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Cutting the red tape: the Deregulation Act 2015

by | 1 Nov, 2015 | Blog

The Deregulation Bill received Royal Assent on 26 March 2015. Although it makes some fairly significant changes to the law, it received relatively little media coverage, perhaps because at that time so much attention was focussed on the run-up to the general election. In this post I am going to look at some of the aspects of the Deregulation Act 2015 (‘the 2015 Act’) that are relevant to housing.

According to the introduction to the 2015 Act, it is intended to make provision for the reduction of burdens resulting from legislation for businesses or other organisations or for individuals; make provision for the repeal of legislation which no longer has practical use; make provision about the exercise of regulatory functions; and for connected purposes.

Right to buy

Section 118 of the Housing Act 1985 gives eligible local authority tenants the right to buy their home. Section 28 of the 2015 Act reduces the qualifying period from five years to three years. It also applies to those tenants of housing associations who qualify for the right to acquire. This amendment does not change the discounts available and the increase in the starting discount for each complete year of the qualifying period will continue to apply only when the qualifying period exceeds five years.

Section 28 came into force on 26 May 2015. It applies to England only.

Tenancy deposits

Sections 30 to 32 of the 2015 Act make significant amendments to the tenancy deposit protection legislation that was introduced in the Housing Act 2004 and which has been the subject of much litigation before the courts, including my own Court of Appeal case of Superstrike Ltd v. Rodrigues in 2013 and the 2014 case of Charalambous v. Ng.

Section 30 of the 2015 Act provides that it is acceptable to show in the prescribed information the details of the agent who protected the deposit at the outset of the tenancy instead of giving the landlord’s details.

Sections 31 and 32 of the 2015 Act amend sections 214 and 215 of the Housing Act 2004 and introduce three new sections: section 215A, which deals with deposits received prior to 6 April 2007; section 215B, which deals with deposits received on or after 6 April 2007; and section 215C, which sets out the circumstances when the amendments to the 2004 Act will not be treated as being retrospective (generally if matters have been settled or the court has finally determined proceedings by 26 March 2015).

The effect of the amendments is as follows:

  • if a landlord took a deposit in respect of a tenancy that became periodic before the tenancy deposit scheme came into force on 6 April 2007, the landlord should protect the deposit and provide the prescribed information within 90 days of the 2015 Act coming into force; i.e. by 23 June 2015. There is no financial penalty for failure to comply;
  • if a landlord took a deposit in respect of a fixed term assured shorthold tenancy that was granted before 6 April 2007 and which became a statutory periodic tenancy after that date, the landlord must protect the deposit and provide the prescribed information within 90 days of the 2015 Act coming into force; i.e. by 23 June 2015. The financial penalties will apply to landlords who fail to comply;
  • if a landlord took a deposit after 6 April 2007, which it placed in a tenancy deposit scheme and it served the prescribed information, if a statutory periodic tenancy arises the landlord’s compliance with the deposit protection legislation in respect of the original tenancy will suffice for the purposes of the statutory periodic tenancy. However, this amendment will not assist a landlord who failed to protect the deposit during the original tenancy.

Sections 30 to 32 came into force on 26 March 2015. They apply to England and Wales.

Retaliatory eviction

Sections 33 and 34 of the 2015 Act contain provisions that restrict a landlord’s ability to rely on a section 21 notice requiring possession in respect of an assured shorthold tenancy if a tenant has made a written complaint to the landlord regarding the condition of the premises or common parts and the landlord has not responded (or its response is inadequate) and it then serves a section 21 notice. The tenant can complain to the local housing authority, which can serve various types of enforcement notice on the landlord. If the local housing authority does this, the landlord cannot serve a section 21 notice within six months of the date of service of the enforcement notice.

The provisions do not apply where:

  • the tenant is in breach of their duty to use the premises in a tenant-like manner or an express term of the tenancy agreement to the same effect;
  • the premises are genuinely on the market for sale;
  • the landlord is a private registered provider of social housing; or
  • the premises were mortgaged before the grant of the tenancy and the mortgage lender wishes to exercise its power of sale and requires vacant possession.
  • Sections 33 and 34 come into force on 1 October 2015. They apply to England only.

