Section 21 and Deposits

Section 21

The Deregulation Act 2015 makes amendments to Section 21 of the Housing Act 1988 and below is a summary of the provisions which apply in England. At the time of writing the changes in relation to section 21 do not apply to tenancies in Wales and existing procedures should be followed.

The Deregulation Act provides a provision for a prescribed section 21 form to be introduced and now under the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) (Amendment) Regulations 2015 SI 1725 a new prescribed section 21 form must be used for assured shorthold tenancies (ASTs) granted on or after 1st October 2015. Our understanding is that this does not include statutory periodic tenancies which come into effect on or after 1st October 2015 where the original tenancy was granted prior to this date. We believe this is also the case for contractual periodic tenancies where the original tenancy (granted prior to 1st October 2015) contained a provision for the fixed term to become periodic upon expiry as it is a continuation of the original tenancy but this is a grey area.  In these cases Letting Centre customers can use existing forms - s21(1)(b) form can be used for statutory periodic tenancies and s21(4)(a) for contractual periodic tenancies.  There is a provision that the new prescribed section 21 form will need to be used for all tenancies from 1st October 2018 and can be used prior to 1st October 2018 for all tenancies where the prescribed requirements below have been complied with.

The new prescribed section 21 form cannot be issued to the tenant within the first four months of the original tenancy or where certain prescribed requirements have not been met.

You can access the Letting Centre section 21 forms by purchasing our Statutory Notices and Forms or if you are already a member you can access them in the download area under 'My Account.' 

Prescribed requirements

For ASTs granted on or after 1st October 2015 landlords will not be able to serve a section 21 notice where they have not provided the tenant with a copy of the energy performance certificate, the gas safety certificate and a copy of the Department of Communities and Local Government’s How to Rent Guide.

The law hasn’t changed regarding energy performance certificates (e.g. to be provided free of charge to any prospective tenant) and gas safety certificates (to be provided within 28 days of completion of the annual check or to new tenants before they move in) as landlords already have to provide these to the tenant under existing legislation, where required. The amendment is that a section 21 notice can only be given to the tenant if they have received these documents from the landlord. Where these documents have not been provided the landlord will have to give them to the tenant prior to serving a section 21 notice.

A new requirement is that landlords now have to provide the tenant with a copy of the How to Rent Guide mentioned above in hard copy or by email for ASTs granted on or after 1st October 2015. There is no requirement to re-issue the guide during the tenancy if a newer version becomes available but landlords will be required to re-issue the up to date version upon renewal of the tenancy or where a new tenancy is granted. Our understanding is that this will include statutory periodic tenancies. If the How to Rent Guide has not changed since it was last issued to the tenant landlords are not currently required to re-issue the guide upon renewal. Landlords will not be able to serve a section 21 notice until they have provided the tenant with a copy of the How to Rent Guide.

Landlords and agents will only be able to email the How to Rent Guide to the tenant where the tenant has agreed to accept service of documents by email. We have amended our tenancy agreements and guidance notes to include a clause to allow for this and have also produced an example document checklist which can be used alongside our agreement, or separately, as proof of evidence that the tenant has received documentation and agreed to accept service by email.

Section 38 of the Deregulation Act 2015 states ‘a notice under subsection (1) or (4) of section 21 may not be given in relation to an assured shorthold tenancy of a dwelling-house in England at a time when the landlord is in breach of a prescribed requirement. The requirements include those which relate to the condition of dwelling-houses or their common parts, the health and safety of occupiers of dwelling-houses, or the energy performance of dwelling-houses.’

Landlords and agents also need to ensure that they have complied with existing legislation prior to issuing a section 21 notice including tenancy deposit protection legislation and, where a property requires a licence, you should make sure that the property is licensed to ensure valid service of a section 21 notice.

