NEW SECTION 21 NOTICES
By John Spence, Partner
Update for landlords and lettings agents on new Section 21 Notices and other recent developments relating to Assured Shorthold Tenancies
The area of landlord and tenant law concerning Assured Shorthold Tenancies is built on ever shifting sands, which makes it important for landlords and lettings agents to keep up with all the recent changes in the law, if they are to avoid any difficulties in recovering possession of their residential properties.
New regulations have been passed by the Government, and recent case authorities handed down by the Courts, that all residential landlords and lettings agents need to make sure they are familiar with. This blog is a brief round-up of some of the key recent changes in the law.
New Section 21 Notices
As of the 1June 2019, landlords and agents in England are advised to now use the new prescribed form of Section 21 Notices. The new prescribed Section 21 form is not mandatory in all cases. The old notices can still be used for assured shorthold tenancies created before the Deregulation Act came into force on 1 October 2015, or statutory periodic tenancies which came into being on or after 1 October 2015 at the end of fixed terms created before 1 October 2015.
However, landlords and their agents would be best advised to use the new forms from now on to avoid any challenges over the validity of their Section 21 Notices by tenants or judges.
To ensure you are using the right form, the template for the new Section 21 Notice (also referred to as a Form No.6A) can be found in the schedule to the Assured Tenancies and Agricultural Occupancies (Forms) (England) (Amendment) Regulations 2019 (SI 2019/915).
Tenant Fees Act
The changes to Section 21 notices have been introduced in part because they now must refer to the new Tenant Fees Act 2019 which also came into form on the 1 June 2019. The Tenant Fees Act provides strict controls on what administrative charges and fees can be imposed on tenants by landlords and lettings agents for all Assured Shorthold Tenancies granted on or after 1 June 2019.
Any charges not included on the list of ‘permitted payments’ in the schedule of the Act are prohibited, and landlords and agents alike are advised to familiarise themselves with the list.
Importantly, deposits for new tenancies are capped by the Act at not more than five weeks’ rent for tenancies with an annual rent of £50,000 or less, and holding deposits capped at not more than one weeks’ rent.
Any landlords or agents found in breach of the Act face a fine on conviction of up to £5,000, and £30,000 for landlords or agents found to have a history of breaches along with a criminal record. Moreover, landlords will not be able to serve a valid Section 21 notice unless they refund their tenants for any unlawful charges.
Prescribed Information Forms
The form and contents of Prescribed Information Forms, which landlords must serve upon their tenants containing information about the protection of their deposits within 30 days of receipt, has not changed. However, what is still filtering down to landlords and agents are the repercussions of the decision in the 2016 County Court decision of Bali v Manaquel Company Ltd.
In Bali, the defendant tenant avoided a possession order by arguing successfully that the tenancy deposit Prescribed Information Form served upon the tenant by the landlord’s agents in that case had been invalidly executed by the agents because it had only been signed by one signatory and failed to comply with section 44 of the Companies Act 2006. Section 44 requires all documents executed by a company to be signed by two authorised signatories or a director in front of a witness.
Landlords and agents when signing any prescribed documents that must be served upon a tenant as a company should bear in mind the decision in Bali and whether it is prudent to make sure they are signed by two authorised signatories.
Gas Safety Certificates
Following the decision in the 2018 County Court decision of Caridon Property Limited v Monty Shooltz, landlords who inadvertently fail to serve a Gas Safety Certificate upon their tenant before they move into the property are barred from ever serving a valid Section 21 notice. There is no exception to this rule even if the landlord serves the Gas Safety Certificate late or if there was a certificate in place at the time the tenant moved into the property.
Although this was never the intention of the Government when it brought in the Gas Safety (Installation and Use) Regulations 1998, the Ministry of Housing announced earlier this year that it would not be legislating to remedy this unintended consequence for landlords.
The Shooltz decision was also upheld this year in the decision of Trecarrell House v Rouncefield.
For some landlords, the failure to serve a Gas Safety Certificate at the right time is resulting in some tenants being protected tenants through the backdoor.
New How to Rent Guide
The recent changes brought in by the Tenant Fees Act have also seen the Ministry of Housing publish an updated version of the How to Rent Guide on the 31 May. All landlords must serve upon their tenants at the beginning of a new Assured Shorthold Tenancy or when renewing a tenancy. Landlords cannot serve a valid Section 21 Notice to recover possession unless and until they have served the How to Rent Guide upon their tenant.
Landlords and lettings agents are advised to make sure they are now serving the updated version to avoid the validity of their Section 21 Notices being challenged.
The new version of the How to Rent Guide can be found on the Ministry of Housing’s website.
Failure to comply with all of the above requirements will give tenants technical defences to many unsuspecting landlords and in the worst cases leave landlords unable to recover possession of their properties.
If you have any queries about the issues raised in this article, please contact John Spence, Partner, a specialist in property litigation, on tel: 01892 515022 or email: email@example.com
This blog is not intended as legal advice that can be relied upon and CooperBurnett does not accept any responsibility for the accuracy of its contents.