New Rules For Assured Shorthold Tenancies
Author: Laura Marchington
The Deregulation Act 2015 (“the Act”) received Royal Assent on 26 March 2015. The Act contains a mixed bag of provisions from landlord and tenant to transport and health & safety and child and trust funds. It was billed to simplify regulation and iron out a number of glitches in the law but due to the pace it was rushed through Parliament, it is questionable whether this has been achieved.
Here we focus on the property sector, and in particular the new rules for Section 21.
Section 21 of the Housing Act 1988, lies at the very heart of modern tenancy law in England and Wales. A notice validly served under Section 21 will force a Court to grant a Possession Order without the landlord having to establish a “ground” for possession. Under the Rent Acts (applying to tenancies granted before 1989), tenants enjoyed strong security of tenure and could only be evicted on limited grounds. This changed in the 1980s with the introduction of Assured Shorthold Tenancies (ASTs). In 2015, the pendulum began to swing back in favour of the tenant.
The Act has introduced new rules in relation to the way in which tenancies of properties in England can be terminated which restrict the landlord’s ability to serve a Section 21 Notice (the Act does not affect any changes to ASTs of properties in Wales). These provisions have been in force since 1 October 2015. With one exception referred to below, the new rules only apply to new ASTs entered into on or after 1 October 2015. In the case of a statutory periodic tenancy arising on the expiry of the fixed term tenancy which starts before 1 October 2015, landlords in that situation may be pleased to learn that the old Section 21 regime will continue to apply to the periodic tenancy.
The changes are summarised as follows:-
Prescribed Form of Section 21 Notice
The Act introduces a prescribed Section 21 Notice.
Timing Restrictions - “Use it or Lose it”
A Section 21 Notice to determine a contractual fixed term tenancy may not be given within the first four months of the tenancy. The Act also stipulates that, once a Section 21 Notice has been given, possession proceedings must be commenced (where appropriate) within six months of the service of the Section 21 Notice. In other words, “use it or lose it”.
Relaxation of Date Requirement in Section 21 (4) Notice
Under the new rules, the need for a landlord to specify the last day of the period of tenancy as the date on which the tenancy will come to an end will be removed. However, whilst this removes an element of precision from the wording of the Notice, landlords and letting agents should still be aware that the date specified in the Notice must still be (a) not earlier than two months from the date on which notice is given and (b) not earlier than the earliest date on which the tenancy could be brought to an end under the traditional common law rules (by means of a Notice to Quit).
Gas Safety Certificates/Energy Performance Certificates (EPC)
A Section 21 Notice may not be served unless the tenant has been provided with a valid gas safety certificate and an EPC.
More Prescribed Information
As well as any prescribed information related to deposit protection, no Section 21 Notice can be served unless the tenant has been furnished with the CLG booklet “How to Rent: the checklist for renting in England”.
A landlord will not be able to evict a tenant based on service and expiry of a Section 21 Notice in certain circumstances. Where a tenant makes a complaint about the condition of a property in writing, the landlord will have to respond within 14 days, in writing, setting out what he intends to do about it and what the time line for doing this is. If the landlord (a) fails to reply or (b) replies by serving a Section 21 Notice or (c) gives a reply that is inadequate, then the tenant may complain to the local authority who must inspect the property. If the local authority then serves an improvement notice or carries out emergency remedial action, any Section 21 Notice already served will be rendered ineffective and no further notice can then be served for six months. This provision (set out in Section 33 of the Act) lacks clarity in a number of respects and it remains to be seen how it will work in practice.
These provisions do not apply where:
- The tenant is in breach of 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;
- 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.
As will be clear from this overview of the new law relating to Section 21 notices, there is a substantial body of law to get to grips with. Landlords and tenants will need to understand their new rights and obligations. The changes are partly good (prescribed Section 21 notice, less complicated rules on deposits) and partly bad (more prescribed information, retaliatory eviction). Only time will tell whether the new law represents a measured re-balancing of the interests of landlords and tenants, but one thing for sure is that the landlords and their agents will find these changes hard to swallow.
If you would like further information about any of the above changes and what they may mean for you, please contact a member of our Property Department.