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The Deregulation Act 2015 (the DA) and its Regulations significantly extended the obligations of landlords in the residential rental sector. The Act was of equal significance to fixed charge receivers who automatically assume the landlord's legal duties to the tenant upon appointment.
The DA introduced restrictions relating to when a landlord could serve a notice pursuant to section 21 of the Housing Act 1988 (section 21 notice). In particular, a landlord is unable to serve a section 21 notice if they had breached a “prescribed requirement”, which included providing the tenant with a Gas Safety Certificate (GSC).
In a highly anticipated decision, the Court of Appeal has held that a landlord’s failure to provide a GSC to a tenant before they enter occupation does not prevent the service of a section 21 notice to recover possession, providing that the landlord provides the GSC before service of the section 21 notice.
This update considers the legal position, the Court of Appeal’s decision and its implications for landlords and receivers.
Section 21 of the Housing Act 1988 provides landlords with a “no fault” route to possession against an assured shorthold tenant. However, section 21A of the Housing Act 1988 (as amended by the DA) provides that (for tenancies granted after 2015) a section 21 notice cannot be validly served on a tenant if the landlord is in breach of a prescribed requirement.
The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 specifically require the landlord to provide to the tenant the following prescribed requirements:
Following the DA and its Regulations, it was widely considered that it was sufficient that a landlord could (although not considered best practice) serve a GSC, EPC and the Checklist immediately before serving a section 21 notice.
However, the Central London County Court in Caridon Property Limited v Monty Shooltz found that a GSC needed to be served before the tenant entered possession. Whilst the County Court decision was not legally binding, it was heavily relied upon and caused significant problems for landlords and for receivers who may not know when, or be in a position to prove, prescribed information was served.
In February 2017, Ms Rouncefield (Ms R) became an assured shorthold tenant of a flat and Trecarrell House Limited (Trecarrell) was her landlord. Trecarrell did not provide Ms R with a GSC prior to her entering possession but in November 2017, Trecarrell provided Ms R with a GSC dated January 2017.
In May 2018, Trecarrell served Ms R with a section 21 notice and issued possession proceedings.
Ms R defended the claim on the basis that no GSC had been provided prior to her before entering into occupation and therefore Trecarrell was in breach of a prescribed requirement and was not entitled to serve a section 21 notice. The Court dismissed the defence and granted Trecarrell a possession order.
On appeal, the County Court relied upon the decision in Schooltz and overturned the possession order on the basis that Trecarrell’s failure to provide a GSC before the tenancy commenced was a breach of a prescribed requirement and was not capable of being remedied. The Court of Appeal granted permission for Trecarrell to appeal.
On 18 June 2020, the Court of Appeal held, by a majority of two to one, that a section 21 notice was valid providing that before service of the notice, the landlord had given the tenant a copy of the GSC which was in force before they entered into occupation and a copy of any further GSCs following subsequent inspection. The fact that the GSC had been served on Ms R in November 2017, after she entered possession, was not relevant.
The Court of Appeal also considered whether a failure to carry out a gas safety inspection in time (i.e. within the time limit required by gas safety regulations) invalidated a section 21 notice. The Court did not consider this failure was a prescribed requirement for serving a section 21 notice and therefore a landlord could serve a valid section 21 notice even if a gas safety inspection was late (providing the other prescribed requirements were satisfied).
The Court of Appeal decision in Rouncefield is welcome news for landlords and receivers. A section 21 notice will be valid if the original GSC (which took place before the tenant entered occupation) has been served on the tenant (even if it is served by the receiver after the tenant enters possession). In addition, a failure to provide subsequent GSCs following annual gas safety inspections (even where those inspections are late) will not prevent a valid section 21 notice, providing that it is served on the tenant before the section 21 notice is served.
In practical terms, receivers will still need to ensure that a gas safety inspection took place prior to the tenant entering occupation, and questions remain as to how a landlord or receiver can remedy this if it has not taken place. However, receivers will take comfort that they no longer need to obtain evidence of when the GSC (or other prescribed information) was served by the landlord on the tenant.
Receivers will be aware that the landlords for whom they act as agent are often not particularly conscientious (as evidenced by their appointment). Following this decision, we anticipate that prudent receivers will, on appointment, and as a matter of course, look to serve the prescribed information on the tenant.
10 July 2020
News 15 SEPTEMBER 2021