Court of Appeal sides with landlords in landmark case ruling
The Court of Appeal yesterday ruled that Section 21 notices issued by landlords are valid provided a gas safety certificate is issued before the notice is given to the tenant, not before a tenant moves into a property.
The case of Trecarrell v Rouncefield focussed on the relationship between Section 21 notices and gas safety certificates.
The landlord, Trecarrell House Limited, was initially granted an order to repossess the property using Section 21 powers, but the tenant successfully appealed on the grounds that they were not provided with a gas safety certificate before moving into the property.
However, the Court of Appeal ruled that failure to give the gas safety certificate before the tenant begins to occupy can be remedied by giving it at any time before service of a Section 21 notice.
The case itself was heard earlier this year and landlords in England and Wales have been waiting for the outcome of this important decision.
The judgment hinged on whether a landlord’s failure to provide a gas safety certificate before the tenant’s occupation is a breach of the prescribed requirements to serve a valid Section 21 notice under the Housing Act 1988.
This was a particularly important case as a mistake by a landlord or its agent would have consequences far greater than other breaches of legislation, which can be remedied or resolved in order to serve a fresh notice.
Without the ability to serve a section notice at any point in a tenancy the rights of landlords would be seriously curtailed and could prevent the use of possession of a property in future where the landlord has no other grounds to secure possession.
The leading ruling from Lord Justice Pattern, which will be welcomed by so many landlords, states: “Although the point is not straightforward, I am not therefore persuaded that for the purposes of Section 21 the obligation to provide the gas safety record to a new tenant prior to the tenant taking up occupation cannot be complied with by late delivery of the gas safety record.
“Late delivery of the document does provide the tenant with the information he needs. If a breach has the consequence for which Cherry contends then that must apply in every case of late delivery even if the delay is only minimal. This seems to me an unlikely result for Parliament to have intended particularly in the light of the express rejection of the 28 day deadline under paragraph (6)(a).
“Many ASTs are granted for fixed periods of one year or less so that in practice the landlord’s inability to rely upon section 21 will provide a strong incentive for the timely compliance with paragraph (6)(b).
“As a matter of construction, I, therefore, prefer the view that as a result of regulation 2(2) the time when the landlord “is in breach” of paragraph (6)(b) ends for the purposes of Section 21 once the gas safety record is provided.”
But landlords should ensure that all other requirements such as deposit protection, for instance, are fully compliant as they can affect the validity of a Section 21 notice.
Tony Kent, head of the property litigation team at Mackrell Solicitors, said: “For landlords, this decision comes as an enormous relief since the consequences of the ruling of the lower courts have seemed disproportionately severe for them, especially when there is a gas safety record in existence and the landlord or their agent had either forgotten to serve it or the tenant has denied receipt at the beginning of the tenancy.”
Scrapping Section 21 is ‘another attack’ against BTL landlords
The Queen has announced the new government’s priorities for its coming term, and it includes a proposal to abolish Section 21 of the Housing Act and reforming the grounds for possession, as part of a new Renters’ Reform Bill, designed to “introduce a package of reforms to deliver a fairer and more effective rental market”.
But in the absence of any meaningful plan to boost the level of social housing in this country, the announcement confirming the abolition of Section 21 in yesterday’s Queens speech has been described by ARLA Propertymark as “another attack against the landlords who actually house the nation”.
The trade body’s chief executive, David Cox, said: “If Section 21 is scrapped, Section 8 must be reformed and a new specialist housing tribunal created. Without this, supply will almost certainly fall which will have the consequential effect of raising rents and will further discourage new landlords from investing in the sector.
“ARLA Propertymark will be engaging with the government to ensure they fully understand the consequences of any changes, and we will be scrutinising the legislation, to ensure landlords have the ability to regain their properties if needed.”
The government also plans to introduce a new scheme to permit tenants to transfer their tenancy deposits when they move properties.
The new Lifetime Deposit scheme will permit renters to transfer their deposit from one property to another instead of being left out of pocket for weeks while they wait to be reimbursed from their old landlord but have to spend money securing their new property.
Top tips for landlords on how to manage a Section 21 notice
Proposals by the main political parties, including the Tory government, to scrap Section 21 notices to evict tenants could potentially pave the way for the mass exodus of landlords from the private rented sector in the coming years.
