The Deregulation Act will be extended on 1st October 2018. Here, RLA Policy Director David Smith explains what it will mean for landlords when it comes to Section 21 notices.
As all landlords and agents should be aware the Deregulation Act 2015 made substantial changes to the operation of section 21 notices in Assured Shorthold Tenancies (ASTs) in England.
These changes first came into effect on 1 October 2015 but only for tenancies which started or were renewed for new fixed terms after that date (‘new tenancies’). Therefore we have been in a transition period for tenancies which pre-dated 1 October 2015 (‘old tenancies’). This transition period ends on 1 October 2018 and from that date the Deregulation Act changes will apply to all ASTs. However, not all the changes will apply and they will not apply uniformly so it is not quite that easy.
There are essentially four groups of changes that the Deregulation Act made to section 21 notices:
- New form of notice (Form 6A) and changes to time limits;
- Prohibitions on service of notice after local authority enforcement action under the HHSRS (retaliatory eviction);
- Obligation to serve Energy Performance Certificates (EPCs) and Gas Safety Certificates (GSCs);
- Obligation to serve the How to Rent guide.
Not all of these will apply to all ASTs from October.
Section 21 Notice Forms and Time Limits
The Deregulation Act introduced a prescribed section 21 notice, also known as ‘Form 6A’. Previously, section 21 notices just had to be in writing and had no set style.
The new Form 6A and the time limits on service of section 21 notices will apply to all ASTs from 1 October 2018. While currently not mandatory for old tenancies landlords serving notice now would be advised to use the prescribed form anyway. Any section 21 notice served now will not expire until after 1 October 2018 and a possession hearing will not be listed until after this date. There is no good reason not to use the Form 6A and it will prevent unnecessary disputes over whether the correct form of notice has been served.
The Deregulation Act also introduced restrictions on the timings of serving section 21 notices including preventing the landlord from serving a section 21 notice within the first 4 months of the original AST. Section 21 notices now also have an expiry period. If proceedings are not commenced within 6 months from the date the notice was given (the period is slightly longer if more than two months’ notice is required), the notice will expire and the landlord will need to serve a fresh notice if they want to bring a possession claim.
While these rules currently only apply to new tenancies it seems that from 1 October 2018 the 6 month time limit will operate for all ASTs including old tenancies so that even notices served now, before the 1 October 2018, will be subject to the 6 month restriction after 1 October 2018.
It is probably safest for landlords to assume that the ‘use it or lose it’ provision now applies to all section 21 notices served. This means that landlords will have to issue possession claims promptly. If they delay then a new section 21 notice will need to be served.
The retaliatory eviction rules are complex and are explained in more detail here. In summary, they prevent a landlord from serving a section 21 notice for 6 months if the local authority has served an Improvement Notice or Emergency Remedial Action Notice (a “relevant notice”). These are notices that local authorities can serve using their powers under the Housing Act 2004 to deal with hazards at a property. The provisions also provide a mechanism for rendering a section 21 notice already served invalid if the local authority serves a relevant notice before a possession order is made.
From 1 October 2018 the retaliatory eviction provisions will apply to both old and new tenancies in existence regardless of when they commenced.
It is not entirely clear what this means in respect of old tenancies now. In respect of the 6 month prohibition on service of a section 21 notice, does the local authority’s notice have to be served on or after 1 October 2018 to trigger the prohibition? The second scenario where a section 21 notice already served is rendered invalid due to tenant complaint is even more complicated because it is based on a series of events occurring including the tenant making a complaint in writing, a section 21 notice being served and the local authority serving a relevant notice before the possession hearing. The specific facts and dates of each case will need to be considered carefully to determine whether the retaliatory eviction provisions apply. However, it seems likely that the new provisions will apply and so from October this year no section 21 notice can be served if an Improvement Notice was given from May onwards until the 6 month lock-out expires.
How to Rent Guide
The How to Rent guide currently only applies to new tenancies that started after October 2015 or which were actively renewed after that date. That situation will not change after October 2018 so the obligation to serve the How to Rent guide will not apply to old tenancies that began before October 2015 and have simply continued as periodic tenancies after that date without any renewal.
The How to Rent guide has recently been updated. The changes are discussed in more detail here.
Gas Safety and Energy Performance Certificates
This is the provision that appears to have caused landlords the most difficulty since the Deregulation Act came into force. The Deregulation Act amended the section 21 procedure by stating that a section 21 notice may not be given in relation to an AST at any time when the landlord is in breach of a prescribed requirement. The prescribed requirements were then set out in The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015. These regulations in turn referred to requirements imposed on landlords in other regulations dealing with gas safety and energy performance. In summary, the requirement is to give tenants a copy of the latest gas safety record and energy performance certificate for the property.
In the recent county court appeal of Caridon Properties Ltd v Monty Schooltz, a prominent housing judge stated that the rules relating to gas safety required the landlord to give the tenant a copy of the most recent gas safety record before the tenant occupies the property. This is a ‘once and for all’ duty that prospective landlords owe to prospective tenants which means if the gas safety record has not been given to the tenants before they occupy the premises it is not possible for the landlord to rectify this breach later. This effectively means landlords who failed to give their tenants the gas safety record at the outset of the tenancy are prevented from using the section 21 procedure.
The Deregulation Act states that this provision will apply to any AST in existence at the time from 1 October 2018. However, the 2015 Regulations which specify the prescribed requirements expressly state that they only apply to ASTs granted on or after 1 October 2015 and not to statutory periodic tenancies that came into being on or after 1 October 2015 at the end of an AST granted before that date. It therefore seems that until new regulations are passed to clarify this position, there are no prescribed requirements in existence applicable to old tenancies. This is not as unusual as it might seem. For example, in relation to Notices to Quit there is a power in section 5 of the Protection from Eviction Act 1977 for the government to prescribe wording. This has been prescribed in relation to landlord’s notices to quit but not for notices given by tenants.
It is possible that individual judges in county courts will arrive at their own interpretations of the rules. It is certainly an area that requires clarification.
While the majority of the Deregulation Act changes are due to apply to all ASTs from 1 October 2018 it is clear that there are still a number of grey areas in relation to how the rules apply to old tenancies. This is especially true of the provisions relating to gas safety and energy performance certificates.
While 1 October 2018 changes should make the section 21 procedure more straightforward for landlords, section 21 remains a notoriously complicated area. If you are unsure about how to serve a valid notice or would like advice on your tenancy we can assist.
David Smith will be speaking at our Future Renting conference in London on 13th September. He will be talking about upcoming legislation changes and how they will impact your lettings. Book your ticket here.