Helpful Tips RPI

RPI: Section 21 revisited

residential property investor rpi
Sally Walmsley
Written by Sally Walmsley

Section 21 and the Deregulation Act

Important changes affecting how landlords can reclaim their properties are now in place. Lawyer Michelle Cox explains:

This autumn, important changes were implemented under the Deregulation Act.

The main changes are to the rules on serving a notice under Section 21 of the Housing Act 1988, commonly known as a Section 21 Notice (S21N). The changes came into force on October 1 2015 and apply to tenancies entered into on or after that date.

The main changes to be aware of are as follows.

Minimum four-month period

It will no longer be possible to serve an S21N until the tenant has lived in the property for a minimum of four months. This is designed to stop landlords serving a S21N as soon as a tenant moves in.

As before, the notice can’t expire in any event before the end of any fixed term.

An S21N will only be valid for six months from the date it was given.

This means that if the tenant doesn’t leave, possession proceedings must be commenced within six months of the service of the S21N.

Different rules apply where the notice period set out in the tenancy agreement is more than two months.

Full two months’ notice

An S21N will no longer be invalid if the date of possession given on it is not the last day of a tenancy period.

This has traditionally been one of the main reasons that an S21N fails.

As long as a full two months’ notice is given, then unless another unconnected error is made, the S21N will be valid.

Landlords in breach of duties

Landlords will be unable to serve an S21N in circumstances where they are in breach of its legal obligations to a tenant.

This includes obligations as to the condition of the property, the health and safety of the occupants and failure to provide an Energy Performance Certificate or a valid gas certificate for the property.

Gas servicing certificate

If a tenant fails to provide access for a gas safety inspection, this is a breach of tenancy.

So long as the landlord can show that he or she has made regular and genuine attempts to gain access for the purposes of carrying out a gas safety check and obtaining a gas certificate, then there should be no impact on the S21N.

It will not prevent a tenant from seeking to defend court proceedings by stating that the S21N was not valid as a result of no gas certificate being in place at the time the notice was served, and in these cases a hearing will have to be fixed.

However, if a landlord can provide evidence at that hearing that the tenant failed to agree to or allow access for the gas safety inspection, then this will allow a landlord to defend such a claim.

Bear in mind that where the legislation states a notice “cannot be served”, it essentially means that the validity of an S21N can be challenged.

Complaints about the condition of property

In addition, where a tenant has raised a complaint to the landlord or agent in writing about the condition of the property, there are also restrictions against the service and reliance upon an S21N.

This is the measure designed to prevent so-called retaliatory evictions – where a landlord would evict a tenant simply because they had complained about a property.

Under the new regime, if such a complaint is raised and no adequate response is received, or such response is received but no action is taken to remedy the complaint, then the tenant can complain to the local authority.

Until the local authority has decided whether to issue a Relevant Notice (e.g. improvement notice) on the landlord for works to be carried out, then an S21N cannot be relied upon.

If a Relevant Notice is served by the local authority, an S21N cannot be served for six months from the date of that notice. If the landlord/agent adequately responds within 14 days and the work is carried out, this will have no impact on an S21N.

The landlord will have a defence in these circumstances where the tenant has failed to use the property in a tenant-like manner or the disrepair is due to a breach of the tenant’s obligations under the lease; where a mortgagee is seeking possession; or where the property is genuinely on the market for sale at the time the S21N is served.

Repayment of rent to tenant

When an S21N is served, all rent that has been paid for any period where the tenant ceases to lives in the property must be repaid to the tenant.

This has implications where a tenant who has paid their rent decides to leave when they receive the S21N rather than when the notice expires.

Where a tenant pays a full month’s rent but then is required by the S21N to vacate or voluntarily vacates mid-way through the month, the tenant is entitled to be reimbursed the over payment of rent for that period.

When does the obligation to repay rent occur?

The wording of the new Section 21C relating to repayment of rentstates as follows:

21C Repayment of rent wheretenancy ends beforeend of a period

(1) A tenant under an assured shorthold tenancy of a dwelling-house in England is entitled to a repayment of rent from the landlord where –

(a) as a result of the service of a notice under section 21 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 dwelling-house for one or more whole days of that period.

