Section 21 After the Deregulation Bill

I have previously discussed the changes to Tenancy Deposit Protection created by the Deregulation Bill in another post. At the same time as these amendments were introduced there were also a range of amendments which will alter s21 of the Housing Act 1988. This is the provision which landlords commonly use to evict tenants on a “no fault” basis at the end of their tenancy. 

These changes were originally mainly contained in the Tenancies (Reform) Bill which I have also discussed before. However, this Bill largely died after it was talked out by a some MPs. The return of almost exactly the same provisions in another Bill, where they were passed largely without debate shows the danger of using procedural tricks to obstruct Bills as the provisions will now come into force with relatively little debate and opportunity for them to be considered.

There are several key changes which will effect almost every landlord and agent to sime degree.

Retaliatory Eviction

One of the main thrusts of the changes was to prevent landlords faced with complaints about property condition from their tenants from simply removing the tenant using s21 and substituting them with someone more accommodating. In order to prevent this s21 notices will not be validly served if:

• the tenant has made a written complaint to the landlord about the condition of the property prior to its being served; and
• the landlord has not provided an adequate written response within 14 days; and
• The tenant has then complained to the relevant local authority who have decided to serve an Improvement Notice in respect of the property or have carried out emergency remedial action themselves using their powers under the HHSRS.

An adequate response is defined as a response which defines the actions the landlord is proposing to take to deal with the complaint and sets out a reasonable timescale for doing so.

In addition, where an Improvement Notice has been served or emergency remedial action has been carried out the landlord is precluded from serving a notice under s21 for a period of 6 months from the date of that notice being served. Where the landlord asserts that the tenant’s actions are what has caused the condition situation to arise  then these restrictions will not apply. There is also an exemption which allows for the section 21 notice to be valid if the property is genuinely on the market for sale but this must be the open market and with no intention to sell it to some connected party.

Comments

These provisions are a big deal. This will to some extent mean that the disrepair provisions under s11 will be much reduced in importance for private landlords and the HHSRS will come to largely supplant them. It also means that landlords will need to think much more carefully about the condition of their property, as opposed to its state of repair, and act promptly to deal with tenant complaints. More practically it may also mean that the accelerated possession proceedings process may effectively collapse in a great many cases as many more such actions will lead to hearings where the tenant asserts that they have made a condition complaint that has not been answered adequately. It will also put great pressure on local authorities to carry out HHSRS Improvement Notice inspections promptly. The government asserted when the provisions were introduced in the Lords that they would effectively have four months to do this, being the two months of the notice and the further two months or so it will take for the matter to come before a Court. I am not sure the timing is right and even if it is there is a real risk of some authorities being totally overwhelmed.

It is also worth noting that these changes may lead to renewed interest in some of the other grounds for possession provided by Schedule II, Housing Act 1988 which are used with a section 8 notice. If a landlord has resided in the property before for example they may wish to consider use of Ground 1 as an alternative to section 21.

Spencer v Taylor

As many people will know the case of Spencer v Taylor (on which I acted in the Supreme Court) changed the operation of s21(4)(a) notices so that they were no longer needed where the tenancy had previously been a fixed term tenancy. This provided some relief for landlords because it meant the tenancy no longer needed to end on the last day of a period. This has been formalised in the changes as s21(4)(a) has been altered in England to exclude the need for an s21(4)(a) notice to expire on the last day of a period of the tenancy. However, the restriction in s21(4)(a) that the notice must be at least one period of the tenancy will remain. However, as Spencer v Taylor is still good law and therefore s21(1)(b) notices can be used in most cases this will make little difference either way.

Section 21 Timing

There is a new restriction on serving section 21 notices early. It will not now be permissible to serve a s21 notice in the first four months of an initial tenancy. Where the tenancy is renewed then the notice can be served immediately. This creates an odd situation for a 6 month tenancy. The notice cannot be served in the first 4 months and is a two month notice. Time must also be allowed for service of the notice. In practice that means that many 6 month tenancies will now become tenancies for 6 months and a few days.

In addition to the restriction on early service there is a further new “use it or lose it” aspect to s21 notices in that they will not be able to be utilised at all more than 6 months after the date they were first given to the tenant. As they are of course 2 month notices this means that the notice will need to made use of within four months after it has required the tenant to leave. Where the notice is given under s21(4)(a) and the periods of the tenancy are longer than 2 months such that the notice has to be for a longer period then it can be used within 4 months of the date the tenant was being asked to leave.

These date changes are another hurdle but they probably will not have a huge effect on many landlords as s21 notices are normally used fairly promptly and the practice of serving such a notice at an early stage has largely fallen out of fashion.

Standardised Section 21 Notices

There is to be a new prescribed form of a section 21 notice which will need to be used when giving notice. This is likely to set out the tenant’s rights, the time limits, and their ability to complain about the condition.

Other Required Information and Limits

There are two other potential limits. There is a new power for regulations to be made requiring a landlord to give a tenant information about their rights. This is likely to mirror similar information required in Scotland. There is no time limit for the giving of the information in the Bill but no s21 notice will be permitted to be served until it has been given.

The second requirement is to permit regulation to be made prohibiting the service of an s21 notice if other matters relating to health and safety, property condition, or energy performance have not been met.

Wales

It is important to note that none of these changes will apply in Wales where s21 continues as before. That said s21 will of course be largely wiped away in Wales next year by the introduction of the Renting Homes (Wales) Bill.

Commencement

It is not yet clear when this will all come into force. In the Lords debates the Government indicated it would be after the election. However, all these measure enjoy broad cross-party support so they are likely to come into force irrespective of the nature of the Government after May 2015. The new provisions will not apply to any AST that is already in existence at the time of their commencement or to any renewal of that tenancy as a fixed term or periodic tenancy. However, three years after commencement the provisions will become applicable to all ASTs, regardless of when they began.

Final Thoughts

This will be one of the most sweeping changes to the Private Rented Sector for several years. It will have a lot of impact and if the various regulations that are created ar fully used it will massively increase the information to be provided to tenants. Ultimately this will drive up cost in the sector and this will also have a large impact. Undoubtedly it will also lead to a great deal more legal input as landlords become motivated to challenge Improvement Notices and the alterations to s21 are litigated thorugh the Courts. On the other side it probably also kicks into the long grass a more sweeping set of reforms to the Housing Act 1988 of the type carried out in Wales.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*