Landlords’ Fair, 11 November 2013 What you need to know about Section 21 Mark Prichard, Housing Consultant [email protected] What is Section 21? The section of the Housing Act 1988 that provides ‘no fault’ procedure for ending an Assured shorthold tenancy ○ ‘Mandatory right to possession’ ○ No need to give any reason or ‘grounds’ ○ Cornerstone of assured shorthold regime Section 21 in 25 minutes? Really?! ○ Additional course on section 21 procedure & tenancy deposit protection legislation ○ Half-day course ○ Register your interest What we’re going to cover ○ ○ ○ ○ ○ When you have to use the s.21 procedure Technicalities about notices ‘Service’ Impact of taking a tenancy deposit Impact of premises being HMO When is the Section 21 notice procedure not used? ○ Tenancy is not an assured shorthold ○ You want possession before a fixed term period has expired ○ Tenant surrenders possession Also: ○ Not a procedure for making a money claim ‘But I don’t ever go to court…’ Surrender of the tenancy is always preferable… “Surrender” = ○ legal term for mutual agreement that tenancy shall end Surrender of the tenancy is nearly always preferable… ○ Time saved (at least 90 days to evict a tenant, in practice often considerably longer) ○ Cheaper – • avoids court and eviction warrant fees • avoids lost rent ○ Surrender can occur at any time: • during fixed term; or • at end of notice period; or • at any time before a possession application / court hearing / eviction. Requirements for a valid surrender ○ Explicit agreement by landlord and tenant that tenancy is to end; OR ○ Action of tenant which is clearly inconsistent with continuation of tenancy and which exhibits an unequivocal intention to end the tenancy, which is accepted by the landlord by an act (e.g. changing locks, closing rent account, notifying tenant that you deem tenancy to have ended, re-letting) (‘implied’ surrender). Risk in taking possession when no unambiguous action by tenant, e.g. might have vacated When to use Section 21 procedure ○ Continuing assured shorthold tenancy ○ Tenant has not given valid notice ○ No surrender (mutual agreement that tenant ends) ○ So, you wish to unilaterally end tenancy ○ You don’t want to claim possession in the first 6 months, or before the expiry of any fixed term A section 21 notice does not end the tenancy An AST cannot be brought to an end by the landlord except by obtaining: ○ a possession order; and ○ executing the order. (Housing Act 1988, s.5(1)) So, it is ok to accept rent after the notice expires! Also… • the ending of a fixed term AST does not end the tenancy either (unless the tenant moves out on last day of term) • a statutory periodic tenancy automatically starts when fixed term expires (Housing Act 1988, s.5) Procedure in outline Notice Court Order Eviction Section 21 imposes technical formalities A district judge simply does not have discretion to… • Waive the notice requirement; • Waive the technical requirements (accept an invalid notice as ‘substantially to the same effect’); • Count the time elapsed under an invalid notice Failure to follow correct procedure = refusal of possession order Manel v Memon, CA (2001) – Court of Appeal stresses that district judges must rigorously consider documents to establish whether defects. If the tenant wishes to apply to a council for housing Council likely to: • advise tenant of legal position & of any deficiency in notice; • not treat occupiers as homeless until you have obtained a possession order and applied for an eviction warrant (R v Newham LBC ex parte Sacupima, CA (2000)); • tenant placed in position of remaining in occupation if want Council to house them The rules about what a notice must include What constitutes a valid notice differs depending whether the tenancy is: • Fixed term; or • Periodic Note: no requirement that a particular type of form (‘prescribed form’) is used Formalities for fixed term tenancies Notice must: • be in writing; • be served by the landlord; • be served on the tenant; • not give less than two months notice; • not expire before the end of the fixed term; and • state that the landlord requires possession. (Housing Act 1988, s.21(1)) Additional rules for periodic tenancies This is what catches some less experienced landlords out. Most notices are served during a periodic tenancy, e.g. after a fixed term has expired. Additional rules for periodic tenancy notices Notice must also: • state that possession of the dwelling-house is required ‘by virtue of’ section 21 • specify a date after which possession is required • which must be the last day of a period of the tenancy (Housing Act 1988, s.21(4)) Additional rules for periodic tenancy notices (cont…) • which must not be earlier than the earliest day on which the tenancy could be brought to end by a notice to quit (only applicable if period