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Property Law Update

Re-regulation of ASTs under the Deregulation Act

On 1 October 2018, major changes in the steps landlords need to take to end an assured shorthold tenancy by serving a section 21 notice come in to effect.

Current position

The Deregulation Act 2015 (“Act”) came into force on 1 October 2015. Its provisions substantially increased the burden on landlords wanting to serve a valid notice under section 21 of the Housing Act 1988 (“s.21 notice”) notice. s.21 notices are used to terminate an Assured Shorthold Tenancy (“AST”) and regain possession of a property either at the end of the initial fixed term, or later. The s.21 notice procedure allows a landlord to use the ”no fault” accelerated possession claim procedure in the County Court. The Act’s provisions in this regard apply to ASTs granted (or renewed) on or after 1 October 2015. The new rules do not currently apply to an AST that was granted before 1 October 2015 and became a statutory periodic tenancy before this date, nor do they apply to an AST which was granted before 1 October 2015 and became a statutory periodic tenancy after this date.

Upcoming changes

Section 41(3) of the Act provides that the restrictions will apply to all existing ASTs after a period of three years from their introduction – that is, 1 October 2018. On or after this date landlords will have to comply with extra restrictions, a summary of which follows:

Retaliatory eviction: landlords will be prevented from serving a s.21 notice in certain circumstances if the landlord has received notice requiring the landlord to carry out repairs (section 33)

Time limits on s.21 notice: landlords will not be able to serve a s.21 notice in the first four months of the start of an AST. This change is will not have an impact on ASTs that were previously exempt as they will have been granted before 1 October 2015 and will have already passed the four month period. A time limit change that will impact older ASTs is that landlords will have only six months from the date the s.21 notice was given in which to act on it (section 36)

Prescribed form of s.21 notice: presently a landlord has leeway to use a non-prescribed form of notice if the AST was granted before 1 October 2015. After 1 October 2018, landlords will need to use the prescribed Form 6A for all ASTs, no matter when they were granted (section 37)

Prescribed information on condition of property: landlords will have to give tenants information on the condition of the property for all ASTs. This is achieved by giving, free of charge, Energy Performance Certificates (EPC) and Gas Safety Certificates (where necessary). This is the change that creates the biggest burden for landlords going forward, as landlords will likely have to commission new surveys of properties that have had tenants in them for a considerable period of time, and bear the expense of doing so (section 38).

The only exception to this new regime is section 39 of the Act. This section relates to supplying information on the rights and responsibilities of landlords and tenants via the ‘How to Rent: the checklist for renting in England’ guide. This will continue to apply only to those ASTs granted or renewed after 1 October 2015. For completeness, landlords may wish to consider giving tenants a copy of the guide regardless, so this can be noted on the claim form if possession proceedings are required later.

Practical steps

Although these provisions have been in effect for newer tenancies for some time, the widening of them may come as a shock to some landlords. In order to avoid being adversely effected by these changes, landlords would be wise to ensure that systems are in place to supply all tenants with copies of Gas Safety Certificates and EPCs before s.21 notices are served. If not doing so already, landlords should make a note of the date six months from the giving of a s.21 notice to minimise the risk of being out of time to issue proceedings. Additionally, landlords should look at using Form 6A for all s.21 notices on their properties, as there is no restriction on using the prescribed form for properties granted before the commencement of the Act. Implementing these steps now – rather than waiting until October – will mean landlords are in a much better position to avoid serving invalid notices.

Finally, please note that the October changes only restrict a landlord’s ability to serve s.21 notices and do not impact on the ability to serve a notice under section 8 of the Housing Act 1988, requiring possession on the basis of rent arrears (or the other grounds listed in the legislation). Nor do the changes apply to properties in Wales.

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