Assured Shorthold Tenancies granted on or after 1 October 2015 - new requirements under the Deregulation Act 2015
Private rented sector landlords will have heard much about the changes made by the Deregulation Act 2015 ("the Act") to Tenancy Deposit Schemes relating to Assured Shorthold Tenancies (ASTs). This note focuses on the changes to the Section 21 Notice Procedure brought about by the Act which came into force on 1 October 2015.
Section 21 Notice Procedure
Section 21 of the Housing Act 1988 gives a landlord the right to seek possession of a residential property let under an AST if:
- The fixed term of the tenancy has expired.
- Any tenant deposit is protected and the prescribed information requirements relating to it have been complied with.
- The tenant has been given at least two months' notice, unless it has a periodic tenancy:
- where the tenant has always held a periodic tenancy, a notice complying with Section 21(4) must be served to expire after the last day of a period of the tenancy and not earlier than two months after the date the notice was given.
- where the tenant has a periodic tenancy as a consequence of holding over a fixed term, a notice complying with section 21(1)(b), giving two months' notice, is now sufficient pursuant to the recent case of Spencer v Taylor  EWCA Civ 1600.
This procedure is subject to changes set out below.
When do the changes apply?
The provisions were brought into force on 1st October 2015 and apply only to ASTs granted on or after that date in England. The changes do not apply to a fixed term AST granted prior to 1 October 2015 even if, after that date, the fixed term AST becomes a statutory periodic tenancy. From 1 October 2018, the new rules will apply to any AST irrespective of when it was granted.
The Act introduced provisions to prevent a landlord from serving a Section 21 Notice where a tenant has made a legitimate complaint regarding the condition of the property and instead of resolving the issue, the landlord seeks to evict the tenant.
To rely on the protection of the Act, the tenant must have complained in writing to the landlord about the condition of the premises or the common parts of the building before serving a Section 21 Notice. A tenant need not complain in writing where it does not know the landlord's postal or email address or it has made reasonable efforts to contact the landlord to complain about the condition of the dwelling-house but was unable to do so.
A landlord must provide an adequate response to the complaint. This is deemed to be one which describes the action that the landlord proposes to take to address the complaint, and sets out a reasonable timescale when it will do so.
Where a landlord has not responded within 14 days, provided an inadequate response or responded by serving a Section 21 Noitice, the tenant may then complain to relevant local housing authority (LHA).
The LHA can serve certain types of enforcement notice on the landlord. If the LHA does so, any Section 21 Notice which has been served is invalidated and a new Section 21 Notice cannot be served for six months following service of the enforcement notice (subject to exceptions, for example, where the notice is revoked).
These provisions do not apply where:
- the condition of the premises or common parts that gave rise to the service of the relevant notice is caused by the tenant breaching its duty to use the premises in a tenant-like manner (or an express provision in the tenancy to the same effect);
- the premises are genuinely on the market for sale (this will not be the case where the sale is to an associated person as defined by the Act);
- the landlord is a private registered provider of social housing; or
- the premises were charged before the grant of the tenancy and the mortgagee wishes to exercise its power of sale and requires vacant possession.
Information to be provided at the start of the tenancy
As well as providing the tenant with the prescribed information relating to a deposit, a landlord must also give the tenant:
- A valid Energy Performance Certificate
- A valid annual Gas Safety Certificate
- A copy of the Department for Communities and Local Government's "How to rent: the checklist for renting in England" guide.
These documents should be supplied at the start of each new tenancy otherwise a Section 21 Notice cannot be served. If the landlord fails to do so, this can be remedied by supplying the documents as soon as possible thereafter and before service of a Section 21 Notice.
Other changes to the Section 21 Notice Procedure
The Act introduced a new prescribed form Section 21 Notice which must be used for all tenancies created on or after 1 October 2015. There will no longer be a requirement for the date specified in the Section 21 Notice to be the last day of a period of the tenancy, even where the tenant has always held a periodic tenancy.
The changes also prevent a landlord from serving a Section 21 Notice at the start of a tenancy, as a landlord is now prohibited from serving a Section 21 Notice within the first four months of a tenancy being granted.
Further, a notice will only remain valid for six months following the date of service. Consequently possession proceedings must be brought within that period to avoid the need for a fresh notice to be served. Although it will no longer be necessary, if a notice period is longer than two months to comply with Section 21(4) (explained above), then the notice will instead become invalid four months from the date of expiry of the notice.
Finally, a tenant can claim repayment of rent paid in advance (calculated on a daily basis) where a tenancy is brought to an end mid-way through a payment period. The court is obliged to make an order requiring a landlord to repay the rent if it has not been paid prior to the court making an order for possession.
A landlord unaware of these changes may find that non-compliance with the new requirements causes delays in obtaining possession.
A diligent landlord should ensure that all prescribed information and documents are provided to the tenant at the start of a new tenancy and complaints are resolved promptly to avoid falling foul of the new requirements.
The Section 21 Notice procedure has been viewed by many as a "no fault" procedure and an easier and quicker way of obtaining possession when compared with the Section 8 Notice procedure, often avoiding the need for a court hearing. It remains to be seen whether the changes will result in a rise in defended Section 21 cases and an increase in the need for the matter to be heard by the Courts.
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