Section 21 notices

Sections 35 to 40 of the 2015 Act make a number of amendments to the law and practice governing the recovery of possession of an assured shorthold tenancy under section 21 of the Housing Act 1988, including:

  • removing the need for the date specified in the s.21 notice to be the last day of a period of the tenancy (s.35);
  • preventing a landlord from serving a s.21 notice within the first four months of the tenancy (s.36);
  • enabling the Secretary of State to make regulations prescribing the form of a s.21 notice (s.37);
  • preventing a landlord from giving a s.21 notice where it is in breach of a ‘prescribed requirement’. The prescribed requirements will be set by regulations and can relate to the condition of the
  • premises and common parts, health and safety and energy performance (s.38);
  • requiring a landlord to provide information about the respective rights and responsibilities of both the landlord and the tenant under the tenancy and preventing the landlord from giving a s.21
  • notice when it is in breach of this obligation (s.39); and
  • giving a tenant a statutory right to recover rent paid in advance, calculated on a daily basis, where a s.21 notice brings the tenancy to an end before the end of a payment period (s.40).

Section 37 comes into force on 1 July 2015. It applies to England only.

Sections 38 and 39 come partially into force on 1 July 2015, enabling the power to make regulations to be exercised, and fully into force on 1 October 2015. They apply to England only.

Sections 35, 36 and 40 come into force on 1 October 2015. They apply to England only.

Application of the changes to existing- and new tenancies

Section 41 of the 2015 Act states:

  • sections 33 to 40 will apply to an assured shorthold tenancy granted on or after the date the relevant rule comes into force;
  • they will not apply to a fixed term assured shorthold tenancy agreement granted prior to that date even if the tenant holds over as a statutory periodic tenant after that date; but
  • all of the new rules (apart from section 39, the requirement to provide prescribed information) will apply to all assured shorthold tenancies in existence after the end of the period of three years beginning with the date that the relevant rule comes into force.
    Section 41 comes into force on 1 October 2015. It applies to England only.

Short-term use of London residential accommodation

The Greater London Council (General Powers) Act 1973 requires Londoners who wish to rent out their homes for less than 90 consecutive nights to apply for planning permission from their borough council. Section 44 of the 2015 Act amends this to permit short-term letting of residential premises in London for up to 90 days per calendar year. The person who provides the accommodation must be liable for council tax in respect of the premises so as to ensure that the relaxation in the law only applies to residential, and not commercial, premises.

Section 44 came into force on 26 May 2015. It applies to England only.

Commentary

The changes in the 2015 Act to the deposit protection legislation are intended to simplify and clarify matters in light of recent cases such as Superstike and Charalambous by removing much of the ambiguity in the law. It makes eminent sense to require all deposits for assured shorthold tenancies to be protected in a scheme irrespective of when they were taken or when the tenancy began; after all, that was the original intent of the legislation. Landlords and letting agents have had since 6 April 2007 to get to grips with the requirements of deposit protection and should therefore have little or no difficulty ensuring that all deposits are properly protected and the prescribed information given.

In contrast, the changes regarding retaliatory evictions and amendments to the section 21 possession procedure are somewhat novel. Landlords and letting agents only have a limited period of time to ensure that standard form documents, policies and procedures are changed to take account of the new law failing which they may face significant difficulty in obtaining possession using section 21 of the Housing Act 1988. For example, landlords will need to ensure that tenants have adequate means of contacting them because, even though the tenant’s complaint must be in writing, sections 33(4) and 33(5) of the 2015 Act state that it will still apply if the tenant does not know the landlord’s email or postal address or if the tenant made reasonable efforts to contact the landlord to make the complaint but was unable to do so. Similarly, landlords will need to make sure that complaints about maintenance or the condition of the property are documented and dealt with expeditiously and certainly within the 14 days required by section 33(2)(b) of the 2015 Act. Proper record keeping and diary management will therefore become key.

I suspect this is going to require quite a bit of a sea change in attitude. Registered providers of social housing are already used to undertaking a justification exercise prior to the commencement of possession proceedings but the changes introduced by the 2015 Act are going to necessitate all landlords and letting agents carrying out a ‘health check’ before a section 21 notice is served to ensure that the regulatory requirements have been complied with and to identify any possible problems. Coupled with the recent obligations imposed on letting agents by virtue of the Consumer Rights Act 2015 (as to which please see my previous post: http://tinyurl.com/pzgvvkh), it heralds a brave new world for the sector.

Further information

The full text of the 2015 Act can be viewed here. As can be seen, it applies many other areas of life that are well outside the scope of this post. If you require any assistance with interpreting the 2015 Act or assessing its 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.