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Assured Shorthold Tenancies - serving a section 21 notice

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There is a legal change regarding ending Assured Shorthold Tenancies which began before 1st October 2015. From 1st October 2018 a Landlord will only be able to serve a section 21 notice giving 2 months notice to end the tenancy, if they can show the tenant has a gas safety certificate, the “How to Rent” leaflet and the EPC (and that the deposit has been properly arranged).  This relates to tenancies of property in England only. For more information, please contact Emma Morris, Director and member of our Dispute Resolution team on e.morris@crombiewilkinson.co.uk .

The notes and Q&A’s below consider the impact of the Deregulation Act 2015 on the law relating to Housing Act 1988 (HA 1988) assured shorthold tenancies (ASTs) from 1 October 2018.

The Deregulation Act 2015 (DA 2015) requirements will apply to all assured shorthold tenancies (ASTs) in England from 1 October 2018, even if they were granted before 1 October 2015 (when the provisions first came into force).

This note sets out questions and answers relating to what happens where a tenancy which was granted before 1 October 2015 is still in existence but the DA 2015 requirements have not been complied with in relation to that tenancy and, in particular, where the landlord wishes to serve a section 21 notice under the Housing Act 1988 (HA 1988).

The retrospective effect of the DA 2015 will now affect the service of a section 21 notice and obtaining possession, even though the DA 2015 requirements were not in existence when that tenancy was first granted. This note also considers whether the requirements can be complied with now and if a valid section 21 notice can be served by the landlord.

What will change from 1 October 2018?

The DA 2015 introduced new rules in relation to the way in which ASTs of properties in England can be granted and terminated and which restrict the landlord's ability to serve a notice under section 21 of the HA 1988 to terminate the AST.

Until 1 October 2018 these requirements only apply to an AST created on or after 1 October 2015. From 1 October 2018, the requirements apply to all ASTs of properties in England, whenever the AST was granted.

The DA 2015 requirements do not apply to tenancies of properties in Wales.

The DA 2015 provisions relate to a number of key areas concerning the granting of ASTs and the service of section 21 notices to terminate ASTs.

The position relating to the service of section 8 notices to terminate ASTs is not affected.

Does the landlord have to have complied with any requirements retrospectively under the DA 2015 relating to the granting of the AST?

Yes. A landlord will be prevented from serving a section 21 notice unless it has first complied with both of the following requirements under the DA 2015:

  • Its statutory obligations pursuant to section 38 of the DA 2015 which inserted section 21A into the HA 1988.

The landlord must have provided the tenant with both of the following:

o          an energy performance certificate (EPC) free of charge.

o          a gas safety certificate.

  • The requirement to supply prescribed information pursuant to section 39 of the DA 2015 which inserted section 21B into the HA 1988.

The landlord must have supplied the tenant with a copy of the current version of MHCLG: How to rent: The checklist for renting in England.

The landlord is not required to supply a further copy of the booklet each time a new version of it is published during the tenancy.

Does the landlord need to have complied with the DA 2015 requirements even if the tenancy was granted prior to 1 October 2015?

From 1 October 2018, yes, it does. Where the tenancy was granted before 1 October 2015, the landlord may not have complied with the DA 2015 requirements. Nonetheless, from 1 October 2018 the requirements will apply to those old ASTs still in existence. The landlord needs to have complied with the DA 2015 requirements to be able to use the prescribed form section 21 notice and non-compliance may affect the validity of the section 21 notice.

From 1 October 2018, there is no longer the option of serving a non-prescribed form section 21 notice which does not require compliance with these obligations; this form of notice is no longer in effect from that date.

The prescribed form of section 21 notice must, from 1 October 2018, be used by a landlord seeking to terminate an AST of a property in England pursuant to section 21(1) or section 21(4) of the HA 1988, Prescribed form of notice requiring possession under section 21 of the Housing Act 1988.

Can the landlord comply with the requirements after the tenancy has been granted?

The question of whether the landlord can comply with the DA 2015 requirements late, after the AST has already been granted, is a topic of much recent debate.

