How does the Deregulation Act affect assured shorthold tenancies?

The changes created substantial hurdles for landlords to get over in order to serve a valid Section 21 notice.

Since implementation, the Deregulation Act amendments have only applied to assured shorthold tenancies commencing or renewed after 01 October 2015.

However, it has always been the intention that the rules would apply to all assured shorthold tenancies after a period of three years, which will take effect on 01 October 2018.

This article examines the impact of the additional requirements and what action landlords can take to protect their position.

We have also created a free downloadable Section 21 Notice compliance checklist for you to use.

What were the main changes to Section 21 notices in October 2015?

• The addition of a new form of Section 21 notice (form 6a), which can be used in all cases;
• New time limits detailing how early a Section 21 notice can be served, and how long it will remain actionable;
• A landlord cannot now serve a valid Section 21 notice if a tenant has complained about the state and condition of the property, which has resulted in the local authority serving an improvement notice or notice for remedial action (see retaliatory eviction below)
• The landlord must now provide the tenant with the most recent ‘How to Rent’ guide; and
• The landlord must now provide the tenant with an energy performance certificate (also known as an EPC) and gas safety certificate (where applicable) before occupation commences.

There are some elements of the October 2018 changes under the Deregulation Act that are clear:

Notice 6a to be introduced

Previously there was no specific prescribed form of notice, however, there were two common versions dependant on whether the assured shorthold tenancy was in the fixed or periodic term and whether it was being terminated under Section 21 (1) or Section 21 (4) of the Housing Act 1988. This created room for confusion and challenge.

From October 2018, it is clear that the new form of notice 6A will apply to all assured shorthold tenancies and will be mandatory. However, it can be used for pre-October 2015 assured shorthold tenancies prior to that date, although there is no requirement to do so.

Many landlords are understandably reluctant to use the new form for older assured shorthold tenancies prior to 01 October 2018, as it appears to impose additional obligations, which may not be relevant to pre-01 October 2015 assured shorthold tenancies.

Not able to serve a Section 21 notice within the first four months of the assured shorthold tenancy

The landlord cannot serve a Section 21 notice within the first four months of the assured shorthold tenancy, making it impossible to end an assured shorthold tenancy on the expiry date of an initial fixed six-month term. This prevents the old practice of landlords serving the Section 21 notice when the assured shorthold tenancy is entered into so that they could easily take possession at any time. In addition, a Section 21 notice will now expire after six months so it cannot be used as holding leverage.

Providing a ‘How to Rent’ guide

Finally, the requirement to provide the tenant with a ‘How to Rent’ guide will continue to only apply to assured shorthold tenancies entered into or renewed after 01 October 2015. This is probably because the document itself did not exist until 2015 and therefore, it would have been impossible for a landlord to provide it to a tenant before that date.

There are also some elements of the 2018 Section 21 notice changes that are not as clear:

Retaliatory eviction

This already applies to assured shorthold tenancies created on or after 01 October 2015 and prevents landlords from simply evicting a tenant who complains about the state of the property rather than having to deal with the complaint.

It will also apply to all assured shorthold tenancies after 01 October 2018, however, the rules are fairly convoluted and therefore, what is less clear is what will happen when the complaints and relevant notices overlap the ‘before and after period’ of the new rules coming into effect.

Where there is a dispute, this will need to be considered on a case-by-case basis.

Legal advice should be sought if a landlord is unsure about evicting a tenant who has made a complaint about the state of the property.

Prescribed requirements

Compliance with the prescribed requirements is the least clear and the most confusing. In order to serve a valid Section 21 notice, the landlord must not be in breach of the prescribed requirements.

According to the Deregulation Act, this will apply to all assured shorthold tenancies after 01 October 2018.

However, upon interpretation of the relevant regulations, the prescribed requirements still only apply to assured shorthold tenancies created on or after 01 October 2015.

On this basis, there are no prescribed requirements for pre 01 October 2015 assured shorthold tenancies, but it remains to be seen how it will be dealt with by the courts and amendments to the regulations may be required to clarify this.

What action should a landlord take to lessen the impact of the Section 21 notice changes?

It is impossible to remedy the majority of this retrospectively. If it was not done at the outset of the assured shorthold tenancy, then it simply was not done. However, these changes should mainly only affect the newer assured shorthold tenancies created on or after 01 October 2015.

In addition to the deposit protection requirements which have been in place for some years, landlords would be wise to review their property portfolios to check whether the relevant documents have been provided to tenants and make a note of any cases where there is likely to be an issue.

There is some suggestion that a breach of the prescribed requirements can be remedied on renewal of an assured shorthold tenancy, however, given that the governing legislation clearly refers to the documents being provided prior to occupation (rather than the commencement of the assured shorthold tenancy), this is unlikely to be sufficient and could be challenged.