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The Deregulation Act 2015 (the DA) and its regulations have impacted the obligations of landlords in the residential rental sector. This case in particular looked at an Assured Shorthold Tenancy Agreement (AST) and whether the landlord’s failure to give the tenants an Energy Performance Certificate (EPC) before serving them with a section 21 notice (s21) deemed it invalid.
This update explains the legal background and the Court of Appeal’s decision. It also looks at the impact it will have on landlords and receivers and what they’ll need to be mindful of before serving tenants a ‘no fault’ possession order.
Section 21 of the Housing Act 1988 gives landlords a “no fault” way to gain possession of properties occupied by tenants with an AST. However, section 21A of the Housing Act 1988 (as amended by the DA) says that an s21 notice cannot be served on a tenant if the landlord breaches one of their ‘prescribed requirements’ (for tenancies granted after 2015).
According to the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015, the landlord must provide the tenant with:
a Gas Safety Certificate (GSC);
an energy performance certificate (EPC); and
the current version of the booklet ‘How to rent: The checklist for renting in England’ (the Checklist).
Under the DA’s transitional provisions, 1 Octoberthe new rules and requirements would apply to old and new post-2015 ASTs from 1 October 2018. But what isn’t clear is how the provisions would be applied to old AST’s granted before 1 October 2015 and new ASTs which were granted or renewed for a fixed term from 1 October 2015 onwards.
The tenants and the landlord entered into a tenancy agreement on 19 March 2008 for a fixed term of one year. From 19 March 2009, it became a statutory periodic tenancy (in line with s5(2) of the Housing Act 1988) meaning the tenants held an AST.
The landlord wanted possession of the property and served the tenants with an s21 notice on 06 December 2018, asking them to leave. The tenants objected to the notice and argued that the landlord had not served them with an EPC, in line with s21A of the DA.
In the initial outcome, the judge ruled in favour of the tenants and the s21 notice was deemed invalid. The landlord appealed the decision and the ruling was overturned, meaning the s21 was in fact valid.
The tenants subsequently appealed this decision on the basis that the courts were divided and the matter went before the Court of Appeal.
In the context of transitional provisions, S41(3) of the DA says that from 1 October 2018, the provisions of the DA1 October would apply to all ASTs, rather than just those granted on or after 1 October 2015.
The tenants therefore argued the tenancy was an AST ‘in existence’ on 1 October 2018, in line with S41(3) of the DA. This meant that the prescribed requirements needed to be complied with.
The tenants argued that the EPC requirement applied because the Deregulation Act’s transitional provisions had ended, and the changes made by the DA applied to all ASTs in existence from 1 October 2018.
Arnold LJ disagreed with this argument. Instead, he agreed with the landlord’s submission that this was not an AST granted on or after 2015, but that it became one from 19 March 2009.
The Secretary of State had, since October 2018, been able to prescribe requirements to ASTs granted before 1 October 2015, including the requirement to serve an EPC or GSC on the tenants. But in this case the Court of Appeal concluded 1 Octoberthis power has not been exercised.
The only regulations that had been made were the 2015 regulations, which stated that an EPC or GSC only had to be served to tenants where the AST has been granted on or after 1 October 2015. They do not apply to AST’s that came into effect before 1 October 2015, so the requirements for serving a GSC and EPC to validly serve an s21 notice only apply to new ASTs.
As a result, the judges agreed that no EPC should have been served on the tenants and the s21 notice was valid.
The court of appeal decision in Minister v Hathaway& Hathaway is good news for landlords and receivers looking to serve a s21 notice on tenants, if their AST started before 1 October 2015.
This decision also says that, if the AST started before 1 October 2015, landlords are not required to serve a Gas Safety Certificate on the tenants before a valid s21 notice can be served.
This decision offers useful guidance and clarity on how various sections of the DA apply to both new and old ASTs.
As we explained, the rules relating to the transition period didn’t make it clear exactly when the new rules would apply to all ASTs, and how to handle pre-2015 ASTs. Landlords will still to carefully consider which statutory obligations they need to comply with based on the type of tenancies their tenants hold. Regardless, this decision provides some much-needed clarity on when such regulations relating to EPCs or GSCs apply.
Contributor: Jessica BennetThis publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions
19 October 2021
Publications 24 NOVEMBER 2021