Catch 21

The assured shorthold tenancy (AST) is the most common tenancy in the private rented sector. Its distinguishing feature, and what separates it from a fully assured tenancy, is the landlord’s right to regain possession using the procedure set out in section 21 of the Housing Act 1988 (HA 1988). This provides landlords with a ‘no explanation’ route for regaining possession: provided the procedural requirements have been complied with, including giving the tenant notice, the landlord is entitled to possession as of right without having to provide a reason to the tenant. This is in contrast to the section 8 notice procedure, where the landlord needs to prove one of the grounds for possession. For this reason, section 21 is sometimes referred to as “no fault” possession, although landlords often use it for tenant default.

Section 21 no longer provides a straightforward route to possession

The section 21 procedure has grown increasingly complex. It has become a popular method of enforcement to penalise non-compliant landlords by restricting their right to use the section 21 procedure. In this article, we explore this trend through examining the changes made by the Deregulation Act 2015 (DA 2015) and the Tenant Fees Act 2019 (TFA 2019). We also consider the future of section 21 in light of the government announcement that it will act to eliminate section 21 in England, coupled with a similar announcement by the Welsh government.

In this article, we will refer to an AST granted before 1 October 2015, when the DA 2015 came into force, as an “old” AST. This includes tenancies that became statutory periodic tenancies on or after 1 October 2015, following the expiry of a fixed-term tenancy that commenced before this date.

We will refer to an AST granted on or after 1 October 2015 as a “new” AST. This could be the first grant of a fixed-term tenancy, or a tenancy that was renewed for a further fixed term after 1 October 2015.

We shall see how, in some cases, whether an AST is old or new may determine whether the section 21 procedure is available to the landlord.

Deregulation Act 2015

The DA 2015 made substantial changes to the section 21 procedure. These only apply in England, as Wales has introduced the Renting Homes (Wales) Act 2016, which will eventually (probably from mid-2020) regulate renting in Wales.

The changes to section 21 started applying to new ASTs from 1 October 2015. Last year, on 1 October 2018, the transitional period set out in the DA 2015 ended. However, due to the way the legislation has been enacted, with a number of the requirements set out in secondary legislation, not all the DA 2015 changes apply to old ASTs.

The DA 2015 changes can be split into four categories:

1. changes to the form of notice and the timings when it can be served
2. a new obligation on landlords to comply with ‘prescribed legal requirements’: this change makes the landlord’s duty to provide tenants with a gas safety certificate and an energy performance certificate a pre-condition for serving a section 21 notice
3. a new requirement on landlords to provide “prescribed information”: information contained in the government’s ‘How to Rent’ guide
4. new measures to protect tenants from retaliatory eviction.

It is worth remembering that the validity of a section 21 notice also depends on whether the tenant’s deposit has been dealt with in accordance with the tenancy deposit legislation and, where the property requires a licence from the local authority (LA), whether the landlord has applied for a licence or an exemption from licensing. Both requirements were introduced by the Housing Act 2004 (HA 2004) and have been in force for some time. However, mandatory licensing for houses in multiple occupation was extended for England in October 2018 to cover a wider range of properties, so it is always important to check whether a property requires a licence prior to serving a section 21 notice.

1. Form of notice and timings

There is now a prescribed form of notice – form 6A – that must be used when giving tenants notice using the section 21 procedure. Before 2015, there was no set form for serving a section 21 notice – landlords simply had to give notice in writing.

The DA 2015 also introduced restrictions relating to when a section 21 notice can be served. It may not be given in the first four months of the original AST. This does not include replacement tenancies or statutory periodic tenancies – the four-month limit runs from the beginning of the original tenancy only. This prevents a landlord from attaching a signed section 21 notice to the tenancy agreement at the outset of the tenancy, which was previously a common practice.

There is also now a ‘use it or lose it’ element to section 21 notices. Previously, if a valid notice was served, there was no restriction on when a landlord could start a possession claim relying on the notice. This meant that a landlord could sit on a section 21 notice for months or even years, and then issue a possession claim without giving the tenant any further warning. Section 21 notices now expire six months after they are served. The period may be longer if more than two months’ notice is required. If the landlord does not commence a possession claim at court within the six-month limit, a fresh notice will need to be served if the landlord wishes to apply for a possession order.