According to the National Landlords Association (NLA), abolishing Section 21 evictions could lead to the private renting section shrinking by as much as 20%, with up to 960,000 fewer homes available to renters if landlords pull out of the market.
But while the legislation still exists, landlords still need to be aware of how to manage the section 21 process and ensure rules are being followed.
To help landlords, Paula Haverkemp, a paralegal at East Midlands-based law firm Nelsons’ property disputes team, shares her advice and tips for landlords on how to manage a section 21 process.
What is a section 21?
“A section 21 notice/form 6A is a no-fault notice that enables landlords to evict tenants who have entered into an assured shorthold tenancy (AST) agreement without a reason. Before issuing a section 21 notice, a landlord must ensure they have complied with the requirements as defined in the Deregulation Act 2015.”
When would a section 21 notice be used?
“If a tenant does not vacate the property at the end of the fixed-term, the only way a landlord can evict a tenant lawfully is to serve a section 21 notice upon them.
“This also applies if the tenant remains in occupation at the end of the fixed-term and the AST becomes a statutory periodic tenancy (SPT). This means the tenancy runs on exactly the same terms as defined in the expired AST on a month by month basis.
“The section 21 notice can be served during the fixed-term but only once the tenant has been in occupation of the property for four months. However, as section 21 notices now have a shelf life of six months from the date the notice is signed, a landlord will need to pay particular attention to the date they serve the notice – especially if the AST is for a fixed-term of 12 months.
“If a tenant is not in breach of their AST or SPT, the only way a landlord can evict them lawfully is to serve a section 21 notice upon them.”
How long will the process take?
“The section 21 notice is a two-month notice. If the tenant does not vacate in accordance with the notice, the only way a landlord can obtain vacant possession of their property lawfully is to obtain an order for possession through the court. This process usually takes approximately two to three months to obtain, depending on how busy the court is.”
What changes are the government planning to make?
“The government is proposing to remove the AST from the Housing Act 1988 meaning that these types of tenancies would only be available to private landlords. We may also see the government introduce fixed-term assured tenancies, which would commit the tenant and landlord to a specific time period. This would mean a fixed-term tenancy could be renewed or become an assured periodic tenancy if not ended by tenant or landlord.”
What happens if the law changes?
“The proposed changes to legislation are currently being consulted on and will then need to be progressed through parliament before they come into play. However, it is unlikely any changes will take place before late 2020.
“Regarding ASTs, the government has also confirmed the changes will not affect any pre-existing tenancy agreements. The landlord will still need to go through a section 21 process when the tenancy ends.”
Scrapping Section 21 could lead to ‘open-ended tenancies and rent controls’
The government’s plans to scrap Section 21 notices to evict tenants could potentially pave the way for the introduction of open-ended tenancies and rent controls, according to London Assembly member Tom Copley.
The Labour politician is urging the government to press on with plans to outlaw the use of Section 21 eviction notices.
In a letter to the housing secretary, Robert Jenrick, Copley said that with more than a quarter of Londoners now renting, more stringent measures should be put in place to prevent tenants being forced to leave rented homes with two months’ notice, without having to provide a reason for the eviction. In July, the Ministry of Housing, Communities and Local Government (MHCLG) launched a public consultation on its proposals to scrap the use of section 21 notices.
The MHCLG expects any changes to come into force by late 2020 or early 2021 and have highlighted that this will also be dependent on where other government priorities may take precedence.
But in his letter to the housing secretary, Copley called upon the government to swiftly scrap section 21 now that the consultation has closed. He said this was a “vital first step” towards providing more robust protections for the growing number of private renters.
Copley also wants to see the government take a further step towards sparking wider reform in the PR by following the example of other European countries and introducing open-ended tenancies. Copley said: “The threat of no fault evictions can deter tenants from reporting problems with repairs to their landlords for fear of retaliatory eviction. Abolishing ‘no fault’ evictions is the vital first step in protecting tenants in an often unfair and unforgiving private rented sector.
“There were thousands of no-fault evictions in London last year, but this is likely to be the tip of the iceberg. So we need to get on with scrapping section 21 without dither or delay.
“We know that the end of a private tenancy is now the leading cause of homelessness in the capital. It is clear that the sector needs quite radical reform as a matter of urgency.
“Of course, after abolishing section 21, the government have a golden opportunity to go further and follow the lead of many other European countries by introducing open-ended tenancies and rent controls.”