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The Deregulation Act 2015 (the DA) significantly extended the obligations of landlords in the residential rental sector in England.
The DA requirements do not apply to tenancies of properties in Wales.
The Act was of equal significance to fixed charge receivers who automatically assume the landlord's legal duties to the tenant upon appointment. Whilst the requirements of the DA initially applied only to assured shorthold tenancies granted in England on or after 1 October 2015, from 1 October 2018, they will apply generally to all assured shorthold tenancies in England regardless of the date it was granted. This legal update will recap the key provisions that came into force in 2015, cover the changes that came into force on 1 October 2018 and highlight the principal considerations for fixed charge receivers.
The Tenancy Deposit Scheme (TDS) legislation came into force on 6 April 2007. Under the TDS legislation, landlords have a legal obligation to protect a tenant's deposit in a TDS and provide the tenant with the following prescribed information:
The DA has extended the obligations of landlords where there is a fixed term tenancy that commenced before the 6 April 2007 and that original tenancy ends and gives way to a new statutory periodic tenancy. Under the DA, landlords had until 23 June 2015 to comply with the TDS legislation.
The consequences of failing to protect the deposit and provide the prescribed information are severe. Landlords who failed to comply are now unable to serve a valid Section 21 notice without returning the deposit, coming to an agreement with the tenant, or obtaining a court order. This is the case regardless of whether the periodic tenancy commenced before or after 6 April 2007.
The good news for landlords is that the DA guarantees that if they have complied with their TDS obligations in respect of an original fixed term tenancy, there is no need to re-serve the prescribed information on the commencement of a periodic tenancy.
The DA introduced new rules protecting assured shorthold tenants in England from 'retaliatory evictions'.
A section 21 notice will be invalid if the following apply before the notice is given:
These protections will not apply if:
Since the coming into force of these protections, they have only applied to certain assured shorthold tenancies granted on or after 1 October 2015. They have not applied to fixed term tenancies that started before 1 October 2015 and they have not applied to periodic tenancies where the original fixed term tenancy started before 1 October 2015 (even if the periodic tenancy started after). From 1 October 2018, these protections will apply to every assured shorthold tenancy in England.
The Regulations, which came into force on 1 October 2015, provide further restrictions as to when a landlord can serve a Section 21 notice.
The Regulations provided a prescribed form Section 21 notice. This form is appended to the Regulations (Form 6A).
Until 1 October 2018, the prescribed Form 6A was optional and a landlord had the option to serve notice in another form if it wished.
From 1 October 2018, the prescribed form must be used when serving a Section 21 notice in relation to any assured shorthold tenancy in England, regardless of the date it was granted. No other form can validly be used.
Landlords will be unable to serve a Section 21 notice if they are in breach of a prescribed requirement. Under the Regulations, the following are prescribed requirements:
As with retaliatory eviction restrictions, from 1 October 2018, these Regulations will apply to every assured shorthold tenancy in England.
From 1 October 2015, Section 21 notices may not be served on a tenant who has resided in the property for less than four months. As above, from 1 October 2018, this time limit will apply to every assured shorthold tenancy in England.
The DA removes the need in a periodic tenancy for a landlord's Section 21 notice to expire on the last day of a period of the tenancy. As above, from 1 October 2018, this time limit will apply to every assured shorthold tenancy in England.
Tenants will now have a statutory right to claim back rent paid in advance where a Section 21 notice brings the tenancy to an end before the end of the rent period. The amount to be repaid will be calculated on a daily basis. As above, from 1 October 2018, this statutory right will apply to every assured shorthold tenancy in England.
Where there is a periodic tenancy and the original fixed term started before 6 April 2007, the deposit should have been protected in a TDS scheme and the prescribed information should have been served on the tenant by 23 June 2015.
Where receivers are appointed to manage a property subject to such a periodic tenancy, they should prioritise obtaining confirmation that the deposit was protected in a TDS and that the prescribed information was served by 23 June 2015. If the TDS rules were not complied with by that deadline, it will almost certainly be the case that before serving a Section 21 notice, the receiver will need to return the deposit to the tenant.
The general rule is that a tenant's complaints about the condition of the premises or the common parts must be in writing. However, the restrictions on serving a Section 21 notice will still apply if the tenant was unaware of the receiver's email or postal address, or the tenant made reasonable efforts to contact the receiver but was unable to do so. Receivers should ensure that tenants have adequate means of contacting them and that complaints about the state of the property are dealt with expediently and reasonably.
Receivers should be aware that if their purpose in serving a Section 21 notice is to secure vacant possession in order to effect their powers of sale, they are exempt from the 'retaliatory eviction' rules. However for this exemption to apply, the tenancy must have commenced after the mortgage was granted.
Receivers will be aware that (as evidenced by their appointment), the landlords for whom they act as agent are often not particularly conscientious. It is therefore of particular importance that receivers ensure that the Assured Shorthold Notices and Prescribed Requirement (England) (Amendment) Regulations 2015 have been complied with. Receivers should obtain evidence that the tenants were provided with the prescribed information and if not provide it themselves before attempting to serve a Section 21 notice.
Contributor: Daniel Adejumo
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.
21 November 2018
by Roisin McGlinn