assured shorthold tenant of property in England to a repayment of rent from the landlord where: (a) as a result of the service of a section 21 notice the tenancy is brought to an end before the end of a period of the tenancy; (b) the tenant has paid rent in advance for that period; and (c) the tenant was not in occupation of the property for one or more whole days of that period. Section 21C(2) sets out a formula for calculating the amount of the repayment. By section 21C(3), the court must order the landlord to repay the relevant amount if it has not already been repaid by the date when the court makes an order for possession under section 21.

Commentary

Combined with the recent amendments to the deposit protection regulations, there is plenty here to trip up the unwary landlord.

Landlords will need to be especially careful to ensure that they have satisfied all relevant criteria before ‘pulling the trigger’ and serving a section 21 notice. Letting agents will need to ensure that they are totally au fait with the provisions and that their policies, procedures and standard documents are reviewed and updated prior to 1 October 2015, failing which they can expect complaints and even professional negligence claims from their landlord clients.

It seems to me that, as is so often the way with housing law, accurate and full record keeping will be key. Take for example the requirement to provide prescribed information to the tenant: if the landlord is going to rely on the exemption at paragraph 3(5)(b) of the 2015 Regulations it will need to be able to evidence that the version of the booklet that was in force when the replacement tenancy was created was the same as the one when the earlier tenancy started. Will the older iterations of the booklet be available on the DCLG website? This remains to be seen but it certainly cannot be relied upon and the prudent landlord will therefore keep a copy of the relevant booklets on its file.

I suspect there will be a lot of invalid section 21 notices come 1 February 2016 and I think it is fair to say that we can look forward to a raft of satellite litigation, just as we had when the deposit protection provisions first came into force. This is, however, the last thing that is needed in an already overburdened court system with yet more court closures mooted.

If you require any assistance with interpreting the 2015 Act and 2015 Regulations, or assessing the potential impact on your business or you, then please get in touch.

Please note that my posts are no more than an immediate response to a recent decision or other legal development in England and Wales intended for general information purposes only. As such, they do not constitute professional advice (legal or otherwise) nor should they be used as such for any specific situation. Neither my firm nor I can accept responsibility for any act and/or omission based on my posts. You should therefore seek advice if proposing to take any action based on what you have read. Any views expressed are my own and not necessarily those of my firm.