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An update on Assured Shorthold Tenancies (29 April 2015)

Date: 29/04/2015
Duncan Lewis, Legal News Solicitors, An update on Assured Shorthold Tenancies

In this article Duncan Lewis Civil Litigation Solicitor Ross Hulmston provides an update on Assured Shorthold Tenancies in the light of the Deregulation Act 2015 which was introduced on the 26th March.

Introduction

On 26 March 2015 the Deregulation Act 2015 came into force which introduced a number of changes in relation to Assured Shorthold Tenancy agreements (“ASTs”).

The main changes relate to the registration of deposits with an authorised Tenancy Deposit Scheme (“TDS”) and the serving of notices under Section 21 of the Housing Act 1988 to commence possession proceedings under the accelerated procedure (“Section 21 Notice”).

The Deregulation Act 2015 was introduced to assist in providing some clarification to this area following some recent cases, including Superstrike Limited vs Rodrigues [2013] EWCA Civ 669 and Charalambous vs NG [2014] EWCA Civ 1604.

Recap of Landlord’s requirements under the Housing Act 2004 (as amended by the Localism Act 2011)

The Housing Act 2004 introduced an obligation on Landlords with ASTs created on or after 6 April 2007 to register the Tenant’s deposit with a TDS and thereafter to provide the Tenant with certain specific information relating to their AST known as the Prescribed Information within a certain time frame.

Some important sections of the Housing Act 2014 are as follows:

1. Any Landlord who receives a deposit from a Tenant after 6 April 2007 must deal with it in accordance with one of the TDSs (s.213(1) Housing Act 2004)

2. Within 30 days (s.213(3) Housing Act 2004) of receiving the deposit the Landlord, or its agent, must protect the deposit within one of the TDSs and provide the Tenant with the Prescribed Information (s.213(5) Housing Act 2004)

Should a Landlord fail to comply with the above provisions the following sanctions will apply:

1. The Landlord will be required to pay a fine to the Tenant of between one and three times the deposit amount (s.214(4) Housing Act 2004)

2. Any Section 21 Notice served by the Landlord in anticipation of possession proceedings will be invalid unless or until the Landlord complies with the above provisions (s.215(1) Housing Act 2004)

Whilst the Housing Act 2004 set out a number of rules governing the registration of deposits after 6 April 2007, and the sanctions for failing to comply, it did not address deposits that were received by Landlords before 6 April 2007.

A quick reminder of Superstrike and Charalambous

In Superstrike the Court of Appeal held that a statutory periodic tenancy (where an AST rolls over on the same terms) should be deemed a “new” tenancy and if a deposit had been taken before 6 April 2007 and the tenancy was subsequently renewed or continued on or after 6 April 2007 the requirements under the Housing Act 2004 concerning the registration of deposits and sending out of the Prescribed Information to the tenant must be followed.

In Charolambous vs Ng it was held that even though a deposit had been received by the Landlord before 6 April 2007, as a result of the Landlord not protecting the deposit or serving the Prescribed Information at any time the Section 21 notice served on the Tenant in 2012 was invalid.


The current position

The Deregulation Act 2015 brought with it the following changes:

1. Section 21 notices

Timing of the service of a Section 21 Notice

(a) A Landlord is prohibited from serving a Section 21 Notice within the first 4 months of an AST (or within the first 4 months of a statutory periodic tenancy).

(b) Once a Landlord serves a Section 21 Notice, possession proceedings must be brought within 6 months otherwise the Section 21 Notice will be ineffective and a fresh one will need to be served.

Retaliatory eviction

(a) A Landlord is prevented from serving a 21 Notice in retaliation to a complaint of disrepair by the Tenant. In the event that the Landlord fails to comply with the Deregulation Act 2015 then any Section 21 Notice will be invalid.