of tenancy exceeds two months, or where contract stipulate more than two months’ notice required) (Housing Act 1988, s.21(4)) Note No requirement to serve the notice on a particular day How do I work out which day is the last day of a period? • If written tenancy – usually states when period of tenancy starts and ends • If fixed term has expired, and tenancy is a statutory periodic tenancy, periods are ‘the same as those for which rent was payable under the fixed term tenancy’ (Housing Act 1988, s.5(3)). How do I work out which day is the last day of a period? (cont…) • Legal disagreement over meaning of s.5(3) • No necessarily the day before rent falls due to be paid! (Salford CC v Garner, CA (2004)) Always use a ‘savings clause’ where tenancy is periodic Example 1: “If the date specified above is not effective so as to comply with the requirements of Section 21(4) of the Housing Act 1988 then the date after which possession of the premises is required pursuant to this notice is the last day of a period of your tenancy which ends next after the expiry of the period of two months from the date of the service of this notice upon you.” Always use a ‘savings clause’ where tenancy is periodic Example 2: “Date of notice expiry: after [date] or, if later, the day on which a complete period of your tenancy expires next after the end of two months from the service of this notice” Always use a professionally prepared notice • Doesn’t mean paying a solicitor • Available cheaply on internet and at stationers You may need to prove service The tenant may dispute receipt, or date of service (alleging less than two months’ notice given). Then a factual issue for county court to decide. Tips: • Keep a copy! • If serving by post, allow time for delivery; • Serve by hand • Additional evidence (e.g. contemporaneous record, witnessing by friend, signature by tenant, proof of posting). Service 21 notices do not lapse • no statutory provision providing period within which notices must be acted upon; • e.g. Paddington Churches HA v Khan, CC  C.L.Y. 2517 – delay of 3 years. Fact landlord had allowed K to remain in the property for so long did not render notice invalid Service 21 notices do not lapse Arguments tenant may use to defend a possession claim on grounds that s.21 notice no longer effective: • new tenancy granted since notice served; • your subsequent actions are inconsistent with continuing operation of notice (e.g. assuring tenant that notice will no longer be acted upon); • otherwise inequitable (unconscionable) for you to rely on notice If in doubt, serve a fresh notice Implications • You do not have to issue proceedings immediately after the notice period expires (or at all), and can in most cases agree with the tenant to let them stay a bit longer without affecting the validity of the notice • Section 21 notice can be served well before you definitely want possession Implications (cont…) • Notice can act as an ongoing threat of possession proceedings - a way of getting tenants to agree to sign a tenancy at a new rent, or to encourage compliance with obligations. Serve notice immediately after tenancy granted? • Good idea? • Used to be common practice – cut down the time taken to obtain possession • Not if a tenancy deposit has been received… Impact of the tenancy deposit protection legislation • Most landlords take a sum of money as security for non-payment of rent, damages, and other losses due to tenant’s actions in connection with the tenancy • Various legal requirements, triggered when you receive a tenancy deposit (post 6 April 2007) Sanctions for non-compliance • court order, requiring repayment of the deposit, or payment into the custodial scheme • court order for compensation, between amount of deposit and three times’ deposit • inability to serve valid section 21 notice (Housing Act 2004, s.214) Obligations upon receiving a tenancy deposit • Protect the deposit, in accordance with one of the authorised statutory schemes • Comply with the ‘initial requirements’ of the particular scheme within 30 days; • Give the tenant (and any ‘relevant persons’) prescribed information within 30 days. (Housing Act 2004, s.213; Housing (Tenancy Deposits) (Prescribed Information) Order 2007 SI No 797) Obligations apply where: • Tenancy deposit paid on or after 6 April 2007; • Initial deposit paid before 6 April 2007, fixed term expired after this date, and new statutory periodic tenancy arose, under which tenant required to pay deposit (even when landlord simply retained money & no money changed hands) (Superstrike Ltd v Rodrigues, CA (2013)); • Initial deposit paid before 6 April 2007, original tenancy replaced by express replacement tenancy, under which landlord retained original deposit (even where no money changed hands) (Superstrike by analogy). Prescribed information • contact details of the scheme administrator under which the deposit is being protected, including their name, address, telephone number, e-mail address and fax number (if any); • information supplied by the scheme to the landlord explaining the statutory deposit protection requirements; • the procedures for repayment of the deposit at the end of the tenancy; • the procedures where the landlord or tenant is not contactable at the end of the tenancy (including where their whereabouts are known, but they have failed to respond to communications about the deposit); • the procedures where the landlord and the tenant dispute the amount to be paid or repaid to the tenant in respect of the deposit; • the facilities for resolving disputes (Alternative Dispute Resolution); • the deposit amount; • the address of the tenanted property; Prescribed information (cont…) • the contact details of the landlord, including his name, address, telephone number, and any e-mail address or fax number; • the contact details of the tenant, including his name, address, telephone number, and any e-mail address or fax number, for the purpose of the scheme administrator contacting him at the end of the tenancy; • the contact details of any relevant person (i.e. the person who actually paid the deposit – see para 5.32 below), including his name, address, telephone number and any e-mail address or fax number; • the circumstances when all or part of the deposit may be retained by the landlord, by reference to the terms of the tenancy; • confirmation, signed by the landlord, that the information given is accurate to the best of his knowledge and belief; and; • confirmation, signed by the landlord, that he has given the tenant the opportunity to sign to confirm that the information given is accurate to the best of his knowledge and belief. Each scheme provides a ‘prescribed information’ form • If third party paid deposit, form also needs to be served on third party. • Care needs to be taken in completing form. • If form is not completed correctly, a subsequent s.21 notice may be rendered invalid (no case law. Yet…) Interestingly… • In practice, can’t comply with Prescribed Information requirements without a written tenancy • Prescribed information notice must include: “the circumstances when all or part of the deposit may be retained by the landlord, by reference to the terms of the tenancy” Wanting to serve a valid s.21 notice where deposit was not protected within 30 days? • Return the deposit in full; or • Agree deduction(s) with tenant and return balance; or • Application by tenant (or relevant person) for repayment/compensation has been determined (Housing Act 2004, s.215(2A)) Wanting to serve a valid s.21 notice where deposit was not protected within 30 days? Note! You do not have the option of: • protecting deposit late; and • re-serving section 21 notice!! Wanting to serve a valid s.21 notice where prescribed information was not served within 30 days? • Serve prescribed information; or • Return deposit to tenant in full; or • Agree deduction(s) with tenant and return balance; or • Application by tenant (or relevant person) for repayment/compensation has been determined (Housing Act 2004, s.215(2)) Wanting to serve a valid s.21 notice where prescribed information was not served within 30 days? You do have the option of: • serving the prescribed information late; and • re-serving section 21 notice Wanting to serve a valid s.21 notice where you have taken a nonmonetary deposit? You can’t. Until you’ve returned the property… (Housing Act 2004, s.215(3)) Implications of tenanted premises being a registerable HMO If a ‘house in multiple occupation’ (HMO) is: • deemed to require a licence by the Housing Act 2004; or • is within an area / class of HMO which the local authority has subjected to licensing (‘selective’ or ‘additional’ licensing), then, an application must be made to the LA for a licence. One implication of not obtaining a licence • No section 21 may be served, so long as remains an unlicensed HMO Possession claim form Possession application form, post-2004 Housing Act, requires you to: • declare whether tenancy deposit paid; • if so, declare whether protected and prescribed information served; • provide deposit protection reference number; • declare whether property part of a HMO that is required to be licensed; • if so, provide evidence of licence application or valid licence. ‘Renting Homes’ and Housing Bill • To change the landlord & tenant landscape in Wales; • Abolition of the assured shorthold tenancy; • Changes to the re-possession process Register your interest ○ Additional course on section 21 procedure & tenancy deposit protection legislation suggested ○ Half-day course ○ Any other subjects you’d find useful?
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