Section 21 notices now expire six months after they are served

Finally, the DA 2015 relaxed the rules relating to the period of notice. Previously, certain section 21 notices relating to periodic ASTs had to expire on the last day of a period of the tenancy. This was to bring section 21 notices in line with the common law requirements for serving notices to quit. This requirement was removed by the DA 2015, so in most cases, two months’ notice is now sufficient. However, if the tenancy has longer rent periods, for example, quarterly or six-monthly, the notice will need to be a complete period of the tenancy and, of course, time for service of the notice will need to be taken into account in all cases.

The changes to the timings of section 21 notices were inserted as amendments to section 21 of the HA 1988, thus amending the primary legislation. Now that the transitional period set out in the DA 2015 has ended, these changes apply to all ASTs in existence, regardless of when they commenced.

The change relating to the new form 6A was introduced in a different way. The DA 2015 gave the secretary of state the power to prescribe the form of notice by way of regulations. The Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (the 2015 regulations) were then enacted.

The 2015 regulations have their own commencement provisions that specifically state that they apply in relation to ASTs granted on or after 1 October 2015, and not to ASTs that became statutory periodic tenancies after 1 October 2015 on the coming to an end of a fixed term that commenced before this date. No further regulations have been made, which means that, currently, any requirement contained in the 2015 regulations only applies to new ASTs and not old ones.

However, with regards to form 6A, landlords for all ASTs would be best advised to use the new prescribed form. Form 6A is available for landlords to use in respect of both old and new ASTs, and not using it risks unnecessary and potentially expensive delays in possession proceedings. Form 6A was updated on 1 June 2019 to reflect changes made by the TFA 2019 that came into force on the same date.

2. Gas safety certificate and energy performance certificate

There is nothing new about a landlord’s legal obligation to give tenants a Gas safety certificate (GSC) and energy performance certificate (EPC). The Gas Safety (Installation and Use) Regulations 1998 and the Energy Performance of Buildings (England and Wales) Regulations 2012 set out landlords’ duties and the criminal offences for non-compliance.

However, the DA 2015 linked non-compliance with these obligations to the landlord’s ability to serve a section 21 notice. It amended the HA 1988 by inserting a new section 21A, which states that a section 21 notice may not be given in relation to an AST at a time when the landlord is in breach of a “prescribed requirement”. The requirements were prescribed by the 2015 regulations and included a requirement to comply with existing regulations about the provision of EPCs and GSCs.

If the landlord fails to serve a GSC at the right time, they will not be able to serve a section 21 notice at all

As noted above, the 2015 regulations have their own commencement provisions. This means that failure to comply with the prescribed requirements can only invalidate a section 21 notice in relation to a new AST. These rules do not currently apply to old ASTs.

It is the rule relating to the provision of GSCs that has caused landlords the most difficulty since the changes were introduced. Issues have arisen regarding the obligation on the landlord to give a copy of the last GSC to any new tenant “before that tenant occupies those premises”. This provision has been interpreted strictly by the courts, and there are now two county court appeal decisions (Caridon Property Ltd v Monty Shooltz and Trecarrel House Ltd v Rouncefield) where a circuit judge concluded that if the GSC was not given to the tenant before they occupied the property, the landlord cannot remedy this breach later by serving the GSC before serving a section 21 notice. Therefore, if the landlord fails to serve a GSC at the right time, they will not be able to serve a section 21 notice at all, and the tenant will effectively gain a fully assured tenancy with lifetime security of tenure. The landlord in Trecarrel has applied to the Court of Appeal for permission to appeal, and it is hoped that there will soon be binding authority to clarify this issue.

3. The ‘How to rent’ guide

The DA 2015 also inserted a new section 21B into the HA 1988. This states that the secretary of state may, by regulations, require information about the rights and responsibilities of a landlord and tenant under an AST to be given by a landlord to the tenant. A section 21 notice may not be given at a time when the landlord is in breach of the requirement.

Again, the information required is set out in the 2015 regulations, which state that the information is the version of the document entitled ‘How to rent: the checklist for renting in England’, as then published by the Department for Communities and Local Government. There have been several versions of the ‘How to rent’ guide since: the latest version was published in July 2018 and is available on GOV.UK. The guide is likely to be updated this month to reflect the changes introduced by the TFA 2019.

There are specific rules governing how the guide must be given to the tenant, and the circumstances where the landlord has to serve an updated version of the guide. In summary, the landlord should give the tenant a hard copy of the guide, unless the tenant has notified the landlord that they are content to accept service by email. If a new version of the guide has been published and the parties enter into a replacement tenancy (whether a new fixed-term or a statutory periodic tenancy), the tenant should be served with an updated version of the guide if it has altered in the meantime.

