This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.
The Deregulation Act 2015 (the Act) received Royal Assent on 26 March 2015, it includes provisions relating to assured shorthold tenancies (ASTs), the deposit protection scheme and the service of notices to quit under section 21.
From 6 April 2015 the snappily titled Assured Tenancies and Agricultural Occupancies (Forms) (England) Regulations 2015 (the Regulations) also change prescribed notices used under the Housing Act 1988 and care need to be exercised to use the correct form after this date in England.
Whilst the Government is committed to creating less bureaucracy, the impact on landlords of residential and mixed-use schemes would appear to be the opposite.
Tenancy deposits
The case of Superstrike v Rodrigues (and the cases that followed) has caused landlords a great deal of trouble with regard to tenancy deposits having to be reprotected and prescribed information having to be re-served when fixed terms expire and the AST goes periodic. The Act removes the requirement to re-protect and re-serve if the landlord complied with the legislation at the beginning of the initial fixed term. This is good news for landlords and agents as it streamlines the process.
In the 90 days after the Act received Royal Assent, for deposits received before 6 April 2007 where the tenancy becomes periodic (after that date) landlords get a free pass to protect any deposits not previously protected and to serve the prescribed information on the tenant. Landlords taking advantage of this free pass to protect and serve will now be treated as though they had always complied with the legislation. This means that landlords get a retrospective release from the requirements of the Housing Act 2004 (as amended).
For a very small number of ASTs that became periodic before 6 April 2007, the Act does not afford the free pass. Parliament decided not to amend this oversight and the Act received its Royal Assent as drafted.
Where deposits (received before 6 April 2007) have already been returned to the tenants and the AST has become periodic on or after 6 April 2007 then the landlord need take no action as it will be deemed to have fully complied with the legislation.
The provions on tenancy deposits have been changed with retrospective effect and came in to force on 26 March 2015.
Section 21 notices
The provisions relating to the service of section 21 notices will be altered so that landlords cannot serve a no fault two-month notice to quit if an AST tenant has recently made an application relating to housing disrepair. The Act will restrict landlords from being able to serve a section 21 notice for a period of six months following receipt of a housing disrepair notice served by the local authority. For landlords with maintained housing stock this should not pose a problem.
Landlords will no longer be able to serve a section 21 notice at the beginning of an AST either. The Act will change the landlord's ability to serve such a notice in the first four months of the contractual term of an AST. It means that the landlord will only have one day in which to serve a section 21 notice to terminate the AST at the expiry of an initial six-month fixed term. Parliament seems to have overlooked this point and it would have been better for the restriction to apply for the first three months only.
Once the provisions are given operational effect, section 21 notices will also effectively have "best before dates" as they will expire six months from the date they are sent. This means that landlords only have a four-month time window in which to commence their court proceedings for eviction, as the notice does not take effect for two months, after which the notice will become "stale" and need to be reserved.
Good news for landlords in England (sorry, not in Wales) is that the section 21(4) notice used for periodic ASTs will no longer need to end the tenancy at the end of a period of a tenancy and landlords will simply only have to give two months' written notice to quit.
The changes to section 21 notices are to be brought in to force shortly but as yet do not apply.
Compliance with legislation
Landlords will be required to use a prescribed form of section 21 notice and to have complied with legislation relating to the condition of the premises and the common parts, health and safety of the occupiers (believed to include gas safety, electrical testing) and EPCs otherwise the section 21 notice will be deemed void. We wait to see what Parliament may require here but this could be very wide in scope.
Whilst the Act is supposed to talk of deregulation and the removal of red tape, it also includes a provision for the landlord to supply the tenant with prescribed information about the rights and obligations of the landlord and the tenant of premises subject to ASTs. Again, the ability to serve a section 21 notice is dependent on the landlord having first provided this information.
This would appear to be more regulation rather than any deregulation when it comes to terminating ASTs under section 21. Residential tenant rights are on the increase with this legislation.
Regulations
As from 6 April 2015 landlords need to check the form of notice they are using if they are seeking to evict an assured tenant (which includes AST tenants) and also assured agricultural tenants under the provisions of a section 8 notice. The notice has been amended in England to reflect the new grounds of possession added to the Housing Act 1988; ground 7A (commital of a serious offence) and ground 14ZA (commital of an indictable offence) and more careful wording to the tenant to help them understand the nature of the notice. Landlords use these notices in the main for rent arrears in excess of two months. The form in Wales has not changed and the new grounds do not apply in Wales either.
Additionally, the Regulations amend the notices that are used to increase assured tenancy and assured agricultural tenancy rents (AST landlords tend to issue a new AST with the revised rent but can also use this procedure).
