Terminating assured shorthold tenancies - part two

Terminating assured shorthold tenancies - part two

Published:

Author: Richard Willcox

Applies to: England and Wales

This is the second of three articles discussing changes in the law applying to the termination of Assured Shorthold Tenancies (ASTs).

The upcoming Deregulation Bill, anticipated to come into force before the general election, contains several amendments to the current legislation with the intention of addressing some complexities and to clarify the position concerning deposits received before and after 6 April 2007. Once passed, the new rules will apply as if they had been brought into force on 6 April 2007, confirming the retrospective effect of the two cases discussed in our previous article.

Assuming the bill is passed in its current form, landlords will need to consider the following issues prior to serving a s.21 notice:

Protecting deposits

Landlords will have 90 days from commencement of the new rules to protect and give the prescribed information for a deposit received for an AST granted before 6 April 2007 but which became a periodic tenancy after 6 April 2007.

For tenancies which became periodic tenancies before 6 April 2007, landlords will need to now protect any deposit given, but will be no financial penalty for failing to do so.

For fixed term ASTs granted on or after 6 April 2007, if the TDS rules were complied with at commencement of the AST, this compliance will be deemed to apply to any new periodic tenancy that arises after expiry of the fixed term provided the parties and terms remain the same. No protection will be given to landlords who did not protect the deposit during the original fixed term tenancy.

Serving notice

There will be a new prescribed form of s.21 notice.

Landlords will not be able to serve a s.21 notice in the first four months of an initial tenancy. As the notice requires at least two months' notice, this will extend six month tenancies by a few days. Once served landlords have six months from expiry of the notice to act on it.

Rent

If an AST is terminated during a period of the tenancy pursuant to a s.21 notice, the tenant will be entitled to a refund of rent relating to those days falling after the tenancy ends.

Protection from retaliatory eviction

Retaliatory eviction happens when a tenant makes a complaint in writing about the state of the property and the landlord responds by serving a s.21 notice to end the tenancy. The bill provides that where a complaint is made, and the local authority subsequently issues an Improvement Notice or Notice of Remedial Action on the landlord, meaning he cannot serve a s.21 notice within six months of the enforcement notice being issued. Any s.21 notice already issued but not yet expired will also be invalid in these circumstances.

The concern is that upon receipt of a s.21 notice, tenants will suddenly raise issues of disrepair jeopardising the landlord's ability to get possession. If the landlord wants possession in order to refurbish/redevelop the property, its plans will be hampered. Local authorities could also be swamped with requests for enforcement notices. There is an exemption for properties which are genuinely on the market for sale when the s.21 notice is served.

Condition of the property

Any ongoing eviction proceedings will be suspended and a landlord cannot serve a s.21 notice if he is in breach of any statutory requirements relating to:

  • The condition of the property or its common parts as a dwelling house
  • The health and safety of the tenant
  • The energy performance of the property

These requirements are far-reaching and could be costly. Obstructive tenants may also attempt to refuse access for remedial works to be done if they know the landlord intends to serve a s.21 notice, causing delay and further cost.

Comment

Given the reason for introducing ASTs was to provide a short term letting vehicle that allowed landlords to quickly and easily let, re-let and gain possession of their properties, the above cases and new bill appear to have made the law more tenant friendly and administratively more onerous for landlords.

While professional residential landlords may take these new measures in their stride, those for whom it is not part of the day job may inadvertently stumble on the new hurdles in their way of obtaining possession.

For those looking to purchase property subject to ASTs it is vital full enquiries are made from the seller, prior to purchase, as to whether:

  • all of the statutory requirements concerning TDSs have been complied with
  • all other applicable statutory requirements have been adhered to concerning the condition of the property; and
  • any enforcement notices that have been threatened or served within the last six months have been dealt with.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

About the author

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Richard Willcox

Associate

03700 868481

Richard is an associate in our specialist property litigation team. His experience includes rent arrears, forfeiture, lease renewals and break notices. He acts for a wide range of clients including commercial and residential developers, national retailers, public and private companies and educational establishments

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