As it stands, there is no clarification on this section, but it does not specifically identify the date at which the obligation to repay rent kicks in as being the expiry date of the notice(presumably so that the tenant remains liable should they remain in occupation after the expiry date).

Instead, it refers to the tenant’s occupation of the premises. As such, this leaves the section open to interpretation and will no doubt attract claims from tenants for repayment where they have voluntarily vacated early.

Where notices are due to expire at the end of the fixed term,the usual contractual rules will apply. If a tenant voluntarily vacates early, they will remain liable for rent for the contractual period in line with the tenancy – anything beyond that will be repayable if not already apportioned. Where most tenants pay monthly, there remains the risk that a tenant will cease payment for the last part of the term in any event.

It also remains the case that it is unlikely for a tenant to vacate sooner than legally required, given the difficulty with rehousing, and so the question of repayment is only likely to kick in where the tenant remains to the end of the notice having paid rent to a later date.

Deposit protection

One change under the Deregulation Act came into force earlier this year. All deposits ever taken which are still being held must now be protected. This applies regardless of how long ago the deposits were taken. Once complete, the deposit protection certificate and all prescribed information must be served on the tenant. If any deposit has not been protected or returned to the tenant a Section 21 Notice cannot be served.

* Readers are advised that lawyers’ opinions may vary, and that they must obtain their own professional advice.

Prescribed Information

Landlords might think they know exactly what prescribed information is. But there again…

Under the new Section 21 regime, tenants must be given prescribed information.

This is a familiar phrase to most landlords. It means the information that must be given to a tenant on where and how their deposit is protected.

Most landlords would also not disagree that a gas safety certificate and an EPC, which also have to be given to tenants, would also count as prescribed information.

Under the new Section 21 rules, prescribed information extends still further, to include the service of a book called “How to Rent: The checklist for renting in England” published by the Department for Communities and Local Government.

Importantly, the tenant must be served with the latest, most current version of the booklet.

This will be updated from time to time, which opens the door potentially to tenants claiming they were not given the current version and that therefore any Section 21 notice served on them is invalid.

To avoid this, landlords should keep detailed records of exactly what was served and when, and also keep an eye out for updates of the booklet.

For example, it was first published in June 2014 and updated on October 1 this year.

The booklet can be served in hard format – you would have to download it and print it out. This is probably the safest method, and you should ensure that you get the tenant to sign for it, to acknowledge receipt.

If you do send it as a pdf attachment by email, again make sure you get an acknowledgement.

Replacement tenancies

Housing lawyer Tessa Shepperson warns that landlords should also be aware that the booklet will have to be re-served for “replacement tenancies”.

Under the Housing Act, a replacement tenancy is a tenancy:

  • which comes into being on the coming to an end of an assured shorthold tenancy, and
  • under which, on its coming into being –
    • the landlord and tenant are the same as under the earlier tenancy as at its coming to an end, and
    • the premises let are the same or substantially the same as those let under the earlier tenancy as at thhat time.

Shepperson says this means that the booklet will have to be re-served on renewals.

She says: “Replacement tenancies will include situations where a new tenancy agreement is signed between the same landlord and the same tenants for the same property.

“What is not clear is whether the booklet must be re-served when fixed terms end and the tenancy continues under a new periodic tenancy.”

Shepperson advises that to be on the safe side, landlords should re-serve the booklet anyway. Her concern is that some landlords will fall foul of it, simply because they forget.

Shepperson strongly believes that the new rules are over-complicated and believes a simplification is urgently needed.

The “How to Rent” booklet can be found and downloaded on the RLA website.

 

This article is taken from the Residential Property Investor, the RLA’s official members magazine, which is provided free to members. To read more join the RLA here or visit the RPI website here

For more information:

 

About the author

Sally Walmsley

Sally Walmsley

Sally Walmsley is the Communications Manager for the RLA and Editor of RPI magazine. With 16 years’ experience writing for regional and national newspapers and magazines she is responsible for producing articles for our Campaigns and News Centre, the weekly E-News newsletter and editorial content for our media partners.

She issues press releases promoting the work of the RLA and its policies and campaigns to the regional and national media and works alongside the marketing team on the association’s social media channels to build support for the RLA and its work.

Leave a Comment