The Deregulation Act 2015 ('the Act') received Royal Assent on 26 March 2015. The Act contains a real mixed bag of provisions from landlord and tenant to transport and health & safety, and child trust funds. It was billed to simplify regulation and iron out a number of glitches in the law but due to the pace it was rushed through Parliament, it is questionable whether this has been acheived!
For the property management sector, the key areas of change are as follows:
The Act seeks to prevent a landlord from serving a section 21 notice within six months of an improvement or remedial notice being served by a Local Authority and/or relying on a section 21 notice served after a tenant makes a legitimate request for repair works. This request is to be made in writing and the protection is only triggered where the landlord fails to make an "adequate response" to the request within 14 days and where the local authority serves an improvement or remedial notice.
With section 21 traditionally having been the no-nonsense possession ground, managing agents and landlords are right to be concerned that these provisions could put the landlord at a significant disadvantage by affording tenants a significant period of time within which high levels of arrears could accrue. Whilst landlords could resort to using ground 8, they may face the complication of counter-claim for the condition of the property.
For the first three years, the retaliatory eviction provisions will only apply for new assured shorthold tenancies granted after the enactment of the changes. Tenancies granted by housing associations are not caught by the legislation.
Firstly, the expiry date to be inserted into the section 21 notice were that the tenancy periodic is much more straightforward. Once this provision comes into force on 1 October 2015, landlords will no longer need to end the tenancy at the end of a period of a tenancy and can simply give two months' written notice to quit. This will apply to all periodic tenancies. Until this comes into force, Spencer v Taylor will apply to tenancies where there was a fixed term which has now expired.
Secondly, the Act paves the way for the introduction of a prescribed form for section 21 notices from 1 July 2015 onwards. This will help landlords by confirming what information is required in the notes and guidance section of the notice after the changes brought about by the Spencer v Taylor decision.
Thirdly, to counter the effect of more tenancies terminated mid-period due to Spencer v Taylor, the Act contains provision for the repayment of rent where tenancy ends before end of period. A new section 21c has been inserted, to come into force on 1 October 2015, which provides a formula for calculating rent repayment where a tenant is ahead with rent on the expiry of section 21. It works simply by calculating and dividing days in period into daily rate and multiplying by days tenant benefited from occupation of property. The Court may order the landlord to repay rent if possession claim in Court.
Fourthly, the Act inserts new time bars for (a) serving section 21 and (b) issuing possession proceedings. From 1 October 2015, a section 21 notice may not be given "within the period of four months beginning on the day the tenancy began". It will not apply to replacement tenancies or upon a tenancy becoming a statutory periodic tenancy. Also from 1 October 2015, possession proceedings must be issued within six months of notice being given (or four months after expiry if notice required long than two months).
Fifthly, the Act provides a legal framework for Parliament to add further legal requirements before section 21 validly served. This part of the Act is due to come in force on 1 July 2015 and so any regulations will need to be passed thereafter. The regulations may deal with the condition of the property, the health & safety of occupiers, and/or energy performance and require the landlord to issue related prescribed information, failing which the section 21 may be held invalid.
The Act addressed the problem left by Superstrike Ltd v Rodrigues [2013] case where landlords and managing agents were cautiously re-protecting a deposit on tenancy renewal despite the deposit not having moved. There is now no need to re-protect deposits on tenancy renewal so long as the landlord, tenant, deposit and premises remain the same.
The Act moves the goalposts for the tenancy deposit legislation yet again by introducing a requirement to protect deposits taken before 6 April 2007. Where a statutory tenancy started before 6 April 2007, there is no need to protect unless you wish to rely on section 21 notice in possession proceedings and there are no financial penalties for non-protection. Where statutory tenancy started after 6 April 2007, the deposit must be protected before 23 June 2015 or before the Court decides on proceedings under section 21 or failure to protect deposit provisions (s214 of HA 2004).
No section 21 can be issued where deposit is not being held within an authorised scheme. Where deposit taken after 6 April 2007, no section 21 may be given where no prescribed information.
