16th April 2015
The Deregulation Act 2015 - impact on Landlords
The Deregulation Act 2015 (“the Act”) received Royal Assent on 26 March 2015 and contains a number of changes to the law that will impact on landlords, particularly of residential property.
The Act makes welcome changes to clarify the position following the Court of Appeal cases of Superstrike v Rodrigues and Charalambous v Ng. The Housing Act 2004 (“HA 2004”) provided that all deposits paid in respect of residential assured shorthold tenancies (“ASTs”) created on or after 6 April 2007 had to be registered with a Tenancy Deposit Scheme (“TDS”). Superstrike extended this so that a deposit paid before 6 April 2007 had to be registered where a statutory periodic AST arose after that date. That created a significant difficulty because a large number, possibly the majority, of ASTs are not renewed at the end of their terms – they become new statutory periodic tenancies. Charalambous took this further to say that in circumstances where both the AST and the statutory periodic tenancy arose before 6 April 2007, the landlord could only use the section 21 HA 2004 procedure if they had complied with the TDS rules. This meant that the landlord who had not complied with the rules (which have strict timescales) could not commence section 21 possession proceedings in respect of a periodic tenancy without first returning the deposit to the tenant. The Act clarifies the position, as follows:
Where a deposit was taken for an AST commencing before 6 April 2007 and continues to be held in respect of a statutory periodic tenancy that also commenced before 6 April 2007, the landlord is not required to have complied with the TDS rules. However, if the landlord wishes to commence section 21 proceedings, they will need to protect the deposit in a TDS and issue the accompanying “Prescribed Information” before serving the section 21 notice;
Where a deposit was taken for an AST commencing before 6 April 2007 and is still held in respect of a statutory periodic tenancy that arose after 6 April 2007, the landlord must now take steps to protect that deposit. The Act allows 90 days from the commencement date (being 23 June 2015) for compliance, or before the conclusion of section 21 court proceedings, if earlier. The Act also provides that it is no longer necessary to re-register a deposit or re-issue Prescribed Information where the deposit was taken in respect of an AST commencing on or after 6 April 2007 and that tenancy becomes a statutory periodic tenancy or is replaced by another AST, provided that the landlord and tenant and the property remain the same.
The Act has also made (perhaps less welcome) changes to the section 21 procedure to protect tenants who complain about the condition of their premises. A landlord may not issue a section 21 notice in circumstances where the tenant has made a written complaint to the landlord regarding the condition of the premises or common parts before the notice is issued and the landlord has not responded, or responded inadequately. These provisions do not apply where the tenant is in breach of its duty to use the premises in a tenant-like manner, the premises are genuinely on the market for sale, the landlord is a private registered provider of social housing or the mortgagee wishes to exercise its power of sale and requires vacant possession.
A landlord may no longer issue a section 21 notice at the beginning of an AST, to ensure that tenants are actually given two months’ notice. The Act allows the Secretary of State to issue regulations specifying statutory obligations with which a landlord must comply before a section 21 notice may be served. There is now a requirement that landlords must provide tenants with information about the respective rights and responsibilities of the landlord and tenant and will be prevented from serving a section 21 notice if they have not complied with this requirement. Finally, a welcome change, is that landlords need no longer specify within the section 21 notice the last day of a period of the tenancy as the date on which the AST comes to an end (this could often trip up landlords leading to an invalid notice).
The section 21 changes come into force on 1st October 2015 and will apply to an AST granted on or after this date.
For more information please contact Eleanor Rutherford on 01604 463340 or click here to email Eleanor.
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