Changes to Assured Shorthold Tenancies from 1 October 2018

The Deregulation Act 2015 introduced new rules as to the way in which Assured Shorthold Tenancies (“ASTs”) of residential properties in England are granted and restrictions as to how ASTs may be terminated. In particular, the rules restrict a landlord’s ability to serve a notice under section 21 of the Housing Act 1988 (“section 21 notice”), albeit the position in relation to the service of a section 8 notice under the Housing Act 1988 is unaffected. From 1 October 2018, the provisions of the Deregulation Act 2015 will apply to all ASTs in England whenever granted. Previously the new rules only applied to ASTs granted after 1 October 2015.

Requirements from 1 October 2018

Following 1 October 2018, a landlord will now be prevented from serving a section 21 notice seeking to terminate an AST unless it has complied with certain statutory obligations. The obligations require the landlord to have provided the tenant with the following before the tenant enters into occupation of the property:

an EPC certificate;
a gas safety certificate; and
a copy of the Government’s prescribed form booklet entitled: “How to rent: the checklist for renting in England” (“How to Rent Guide”).

If the landlord has not complied with its obligations, this will affect its ability to serve a valid section 21 notice. These requirements are additional to the obligation to protect a deposit received from the tenant in an approved tenancy deposit scheme and provide prescribed information in connection with the deposit to the tenant within the relevant timeframe.

The form of section 21 notice will also be prescribed as from 1 October 2018 and if the landlord cannot satisfy the Court that it has complied with the statutory requirements, it will not be entitled to pursue a section 21 notice. Further, a section 21 notice cannot now be served within the first 4 months’ of the tenancy.

The position as regards an AST before 1 October 2015

A common query is whether the landlord of an AST which was granted before 1 October 2015 (when the statutory requirements did not apply) still has to comply with the statutory requirements before serving a section 21 notice. At present, the assumption is that it does, albeit there are conflicting provisions within the legislation which would appear to suggest that there might be an argument that the statutory requirements only apply to an AST granted post 1 October 2015. This is, however, untested at present.

In the case of Caridon Property Limited v. Monty Shooltz, (which was an appeal of a County Court decision heard in February 2018 and dealt with an AST granted after 1 October 2015), the Court held a gas safety certificate must be provided to the tenant at the start of the tenancy and the landlord is not able to serve a valid section 21 notice where a gas safety certificate is served late.

The current position would appear to be that it is not possible for a landlord who has not complied with its statutory obligations under the Deregulation Act 2015 upon granting the AST to subsequently comply with them in order to be able to serve a section 21 notice.

A practical note for landlords

For any landlords looking to grant a new AST from 1 October 2018, it is essential that at the start of the AST (preferably before it is formally signed and entered into) and before the tenant starts to occupy the property, the tenants are provided with:

an EPC certificate;
a gas safety certificate; and
a copy of the Government’s How to Rent Guide.

There needs to be evidence that these requirements have been complied with, so copies hand delivered to the property with an email confirming the steps, which have been taken, and attaching copies of the documents would be the safest route to later being able to show compliance with the requirements.

For any landlords with existing ASTs granted prior to 1 October 2015, it is recommended that if these are to be renewed, that a fresh AST is granted rather than extending the existing AST. The fresh AST is likely to be a new AST enabling the landlord to comply with the additional requirements by providing the EPC and gas safety certificates and “How to Rent Guide” at the outset.

The perceived intention of Parliament when implementing the Deregulation Act 2015 was to ensure that landlords were unable to let premises which were either unsafe or unfit for occupation. However, the unintended outcome for the time being at least would appear to be to afford to tenants of ASTs security of tenure, potentially in the long term, where a landlord has failed to comply with its obligations at the start of the AST. In some cases therefore, consideration will also need to be given to serving a section 8 notice (based on a fault ground such as a non-payment of rent or breach of a term of the AST) to seek possession of the property.

This article was written by Natalie Deuchar. For more information please contact Natalie on natalie.deuchar@crsblaw.com or +44 (0)1483 252504.