Court of Appeal Decision in Martyna Switaj v Adrian McClenaghan – Can a valid section 21 notice be served if prohibited fees under the Tenant Fees Act 2019 have been taken prior to 1 June 2019?

The Tenant Fees Act 2019 (“the Act”), came into force on 1 June 2019. The Act prohibits landlords and letting agents from requiring tenants to make certain payments in connection with a tenancy. The Act only allows payments which are permitted under Schedule 1 of the Act. There are restrictions on terminating a tenancy under section 21 where a prohibited payment or holding deposit has been taken and not repaid prior to the service of the section 21 notice.

The recent court of appeal case of Martyna Switaj v Adrian McClenaghan  considered whether the requirement of a tenant to pay fees required under the tenancy entered into in June 2018 prior to the commencement of the Act, invalidated a section 21 notice.

Background to Case

Ms Switaj entered into an assured shorthold tenancy (‘AST’) with Mr McClenaghan (the landlord) of the property in April 2018 for an initial term of 12-months (‘the initial AST’). The initial AST contained 2 clauses which required Ms Switaj to make the following payments:

1. “Pay the sum of £120 plus VAT for the preparation of any documents in relation to all renewals or extensions of this Tenancy” (‘the administration fee’); and
2. “To pay the cost of a check out of the inventory and schedule of condition listing all the fixtures and fittings in the premises and the condition thereof at the expiry or sooner determination of the property” (‘the check-out fee’).

Ms Switaj made payment of these fees in around April 2018. When the fixed term of the initial AST expired, a new agreement was not entered into but there were discussions of a new agreement.  Ms Switaj continued to occupy the property under the same terms as her previous tenancy which was subject to the same requirement to pay the administration fee and check-out fee. Ms Switaj paid a further administration fee of £120.00.

In April 2020 a new AST was granted to Ms Switaj for a term of 12-months which did not include requirements to pay the administration fee or the check-out fee. The Court of Appeal also noted that there was no evidence of a payment being made by Ms Switaj in respect of any administration fee or a check-out fee under the 2020 AST or thereafter. A further AST was granted in April 2021 with identical terms to the 2020 tenancy, and Ms Switaj continued occupying the property from April 2022 on a month-to-month contractual periodic tenancy.

In June 2023, the landlord served a section 21 notice on Ms Switaj who asserted that her landlord was not entitled to possession as the section 21 notice was invalid due to the administration fee and the check out fees she paid in 2018 and 2019, as required under the terms of the initial AST. At the initial possession hearing, the District Judge ruled in Mr McClenaghan’s favour, and a possession order was issued.

Ms Switaj then made an application to appeal this decision, but the Court of appeal upheld the county court decision to issue a possession order. The appeal judgement noted that none of the ASTs granted to Ms Switaj after the Tenant Fees Act 2019 came into force on 1 June 2019, required her to make any payments which are prohibited under section 1 of the Act. Further, it was noted that Mr McClenaghan was under no obligation to return the payments that Ms Switaj made for the administration fees and check out fees in 2018 and 2019, prior to serving the section 21 notice because these payments were not prohibited at the time they were made as the Act had not yet come into force.

This Court of Appeal decision serves as a helpful reminder that the requirement of a tenant to make payments of fees now prohibited under section 1 of the Act will not invalidate a section 21 notice if the payments were made in connection with a tenancy before the Act came into force. However, where a tenancy has been granted after the Act any prohibited payments ought to be returned to allow the landlord to serve a section 21 notice.