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The Deregulation Act 2015

The introduction of the Deregulation Act 2015 which received Royal Assent on 27th March 2015, has changed the law regarding how landlords can use Section 21 notices.

New guidance on use of section 21 notices

One of the aims of the Deregulation Act was to prevent landlords using s21 notices to evict tenants in retaliation for complaining about the condition of the property.

Therefore, law now states that from 1 October 2015, if a landlord serves a section 21 notice on a tenant in response to a complaint about the condition of the property, the tenant can report the matter to the local housing authority.

Not only that, local councils have been given the power to serve an enforcement notice on the landlord, setting out "a reasonable timescale" for improvement works to be carried out.

In such cases, the original section 21 is invalid and landlords cannot issue a second section 21 within six months of an enforcement notice being served.

Other restrictions on the use of possession notices that will come into force on 1 October include...

  • Landlords will no longer be allowed to serve an s21 notice within the first four months of issuing an assured shorthold tenancy. This removes a landlord's right to issue an s21 notice at the start of a tenancy - a tactic sometimes used to save time waiting for an AST to expire before issuing proceedings
  • An s21 notice must be used within six months of it being served. Failure to do this will result in the possession notice becoming invalid and a new one being required.
  • When a landlord has issued a periodic tenancy, they will no longer be required to serve a notice ending on its last day.
  • When a landlord has used an s21 notice to remove a tenant, the former occupants will have a statutory right to claim back rent paid in advance.

These changes will only apply to England and for the time being will not affect ASTs where the fixed term was granted before these changes came into force. However, three years after the date the new rules come into force they will apply to all ASTs in existence.

The Deregulation Act also introduces a number of changes to the rules affecting the protection of tenant deposits.

How the Deregulation Act affects tenant deposits

The Deregulation Act 2015 contains a number of new rules covering tenant deposits that landlords need to be aware of.

Every landlord has a statutory obligation (under the Prescribed Information Order) to make certain information regarding the tenancy deposit protection scheme protecting the deposit, the deposit and specified tenancy-related information is available to their tenants.

However, doubts about the rules relating to the serving of prescribed information surfaced in 2013 after the Superstrike vs Rodrigues judgement.

This was a court of appeal decision regarding a deposit that was taken before the tenancy deposit regulations came into force in April 2007, but where the rental agreement continued as a periodic tenancy after that time.

The court ruled that as a periodic tenancy is a new tenancy, this meant the landlord had an obligation to protect the deposit and serve the prescribed information at that time.

And the Charalambous vs Ng judgement ruled that a Section 21 notice served on the tenant was invalid because although the deposit was taken before April 2007, it was not protected and PI was not served.

Four changes landlords must be aware of

1. If you took a deposit on any Assured Shorthold Tenancy before April 2007 and have not protected it or served the PI, you will not be able to issue a Section 21 notice at any point in the future. However, it's important to note that there are no penalties for any landlords who don't protect deposits in these circumstances.

2. If you took a deposit on a tenancy since 6 April 2007, protected and served the PI and the tenancy has since either rolled into a statutory periodic tenancy or been renewed, you will be deemed to have complied with the new legislation as long as the deposit is still protected in the same scheme and the tenancy details have not changed. In other words, this specific change overturns Superstrike vs Rodrigues.

3. If you took a deposit on an AST before April 2007 and the AST rolled into a SPT or was renewed after April 2007, then the deposit must be protected and PI served by 23 June 2015. You will not be able to serve a Section 21 notice and WILL be liable for penalties for non-compliance until you've protected the deposit.

4. The final change allows the agent's details to be used on the PI where they have taken and protected the deposit on the landlord's behalf. Previously there was doubt as to whether the agent's details could be provided instead of the landlord's when the agent took the deposit and protected it on the landlord's behalf.

What you should do

Many of these changes may seem complicated, but the key thing is to remember to check when your deposits were protected.