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Important Changes for Residential Landlords. Key Changes from 1st October 2015

View profile for Sarah Whitehurst
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As of 1st October 2015, new legislation and regulations have been implemented which impose fundamental changes to Assured Shorthold Tenancy agreements (“ASTs”) in England. The burden of these changes is, of course, being borne by the landlord who will now face even more hurdles when trying to regain possession of property at the end of term.

Whilst, for the most part, the changes will only affect ASTs which are entered into on or after 1st October 2015, it will not be long until all landlords are affected by the changes and it would be prudent to be ahead of the game. By 2018, the changes will affect all ASTs.

So, what’s new:-

When to Serve the Notice - As standard procedure, many landlords would issue a Section 21 notice at the commencement of the AST but this will no longer be an option.  A Section 21 notice cannot be served within the first four months of the term.  In the case of “replacement tenancies” i.e. a new tenancy with same parties and same property as previous tenancy, the relevant period is four months from the day on which the original tenancy began. For ASTs with a fixed term of six months this has a knock on effect as it would now appear to be impossible to actually terminate an AST at the end of the six month fixed term. However, it is not all doom and gloom, the requirement for a Section 21 notice to end on the last day of a period of the tenancy has been removed so that only two months’ notice is required.  That being said, if rent is paid in advance and the Section 21 notice expires at a date other than at the end of a rental period, the landlord must repay any rent apportioned daily where a tenant leaves the property before the end of a rental period as a result of a Section 21 notice being served.

“Use it or Lose it” - Section 21 notices now have an expiry date – a claim for possession based on Section 21 notice must be issued within six months of the date of Section 21 notice, failing which the Section 21 notice will fall away and the landlord will have to start all over again. Landlords (or their advisors) will need to keep a careful eye on timings to avoid Section 21 notices lapsing.

Disrepair - One of the most important changes has been imposed in an effort to prevent what were deemed as retaliatory evictions; the service of a Section 21 notice in response to a disrepair complaint by the tenant.

Under the new rules, if a tenant makes a complaint to the landlord about the state of repair/maintenance of the property, the landlord must give an “adequate response” to the tenant within 14 days.  An “adequate response” is considered to be the landlord stating what he is going to do to resolve the problem and the time limit proposed for dealing with it. If the landlord fails or is slow to respond to that complaint or carry out the repairs, the tenant can prevent eviction by reporting the matter to the local housing authority. The local authority can then issue a form of enforcement notice on the landlord which will render a Section 21 notice invalid and prevent the landlord from serving a new Section 21 notice within six months of the enforcement notice being served.

It is unclear how the local housing authority is going to deal with the increase in tenant complaints and the subsequent investigations.  It seems likely that this is going to be used as a tactical, rather than genuine, move by those tenants who simply wish to delay the inevitable and will also lead to an increase in the number of defences to Section 21 claims, causing further loss and frustration to the landlord. A proactive approach to repair and maintenance and good record keeping is essential.

Prescribed Information - In addition to the requirement to protect tenant deposits and provide prescribed information in respect of the deposit, in order to serve a Section 21 notice the landlord will need to show that further prescribed information has been served on the tenant. The further prescribed information includes:-

  • the energy performance certificate for the property – this should be provided free of charge to all prospective tenants before the commencement of the AST;
  • the gas safety certificate for the property; and
  • the new department for communities and local government booklet “How to rent: checklist for renting in England” in its current form as a hard copy or, if the tenant has provided an email address, by email as a PDF, a link to the booklet may not be sufficient.

Until such a time that all of the prescribed information has been served on the tenant, the landlord cannot use the Section 21 procedure. There is a question as to whether landlords will be penalised for late service of any of the prescribed information and to what extent.  Prudent landlords should ensure that the prescribed information is served on the tenant at the commencement of the AST.

The Section 21 Notice - There is also now a prescribed form of a Section 21 notice which must be used in respect of all ASTs starting on or after 1st October 2015 and may also be used for AST’s starting before 1st October 2015. For all newASTs, any other form of Section 21 notice will not be valid.

Smoke Alarms and Carbon Monoxide

In addition to matters raised above, from 1st October 2015 all landlords are expected to provide smoke alarms (in working order) on every storey of a residential property and a carbon monoxide alarm must be fitted in anywhere there is solid fuels (e.g. wood/coal). This will also extend to equipment such as solid fuel AGA in the kitchen.

The local authority are responsible for enforcement of these regulations and if they have any reason to believe that the landlord is in breach of these duties, they must serve a remedial notice within 21 days, allowing the landlord to remedy the situation within 21 days of the date of service of the notice. Where a local authority is satisfied, on the balance of probabilities, that a landlord is in breach of the remedial notice, a penalty charge of up to £5,000 as set by the local authority will be payable by the landlord. A penalty charge notice must be served on the landlord within six weeks after they become aware of the landlords failure to comply with the remedial notice.

If the landlord can show that he has taken all reasonable steps to comply with the notice, the landlord will not be in breach and no penalty will be imposed. This allows for situations such as the tenant that refusing the landlord access to the property to install alarms.

Additional Comment

The new changes are set to cause unnecessary complications to what was the “straightforward” procedure under which a landlord can seek possession of a residential property on an AST and will most likely result in an increase in disputes between landlord and tenants, having the effect of causing financial loss to the landlord. It is important that landlords take a pro-active approach and ensure that they are fully complying with the new changes to avoid facing difficulties in recovering possession later down the line.

If you would like advice on the matters raised and how they may affect you, please contact Sarah Whitehurst.