Caridon Property Limited v Monty Shooltz
In a recent appeal against a first instance decision by District Judge Bloom, HHJ Jan Luba QC sent a clear message to landlords of assured shorthold tenants. While the decision is not binding, Luba is considered to be one of the country’s eminent housing practitioners and dissent from his judgment is unlikely to be forthcoming. The decision is likely to be quoted by tenants seeking to defend possession claims issued further to section 21 notices being served.
The landlord let a flat to the tenant on an assured shorthold tenancy. The landlord did not provide the tenant with a gas safety certificate (GSC) until approximately 11 months into the tenancy. Around the same time that the GSC was served, the landlord also served a section 21 notice on the tenant. The issue was whether or not the landlord had complied with the requirements of the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations and if not, whether they were prevented from serving a section 21 notice.
Section 21A of the Housing Act 1988 (as amended by the Deregulation Act 2015) provides that for tenancies granted after 1 October 2015 a section 21 notice cannot be validly served on the 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:
- a valid energy performance certificate (EPC);
- the current version of the booklet ‘How to rent: The checklist for renting in England’; and
- a valid GSC.
The direction of the landlord’s argument was that in a similar way to with security deposits, as long as there was eventual compliance with the regulations, the landlord would not be debarred from serving a section 21 notice. HHJ Luba offered a strict interpretation that issuing a GSC in advance of a prospective tenant taking possession of a property was a “once and for all” obligation on the landlord and once that opportunity has been missed, it cannot be rectified.
The impact on landlords
Until the government reconsiders the wording of the regulations or this decision is appealed, any landlord who did not provide the GSC at the start of a post-1 October 2015 tenancy, before the tenant moved in, is likely to find that they cannot validly serve a section 21 notice.
By analogy, it would be safe to assume that the same approach would be taken in respect of the EPC and 'How to rent' booklet.
The impact on receivers
It will often be the case that the receiver does not know if these documents were issued to the tenant. Furthermore, the borrower and their tenant may also be uncooperative with the receiver in their attempts to ascertain whether and/or when the documents were served.
In these circumstances, it may now be prudent for receivers to issue a section 8 notice and rely on, for example, Ground 2 of Schedule 2 of the Housing Act to terminate the assured shorthold tenancy. This of course comes with its own issues. The mortgage must pre-date the tenancy and notice must be given to the tenant in the prescribed form prior to entering into the tenancy that the mortgagee may require possession of the property on this ground. The judge has a discretion whether to dispense with service of this notice (as the receivers will not know what was provided at the outset) but we find that when presented with the circumstances, judges are generally willing to exercise this discretion and order that possession is given. Should the receivers not be able to rely on this ground, we are happy to advise them further on their strategy.
If receivers enter into a tenancy agreement as part of their strategy, we strongly recommend that the tenant is required to sign and acknowledge receipt of the prescribed documents to prevent any dispute at a later date.