In the non-binding county court case of Caridon Property Limited v Monty Shooltz heard on 2 February 2018, it was held that the gas safety certificate must be provided to the tenant at the start of the tenancy and a landlord is unlikely to be able to serve a section 21 notice where it is served late. On a literal reading of the legislation, the answer would seem to be that it is not possible, for example, to provide an EPC or gas certificate to the tenant late in order to be able to serve a section 21 notice. However, there is no binding authority on this point and arguably, it cannot be the intention of the legislation to give the tenant full security of tenure in these circumstances with the landlord forever precluded from serving a section 21 notice.

Similarly, in relation to tenancies granted before 1 October 2015, it is not clear whether or not a landlord can comply with the DA 2015 requirements late, on or after 1 October 2018, in order to serve a section 21 notice. The simpler option would be to regularise the position before that date as discussed above.

What are the transitional arrangements that apply between 1 October 2015 and 1 October 2018?

The DA 2015 requirements came into force on 1 October 2015 in relation to tenancies granted on or after that date only. Landlords were given a three-year period until 1 October 2018 before those requirements also start to apply to tenancies granted before 1 October 2015.

During this period, many landlords will have taken steps to regularise the position by agreeing surrenders of ASTs granted before 1 October 2015 and granting new ASTs, complying with the DA 2015 requirements to avoid any pitfalls with obtaining possession which they might otherwise potentially face. Alternatively, landlords may have served section 21 notices, where possible, to terminate those tenancies granted before 1 October 2015.

Does the landlord have to use the prescribed form section 21 notice?

Yes. From 1 October 2018, the prescribed form section 21 notice, Form No 6A, must be used for all ASTs of property in England, whenever the AST was granted. The prescribed form requires compliance with the various DA 2015 requirements. These and the other requirements for serving a section 21 notice are set out in the prescribed form

What options does the landlord still have prior to 1 October 2018?

If a landlord wishes to obtain possession in relation to an AST granted before 1 October 2015, it could consider serving a non-prescribed form section 21 notice which does not require the landlord to have complied with the requirements of the DA 2015 until 1 October 2018.

A landlord could also consider agreeing a surrender and re-grant of a tenancy granted before 1 October 2015. When granting the new tenancy, the landlord should then comply with the requirements of the DA 2015 in relation to prescribed information and legal requirements.

Can possession proceedings be issued after 1 October 2018 relying on a section 21 notice served before 1 October 2018 which was not in the prescribed form?

Yes. The DA 2015 provisions should not affect the ability to issue proceedings after 1 October 2018 relying on a section 21 notice which was correctly served prior to that date and which was not required to be in the prescribed form.

Will the court still grant a possession order where there has not been compliance with the statutory requirements for an AST granted before 1 October 2015?

Where any ASTs granted before 1 October 2015 remain in existence after 1 October 2018, it remains to be seen whether the courts will grant possession where a prescribed form section 21 notice has been served on or after 1 October 2018 but the DA 2015 requirements had not been complied with prior to 1 October 2018.

Arguably, it cannot be the case that a landlord will forever be prevented from obtaining possession from its AST tenant in these circumstances. However, on the other hand, courts may not be very sympathetic when faced with a landlord who has failed to take action during an entire three-year period to deal with this issue.

It remains to be seen whether it will be sufficient for the landlord to provide the tenant with an EPC, gas safety certificate and prescribed information after 1 October 2018 but before the landlord serves a section 21 notice in the prescribed form.

Is the accelerated possession procedure affected?

In relation to using the accelerated possession procedure, the N5B Claim form for accelerated possession for properties in England requires compliance with the various DA 2015 requirements. There are therefore potential difficulties with using the N5B Claim form and the accelerated possession procedure for older tenancies if there has not been full compliance with the DA 2015 requirements.

Until 1 October 2018, it may be possible to serve supplemental particulars of claim explaining why the requirements have not been complied with in relation to an older tenancy and therefore to be able to satisfy the requirements for using the accelerated possession procedure as set out in CPR 55 Part II.

From 1 October 2018, however, a landlord who cannot comply with the requirements of the N5B Claim form in relation to an AST granted before 1 October 2015 may no longer be able to justify non-compliance to the court and, at best, may only be able to proceed by means of the ordinary possession procedure as set out in CPR 55 Part I.

 

 

 

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