An image called “The Ejectment” was published in the “Illustrated London Times” on 16 December 1848. It shows a despondent farmer’s wife pleading with a rotund gentleman who is on a horse wearing a shiny top hat. Men are removing items from the thatched cottage and rolling up the roof itself. Some soldiers look on, seemingly chatting nonchalantly to a passer-by while the tenant farmers plead with the overlord for mercy.
In those days the only way to evict a tentant, except by mutual accord, was on the grounds of non-payment of rent. There were no protections for the tenant on rent increases and so landlords practised “Rent Racking”. Rents were raised on grounds such as having windows, perhaps even a thatched roof, to the point where the tenant couldn’t afford to pay them. There were no rights of appeal and the merciless evictions often went unchallenged.
As Faulkner said (in Requiem for a Nun), “the past is never dead, it isn’t even past”, a quotation which leads seamlessly into the Deregulation Act of 2015, some 167 years since “The Ejectment”.
Provisions which came into force on 1 October 2015, further restrict the landlord’s ability to give a section 21 notice to end a tenancy. The legislative vehicle’s name is starting to look fairly ironic. The new rules will only apply to Assured Shorthold Tenancies (“ASTs”) (majority of all short term residential lease agreements) entered into on or after 1 October 2015. In the case of a statutory periodic tenancy arising on the expiry of a fixed-term which started before 1 October 2015, the old regime will apply.
Below is a brief guide to help landlords and tenants. References to the Deregulation Act 2015 will be termed the “Act”.
The ‘accepted’ process for recovering possession
Section 21 of the Housing Act 1988 has long provided landlords with an established and accepted process for recovering possession.
A section 21 notice can be served if a tenant has:
- a written AST or statutory periodic tenancy; and
- their deposit has been correctly protected in a deposit protection scheme (if the tenancy started after April 2007).
A section 21 notice must give a tenant at least 2 months’ notice. If the tenant has not left on the date specified within the notice and the landlord is seeking possession only (i.e. s/he is not claiming rent arrears) proceedings may be issued under the accelerated route for a possession order. In the absence of the tenant vacating voluntarily the only legal option for recovering possession is to obtain a possession order from the Court.
Tenancies commencing on or after 1 October 2015 will be protected against the service of a section 21 notice in the first four months of the tenancy. Where you have a replacement tenancy, i.e. a new tenancy was entered into by the same parties and of the same premises as previous tenancy agreement, the relevant period is four months from the day on which the original tenancy began.
Section 21 notices currently last indefinitely. Under the proposals, a section 21 notice will only be valid for six months. If legal proceedings haven’t started within the six months, the landlord will have to serve a new section 21 notice and wait a further two months before issuing proceedings. For notices given under section 21(4)(a) (statutory periodic tenancies) the relevant period for issuing proceedings is four months from the date of expiry of the notice. So you must remember to “use it or lose it”.
In cases where only short ASTs are granted for say 6 months or fewer it will be impossible to serve a notice to ensure the tenant vacates at the end of that tenancy. This is obviously going to create a window of opportunity for tenants who have very short ASTs but it’s likely to lead to more landlords limiting service of section 21 notices to when they are actually seeking to recover possession.
Date requirement in section 21(4) notice
Under the new rules, the need for a landlord to specify the last day of a period of the tenancy as the date on which the tenancy comes to an end will be removed. Whilst this will be a welcomed technical change for landlords and letting agents the date specified in the notice for possession must still be:
- not earlier than 2 months from the date on which the notice is served; and
- not earlier than the earliest date on which the tenancy could be brought to an end if a notice to quit had been served.
Prescribed form of section 21 notices
The government now has the power to prescribe the form of notices to be given under section 21 for any new tenancy commencing on or after 1st July 2015. We haven’t seen the new prescribed form yet so watch this space.
This is a new area of law. Landlords and agent are likely to be apprehensive and nervous about these provisions so the key is to clear on the steps required and be prepared.
For tenancies commencing after 1 October 2015, the service of any improvement notice under the housing health and safety rating system by the relevant local authority or the carrying out by them of any emergency remedial action will mean that a landlord will be prevented from giving a section 21 notice for six months.
Click here for a diagram to determine what happens next.
What this means for tenants:
From a tenant’s point of view, they get the benefit of extra protection and clarity of their rights but to take advantage of those rights they will have to ensure that they properly report any complaints in writing.
- Increased likelihood of section 21 claims being defended, making the accelerated possession process far from ‘accelerated’;
- Pressure on the courts to deal with defended claims;
- Increased demand on Local Authorities to carry out inspections;
- Increased tenant complaints – both tactical and genuine but probably more of the former due to the level of protection afforded to tenants; and
- A longer and more costly process of taking back possession for landlords.
Yet more changes
Sections 38 – 40 of the Deregulation Act 2015 (the “Act”) sets out further changes coming our way.
Section 38 of the Act will introduce more restrictions on section 21 notices. For example, it's likely that no valid section 21 notice will be able to be served while there's no EPC or gas certificate in place for the property. Secondary legislation will be made in connection with this section. Further guidance will be provided in due course.
Section 39 of the Act is also expected to introduce a new required form of information to be given to AST tenants by their landlords, setting out the rights and responsibilities of each. Whether this will form part of the Prescribed Information we are yet to see.
Section 40 of the Act will introduce a statutory requirement for landlords to repay rent to AST tenants pro-rata, where it has been paid in advance for a rental period, and where the tenant ceases to be in occupation for the whole of that period.
Letting agents areadvised to seek advice and consult us so that their existing systems and processes can be modified to ensure they comply. Failure to do so could result in not only a landlord’s action for possession failing but a further liability for negligence!