Periodic Tenancies

Section 35 of the Deregulation Act removes the requirement for a section 21(4) notice to end a periodic tenancy on the last day of a period of the tenancy for tenancies granted on or after 1st October 2015. However, for tenancies granted prior to this date which are, or have become, periodic landlords and agents can still rely on the case of Spencer v Taylor which also removes this requirement and can use the Letting Centre s21(1)(b) form.

Section 21 Notice Time Limits for tenancies granted on or after 1st October 2015

Where two months’ notice is required for periodic or fixed term tenancies the landlord has 6 months from the date of issue of the s21 notice to commence possession proceedings. Where more than two months’ notice is required for a periodic tenancy the landlord has four months from the date of expiry of the s21 notice to commence possession proceedings (section 36 Deregulation Act 2015) 

Repayment of Rent where the tenancy ends before end of a period

Section 40 of the Deregulation Act provides a statutory requirement for repayment of rent to the tenant for tenancies granted on or after 1st October 2015 where as a result of service of a notice under section 21 the tenancy is brought to an end before the end of a period of the tenancy, the tenant has paid rent in advance for that period, and the tenant was not in occupation of the property for one or more whole days of that period. It is not clear as to what is meant by s40 as a s21 notice does not end a tenancy it is the bailiff executing a possession order after service of the notice that ends the tenancy.  We would guess that this section has been introduced for periodic tenancies where the notice given expires before the end of a rent period and the tenant would be entitled to a refund for the rent paid in advance for the period that they were not in occupation but, as stated, it is not clear. 

 

Retaliatory Eviction

For tenancies granted on or after 1st October 2015 landlords will not be able to serve a section 21 notice for a period of six months following service of a disrepair notice from the local authority. A section 21 notice will be invalid where it has been given after the tenant’s complaint regarding the condition of the dwelling house and the landlord has failed to provide an adequate written response within 14 days of the complaint (section
33 Deregulation Act 2015).

Tenancy Deposits

The case of Superstrike has been clarified under the Deregulation Act which received Royal Assent on 26th March 2015. The Deregulation Act confirms that any deposits received prior to 6th April 2007 where the tenancy has been renewed or becomes statutory periodic after 6th April 2007 must be protected in one of the three statutory schemes and the prescribed information issued to the tenant. Landlords must protect any
deposits held in connection with a renewal or statutory periodic tenancy which commenced after 6th April 2007 and issue the prescribed information by 23rd June 2015 or, if earlier, before the first day (after commencement of the Act) on which a court does any of the following in respect of a periodic tenancy:

a) determines an application or an appeal against a determination under section 214;

b) makes a determination as to whether to make an order for possession in proceedings under section
21 of the Housing Act 1988 or decides an appeal against such a determination.

Where the landlord fails to comply with the requirements a penalty of between one and three times the deposit will be payable and the landlord will not be able to service a section 21 notice until he has complied.

For post April-2007 tenancies, where the landlord protected the deposit and issued the tenant with the prescribed information in relation to the initial fixed term tenancy there is no need to re-protect or re-issue when the tenancy is renewed or becomes statutory periodic where the tenancy deposit continues to be protected.

The Deregulation Act also confirms the decision in the Court of Appeal case Charalambous & Anor v Maureen Rosairie Ng & Anor [2014] where the deposit was received prior to 6th April 2007 and the statutory periodic tenancy commenced prior to 6th April. In this case the judge held that the deposit should have been protected within an authorised scheme prior to issuing the section 21 notice in accordance with Section 215(1) (a) which states that ‘if a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to a tenancy at a time when the deposit is not being held in accordance with an authorised scheme.’ No penalty will be payable in this situation.

Landlords should protect all deposits held on assured shorthold tenancies in connection with a fixed term or statutory periodic tenancy, whether received before or after 6th April 2007, to ensure valid service of a Section 21 Notice. An alternative would be to return the deposit to the tenant prior to serving the Section 21 Notice. Further information is available in the Letting Handbook or you can download the regulations at www.legislation.gov.uk