The DA 2015 specifically states that the ‘How to rent’ guide does not apply to old ASTs, even if they are still in existence now. The guide therefore only needs to be given to tenants of new ASTs. Where a landlord has not served the guide, it appears that this breach can be remedied by serving the correct version of the guide before serving a section 21 notice.

4. Retaliatory eviction

The final change brought about by the DA 2015 relates to retaliatory eviction. The provisions restrict a landlord’s ability to serve a section 21 notice in certain circumstances where the tenant has complained about the condition of the property.

In a race between the local authority to serve a relevant notice before the court makes a possession order, a single day can make all the difference

The new rules work in two ways, but both rely on the involvement of the LA and the service of a “relevant notice”. A relevant notice is an Improvement Notice or Emergency Remedial Action Notice served in accordance with local authorities’ powers under the HA 2004.

The first restriction prevents a landlord from serving a valid section 21 notice for a period of six months where the landlord has received a relevant notice from the LA. Landlords can appeal the notice to the First-tier Tribunal (Property Chamber). However, to lift the six-month prohibition, the relevant notice must be quashed by the tribunal, or the LA must wholly revoke the notice under section 16 of the HA 2004 as a result of it having been served in error. Where an LA revokes an improvement notice because it is satisfied that the requirements of the notice have been complied with, this would not be sufficient to lift the six-month moratorium on serving a valid section 21 notice, unless the revocation states that the notice was served in error.

The second restriction is more complex. It works by rendering a section 21 notice already served invalid. It requires a sequence of events to take place prior to a possession order being made. In summary:

• the tenant must have made a complaint in writing to the landlord about the condition of the property
• the landlord must either have failed to respond within 14 days or provided an inadequate response or served a section 21 notice in response
• the tenant must then pursue the complaint with the LA, and
• the LA must serve a relevant notice.

If the LA serves a relevant notice before a judge makes a possession order, the section 21 notice is rendered invalid and the judge must strike out the landlord’s possession claim. However, if the relevant notice is served after the possession order is made, the possession order stands, and cannot be set aside on the basis of this provision. Therefore, in what can amount to a race between the LA to serve a relevant notice before the court makes a possession order, a single day can make all the difference.

Now that the transitional provisions set out in the DA 2015 have come to an end, the retaliatory eviction provisions apply to all ASTs in existence, both old and new.

Tenant Fees Act 2019

The TFA 2019 is the most recent piece of legislation to amend the section 21 procedure. This came into force on 1 June 2019, and also contains transitional provisions governing tenancies already in existence. It imposes restrictions on what payments landlords can take from tenants, and continues the trend of sanctioning landlords who fail to comply, by limiting their ability to use the section 21 procedure.

The TFA 2019 prohibits landlords and their agents from taking certain payments from tenants in connection with their tenancies, and caps the security deposit and holding deposit a landlord can take.

A landlord who takes a prohibited payment in breach of these new requirements will not be able to serve a valid section 21 notice until the unlawful payment has been returned to the tenant. For practitioners, this requirement may be one of the most difficult to check before serving a section 21 notice, further complicating an already overly complex procedure.

The future of section 21

The increasing complexities of section 21 notices have led many to question whether the section 21 procedure remains viable. The number of restrictions added in recent years means that section 21 no longer provides a straightforward route to possession, and a failure to comply with minor obligations has resulted in some landlords losing the right to use section 21 altogether. There have been many calls to reform section 21.

In April, the government announced that it would be consulting on repealing section 21 altogether. In the response to its recent consultation on longer tenancies in the private rented sector, the government proposed a “generational change” to the law governing ASTs, starting with the removal of section 21. Under the new regime, a landlord would always need to provide the tenant with a reason for seeking possession.

The government has recognised that in order to abolish section 21, the alternative ground-based possession procedure under section 8 of the HA 1988 will need to be strengthened, including introducing new grounds (for example, grounds for landlords seeking possession in order to sell or move into the property), and simplifying the court procedure. It remains to be seen how these reforms will be achieved, but given recent policy trends, it seems likely that landlords who fail to comply with their legal obligations will continue to face restrictions on their ability to regain possession, particularly in cases where possession is sought on grounds where the tenant is not at fault.