Court of Appeal rules on section 21 EPC requirements and ‘old assured shorthold tenancies’

In 2015 the Deregulation Act made significant changes to the section 21 ‘no-fault’ eviction procedure that applies to assured shorthold tenancies (ASTs) in England. For the first time landlords’ legal obligations to give tenants a gas safety certificate (GSC) and an energy performance certificate (EPC) were linked to their ability to serve a section 21 notice seeking possession. Landlords had to show they had complied with these obligations in order to serve a valid notice.

Old ASTs v New ASTs

Under the Deregulation Act’s transitional provisions the new rules started to apply to certain ASTs from 1 October 2015 and to other ASTs from 1 October 2018 when the transitional period ended. We wrote about the changes at the time and how after October 2018 the new rules did not apply uniformly to all ASTs. There were differences in how the rules applied to ‘old ASTs’ and ‘new ASTs.’ New ASTs are tenancies that were granted or renewed for a new fixed term after the 1 October 2015. Old ASTs are tenancies that started before 1 October 2015 including those that became statutory periodic tenancies before or after this date.

We looked at how the obligations to supply a tenant with an EPC and a GSC were made “prescribed requirements” for section 21 purposes (essentially pre-conditions on serving a section 21 notice) by The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (“the 2015 Regulations”). The commencement provisions for these regulations state that they apply to ASTs granted on or after 1 October 2015 and do not apply to statutory periodic tenancies that came into being on or after 1 October 2015 at the end of an AST granted before that date. Therefore, it was understood that there were no prescribed requirements applicable to old ASTs meaning a landlord could serve a valid section 21 notice without first providing their tenant with an EPC or GSC.

Court of Appeal Judgment

On 23 June 2021, the Court of Appeal handed down its decision in the case of  Minister v Hathaway & Hathaway [2021] EWCA Civ 936, which concerned the requirement to give tenants an EPC before serving a section 21 notice. The facts of the case were not disputed: the tenants had been granted an AST for a fixed term of one year on 19 March 2008 and since 19 March 2009, their tenancy had continued as a statutory periodic tenancy. A section 21 notice was served on 6 December 2018. No EPC had been given to the tenants prior to service of the section 21 notice.

The landlord commenced a claim for possession in the county court. The judge at first instance decided that service of an EPC was required and the landlord’s section 21 notice was invalid. On appeal in the county court, the circuit judge reached the opposite conclusion deciding that the section 21 notice was valid. The Court of Appeal was therefore asked to determine whether service of an EPC was a requirement at the time the section 21 notice was served, noting that this was an issue which had divided judges and commentators.

In a short decision, Arnold LJ reviewed the legislation and concluded that the EPC requirement did not apply to the tenants’ AST. As the tenancy was not granted on or after 1 October 2015, the 2015 Regulations did not apply. The tenants had argued that the EPC requirement applied because the Deregulation Act’s transitional provisions had ended and the changes made by that Act applied to all ASTs in existence from 1 October 2018. The Court of Appeal concluded that while the Secretary of State had, since October 2018, been able to prescribe requirements in respect of old ASTs including the power to enact regulations making service of an EPC a prescribed requirement for these old tenancies, that power had not been exercised. The only regulations that had been made were the 2015 regulations and these had not been amended. Therefore, as things stand the GSC and EPC requirements for serving a valid section 21 notice only apply to new ASTs.

 What this means for landlords

The Court of Appeal’s decision, while not unexpected, has provided useful clarity on the legislation’s application which should now put to an end to disputes on this point in county court possession claims. However, this is not the first time that the Court of Appeal has had to consider the difficult legal issues that have arisen since the Deregulation Act changes to section 21 started to apply nearly 6 years ago. Last year, the Court of Appeal handed down its decision in the case of Trecarrell House Limited v Patricia Rouncefield, an important case concerning the complex interplay between section 21 notices and gas safety certificates. The tenant in this case has applied to the Supreme Court for permission to appeal.

The Court of Appeal’s decision in Minister v Hathaway & Hathaway is helpful to landlords but it would be unwise for landlords with old ASTs to make assumptions that the rules relating to these older tenancies are more relaxed or that legislation that post-dates the grant of their tenancies does not apply to them. Other changes made by the Deregulation Act, for example, the restrictions on retaliatory eviction have applied to all ASTs since 1 October 2018 and the more recent Tenant Fees Act restrictions on serving a section 21 notice, where the landlord has taken prohibited fees, have applied to all ASTs since the transitional provisions came to an end last year. All landlords should also be aware that a failure to give the tenant a GSC or EPC can be punishable in other ways including criminal sanctions.