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27 September 2018

Important changes – residential possession

The Deregulation Act 2015 (the Act) came into force on 1 October 2015. It introduced a number of changes in respect of a residential landlord’s ability to bring an assured shorthold tenancy (AST) to an end.

The Act increased the burden on landlords wanting to serve a valid notice under section 21 of the Housing Act 1988 (‘s21 notice’). Section 21 notices are used to terminate an AST and regain possession either at the end of the initial fixed term, or later. The s21 notice procedure allows a landlord to use the ‘no fault’ accelerated possession claim procedure in the County Court.

Initially the changes applied to ASTs created on or after 1 October 2015. However, from 1 October 2018, the requirements apply to all ASTs regardless of when they were granted. Landlords have had a transitional period of three years to take appropriate action.

Section 41(3) of the Act provides that the restrictions will apply to all existing ASTs after a period of three years from their introduction – that is, 1 October 2018. On or after this date landlords will have to comply with extra restrictions, a summary of which follows:

  • Retaliatory eviction: Landlords are prevented from serving a s21 notice in certain circumstances if they received notice requiring them to carry out repairs (section 33). A landlord can no longer serve a ‘retaliatory’ notice under s21 of the Housing Act 1988 when a tenant has made a written complaint to the landlord about the condition of the premises or the common parts of the building and the landlord either did not respond within 14 days, provided an inadequate response or responded by serving a s21 notice. In these circumstances, the tenant can complain to the local authority which can serve appropriate enforcement notices on the landlord. If this happens the landlord cannot serve a s21 notice within six months of the date of service of the enforcement notice (or, if the operation of the notice has been suspended, within six months of the date on which the suspension ends). There a few circumstances where these rules do not apply:
    • where the tenant is in breach of its duty to use the property in a tenant-like manner;
    • where the property is subject to a mortgage granted before the start of the AST and the mortgagee needs to exercise their power of sale with vacant possession;
    • if the landlord is a registered provider of social housing; or
    • if the property is genuinely on the market for sale at the time the s21 notice is given. Note that an intention to sell to a family member or business partner will not satisfy this exception.
  • Time limits on s21 notice: A s21 notice cannot be served in the first four months of an AST. This change will not have an impact on ASTs that were previously exempt, as they will have been granted before 1 October 2015 and will have already passed the four month period. A time limit change that will impact older ASTs is that landlords will have only six months from the date the s21 notice was given in which to act on it (section 36).
  • Prescribed form of s21 notice: A new prescribed form of s21 notice (Form 6A) must be used regardless of when the AST was granted (section 37). There is no longer a need for a landlord to specify the last day of a period of the tenancy as the date on which the tenancy comes to an end, including in relation to a s21(4) notice. The provisions should not affect the ability to issue proceedings after 1 October 2018 relying on a s21 notice which was correctly served prior to that date and which was not required to be in the prescribed form.
  • Prescribed information on condition of property: Landlords will have to give tenants information on the condition of the property for all ASTs. This is achieved by giving, free of charge, Energy Performance Certificates (EPC) and Gas Safety Certificates (where necessary). This is the change that creates the biggest burden for landlords going forward, as landlords will likely have to commission new surveys of properties that have had tenants in them for a considerable period of time, and bear the expense of doing so (section 38). A s21 notice cannot be served if, prior to this, the landlord did not provide the tenant with an EPC free of charge, a gas safety certificate and prescribed information being the MHCLG’s ‘How to rent: The checklist for renting in England.’ The regulations suggest that the requirement to provide the checklist do not apply to ASTs granted before 1 October 2015 because the checklist didn’t exist then.
  • A claim for possession must be started within 6 months from the date the s21 notice was served, or, if a s21(4) notice giving more than 2 months’ notice was served, within 4 months from the date specified in that notice. A new notice must be served if possession proceedings have not been started within these time limits.
  • The tenant has the right to a rent apportionment of rent paid in advance, in respect of a period falling after a s21 notice brings the tenancy to an end.

Landlords and their agents and solicitors must take heed of the new rules. Failure to comply with these new requirements could result in a court treating a s21 notice as invalid, with inevitable additional costs and delays in recovering possession.

Tips for landlords

  • Pay attention to any written complaint by a tenant about the state of the property or an allegation of disrepair and take care to provide an adequate response. An adequate response to a complaint is one which provides a description of the action that the landlord proposes to take to address the complaint and sets out a reasonable timescale within which that action will be taken;
  • Before the tenancy begins (and before serving a s21 notice) provide the tenant with an EPC, a gas safety certificate and a copy of ‘How to rent: The checklist for renting in England’;
  • Place the tenancy deposit in a tenancy deposit scheme within the required deadline;
  • Do not serve a s21 notice at the start of a tenancy, or within the first four months of the tenancy;
  • Bring proceedings for possession promptly, and certainly within six months, to avoid the notice lapsing. Make a note of the date six months from the giving of a s21 notice to minimise the risk of being out of time to issue proceedings; and
  • Use Form 6A for all s21 notices. There is no restriction on using the prescribed form for properties granted before the commencement of the Act.

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