(b) Where the Tenant has made a written complaint about the state of repair of the property and the Landlord: (i) fails to respond or (ii) fails to provide an adequate response or (iii) serves a Section 21 Notice in response – the tenant can contact the local housing authority who may serve an enforcement notice on the Landlord. A Landlord will be unable to serve a fresh Section 21 Notice until 6 months after the service of an enforcement notice.

2. Deposits

Deposits received before 6 April 2007

(a) If a deposit was received before 6 April 2007 in relation to an AST and the Landlord has not yet registered the deposit with a TDS or served the Prescribed Information on the Tenant, then the Landlord must do so before serving a Section 21 Notice.

Any Section 21 Notice which has been served before carrying out the above will be invalid.

The above effectively supports the decision in Charolambous vs Ng.

(b) If a deposit was received before 6 April 2007 and the AST subsequently became a statutory periodic tenancy or was renewed after 6 April 2007 then the deposit must be registered and the Prescribed Information sent out the Tenant by the earliest of either:

(i) 23 June 2015; or

(ii) before a court decides on proceedings commenced under Section 21 Housing Act 1988 (i.e possession); or

(iii) before a court decides on proceedings commenced under Section 214 Housing Act 2004 (i.e failure by a Landlord to protect a deposit with a TDS)

Unless the Landlord complies with the above, no Section 21 Notice can be served and the Landlord will be liable to pay compensation to the Tenant pursuant to s.214(4) Housing Act 2004.

Deposits received after 6 April 2007

If a deposit was received after 6 April 2007 and correctly protected in a TDS and the Prescribed Information was sent to the Tenant in the requisite time frame there is no requirement to re-register the deposit or re-issue the Prescribed Information on future renewals of the AST or where the AST becomes a statutory periodic tenancy so long as the tenancy particulars remain the same. The deposit will remain with the chosen TDS.

This effectively overturns the Superstrike decision.

3. Miscellaneous provisions

(a) In the event an agent has registered a deposit on the Landlord’s behalf, the agent’s contact details can now be provided within the Prescribed Information.

(b) The eviction of a Tenant can be suspended if the Landlord has failed to comply with certain legal obligations including those in relation to an Energy Performance Certificate or a Gas Safety Certificate.

(c) A new procedure has been introduced whereby the tenant can claim back rent paid in advance for a period falling after the end of an AST which has been terminated by a Section 21 Notice.

Summary

It would be sensible for Landlords to review whether they need to take any steps to comply with the changes introduced by the Deregulation Act 2015. It may also be necessary to consider the implications on any ongoing possession proceedings.

About the Author

Ross Hulmston is a Civil Litigation Solicitor with experience in advising on civil and property litigation matters including Landlord and Tenant disputes, leasehold disputes, possession proceedings, service charge disputes and debt recovery. Ross also has experience of advising clients on both individual and company insolvency matters specifically in relation to enforcing judgments or unpaid debts.

Recent instructions include acting for landlords in a number of residential possession proceedings and working alongside a Director on behalf of a leaseholder in a claim for specific performance for a breach of the freeholder’s repairing covenant. He recently successfully set aside a Statutory Demand which had been served against a client by former solicitors. In the First-tier Tribunal (Property Chamber) Ross is acting for a Landlord in connection with the defence of proceedings brought by a London borough for a determination of a breach of lease. Ross is also undertaking a professional negligence claim against a client’s former solicitors. Ross has experience of acting for clients in the High Court, County Court and the First-tier Tribunal (Property Chamber) including undertaking his own advocacy.

Ross qualified as a solicitor in 2008 after obtaining a 1st in Law at Kent University. Ross trained at a full service firm in Westminster and following a period of working in the property litigation department at a West End firm. Ross also has experience of working in house at the London Borough of Southwark where he specialised in the recovery of residential service charges.

Ross joined Duncan Lewis in November 2014.

To contact Ross, please click here.

This article is provided for information purposes only and does not constitute legal advice. Duncan Lewis solicitors - www.duncanlewis.co.uk

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