Landlords just got more tied with the Deregulation Act 2015 - | Hudson McKenzie


Landlords just got more tied with the Deregulation Act 2015

September 22, 2015 | Latest Thinking, News, Private Clients

The Deregulation Act 2015 (Deregulation Act) provides for some new limitations imposed on notices issued by virtue of section 21 of the Housing Act 1988 (Housing Act). The new legislation makes it harder for landlords to issue a Section 21 Notice, which means better protection for tenants. The relevant provisions from the Deregulation Act are sections 33 to 41, with most of them taking effect from 1 October 2015.

Tenancies affected

Subject to s.41 of the Deregulation Act, all new requirements and limitations imposed on Section 21 Notices will only apply to assured shorthold tenancies granted on or after 1 October 2015. As for any statutory periodic tenancies arising by virtue of s.5 (2) of the Housing Act, they are not regulated by these new provisions as long as the original assured shorthold tenancies were granted before 1 October 2015.

Timing of Section 21 Notice

The current timing requirement in place is basically a 2-month notice. For fixed-term tenancies, a Section 21 Notice must be served no less than 2 months before the ending date of the tenancies in order to be valid; and the timing is 2 months before the last day of any periods in the case of periodic tenancies. In addition, any court’s order for possession should not take effect earlier than 6 months after the beginning of the tenancy.

Under the Deregulation Act, s.36 provides for additional timing requirement of such notice. The major change is that any Section 21 Notice cannot be served within the first 6 months after the original tenancy has been granted. Given this new requirement, a valid Section 21 Notice can only take effect 8 months after the beginning of the tenancy compared to 6 months under the current regime. This would mean a lower flexibility for landlords to utilize their properties though the change is not significant.

Prescribed Form of Section 21 Notice

According to s.37 of the Deregulation Act, a new form will be established by the Secretary of State as a standard notice given to tenants. Landlords will not need to draw up a notice from scratch, and consistency would be ensured.

Retaliatory Eviction

The most important protection to tenants is perhaps provided in s.33-4 of the Deregulation Act, which are two provisions that prevent landlords from evicting their tenants out of retaliation. There are two such conditions:

  • If a notice is issued to improve the dwelling-house by a local housing authority, no Section 21 Notice can be served within 6 months after that.
  • If the tenant makes a complaint to the landlord regarding the conditions of a dwelling-house before the Section 21 Notice is served; the landlord fails to provide a response within 14 days, or provides an inadequate response, or serves a Section 21 Notice following the complaint; the tenant then makes the same complaint to the local housing authority, and the authority serves a notice to improve the dwelling-house to the landlord; any Section 21 Notice served after the complaint and before the local housing authority notice will be invalid.

As for what constitutes an adequate response, the landlord must provide details of the actions to be taken and the relevant timetable to carry out those actions.

In order to evoke these provisions, the flaws in the dwelling-house must not be a result of a breach of the tenant of his duty to use the property in a tenant-like manner. Moreover, these provisions do not apply if the property is genuinely on the market for sale, the landlord is a private registered provider of social housing, or the property is subject to a mortgage that comes before the tenancy.

One potential problem for landlords is that tenants will make a lot more complaints in order to evoke the operation of s.33-4. Landlords perhaps will be busy dealing with these matters throughout the tenancies without any rights to evict the tenants. Besides, it will also bring extra workload to local housing authority to inspect the properties and verify the complaints made by the tenants. This may be seen as a policy that is over-protecting tenants.

Further conditions imposed on landlords

At last, in order to serve a valid Section 21 Notice, landlords have to comply with some prescribed conditions and provide prescribed information pursuant to s.38-9 of the Deregulation Act. Prescribed conditions include statutory conditions imposed on landlords in relation to the conditions of dwelling-houses, the health and safety of the occupiers of dwelling-houses, or energy performance of dwelling-houses; whereas prescribed information includes rights and responsibilities of landlords and tenants during the tenancy.

Concluding Remarks

The new requirements and conditions for Section 21 Notice covered so far are all inclined to the rights of tenants. Landlords are expected to comply with higher standards in order to keep their rights to possess the properties when assured tenancies come to an end. From the perspective of the ownership of the properties, all these new conditions may have overdone the protection for tenants, leaving landlords restricted powers to control or even re-possess their properties, which may seem absurd for landlords to lose the right to manage the properties they own.