Essential Section 21 update for letting agents: Important changes just weeks away

Important changes affecting letting agents and landlords are just weeks away, courtesy of The Deregulation Act.

The main changes are to the rules on serving a notice to quit under Section 21 of the Housing Act 1988, commonly known as a Section 21 Notice.

The changes come into force on October 1 and apply to tenancies entered into on or after that date.

The following guidance has been written especially for EYE readers by Michelle Cox, a lawyer at Greenwoods Solicitors.

“The main changes to be aware of are:

  • It will no longer be possible to serve a Section 21 Notice until the tenant has lived in the property for a minimum of four months. This is designed to stop landlords serving a Section 21 Notice as soon as a tenant moves in. As before, the notice can’t expire in any event before the end of any fixed term.
  • A Section 21 Notice will only be valid for six months from the date it was given. This means that if the tenant doesn’t leave, possession proceedings must be commenced within six months of the service of the Section 21 Notice. Different rules apply where the notice period set out in the tenancy agreement is more than two months.
  • A Section 21 Notice will no longer be invalid if the date of possession given on it is not the last day of a tenancy period. This has traditionally been one of the main reasons that a Section 21 Notice fails. As long as a full two months’ notice is given, then unless another unconnected error is made, the Section 21 Notice will be valid.
  • Landlords will be unable to serve a Section 21 Notice in circumstances where it is in breach of its legal obligations to a tenant. This includes obligations as to the condition of the property, the health and safety of the occupants and failure to provide an Energy Performance Certificate or a valid gas certificate for the property
  • In addition, where a tenant has raised a complaint to the landlord or agent in writing about the condition of the property there are also restrictions against the service and reliance upon a Section21 notice:
    • If such a complaint is raised and no adequate response is received or such response is received but no action is taken to remedy the complaint, then the tenant will need to complain to the local authority. Until the local authority has decided whether to issue a Relevant Notice (e.g. improvement notice) on the landlord for works to be carried out then a Section 21 Notice cannot be relied upon. If a Relevant Notice is served by the local authority, a section 21 notice cannot be served for six months from the date of that notice.
    • If the landlord/agent adequately responds within 14 days and the work is carried out this will have no impact on a Section 21 notice.
    • The landlord will have a defence in these circumstances where the tenant has failed to use the property in a tenant like manner or the disrepair is due to a breach of the tenants obligations under the lease; where a mortgagee is seeking possession; or where the property is genuinely on the market for sale at the time the Section 21 notice is served.
  • When a Section 21 Notice is served, all rent that has been paid for any period where the tenant ceases to lives in the property must be repaid to the tenant. This has implications where a tenant who has paid their rent decides to leave when they receive the Section 21 Notice rather than when the notice expires. Where a tenant pays a full month’s rent but then is required by the Section 21 Notice to vacate or voluntarily vacates mid-way through the month, the tenant is entitled to be reimbursed the overpayment of rent for that period.
  • One change that is already in force relates to the protection of deposits. All deposits ever taken which are still being held must now be protected. Once complete the deposit protection certificate and all prescribed information must be served on the tenant. If any deposit has not been protected or returned to the tenant a Section 21 Notice cannot be served.”

www.greenwoods.co.uk/knowledge-base

1.Michelle Cox

Michelle Cox

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15 Comments

  1. Trevor Mealham

    Good article, helping agents and landlords prepare for navigation of changes coming.

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  2. Peter

    “This has implications where a tenant who has paid their rent decides to leave when they receive the Section 21 Notice rather than when the notice expires”

    WHAT! Am I reading this correctly? I tenant can vacate earlier than expiry of the notice and is due a rent refund. No, can’t be. Don’t believe it.

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  3. GH1st

    I don’t fully understand how the following part works:

    ‘When a Section 21 Notice is served, all rent that has been paid for any period where the tenant ceases to lives in the property must be repaid to the tenant. This has implications where a tenant who has paid their rent decides to leave when they receive the Section 21 Notice rather than when the notice expires. Where a tenant pays a full month’s rent but then is required by the Section 21 Notice to vacate or voluntarily vacates mid-way through the month, the tenant is entitled to be reimbursed the overpayment of rent for that period.’

    So a landlord or agent serves a Section 21 on a tenant to expire in two months, but a tenant decides to leave the next day after paying a full months rent, and the tenant is reimbursed a months rent less a day even though the six month fixed term or two months periodic notice term hasn’t ended? How does that work?

    Isn’t the tenant legally responsible for rent and bills up to the end of the notice period anymore?

    Does it work the other way round so that if a tenant serves notice on an agent or landlord, the tenant can be thrown out a day later and reimbursed the difference? (joke)

    Any chance we could get some clarification on this….?

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    1. Will

      Think how it will get worse if Jeremy Corbyn were leading the country; he has (as I understand it) already suggested private landlords should be compelled to sell their investments at discounted rates under a right to buy scheme. Perhaps the UK is not the place to invest in housing?

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  4. Will

    Another point which I find a little worrying relates to gas certificates.  It is not unusual for a gas certificate to not run concurrently where the gas engineer has had difficulty in gaining access to the property. Will this be yet another potential trap for landlords to slip into once the ambulance chasing lawyers sniff a large fee? I usually instruct gas engineers 3 weeks prior to expiry date as ask they get as close to the renewal date as practical.

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    1. Paul K

      Just another ‘what if’ here – If a savvy tenant knows that a section 21 cannot be served unless there is a valid gas safety in place and refuses to allow access to a gas engineer to do one do they get to stay at the property indefinitely ?

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  5. MK Agent

    Guys

    its not that complicated – you buy/order your EPC before you put a tenant in place (technically you should not even be marketing the property) you have a 48 hour notice period for emergency access as part of your AST letting conditions and access with keys with Gas Engineer.

    Simples!!

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    1. Will

      Never been locked out then by tenants changing locks?  Also would, in law, access to carry out a GS certificate be rightfully deemed an emergency? I would doubt a Judge would consider it so; perhaps a lawyer might care to comment on access rights.

       

      So sorry MK Agent I don’t think it is quite so Simples unless your gas engineer is a meerkat!

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      1. SRW

        With respect, the gas safety certificate would be classified as an emergency and i would seek access for the check to be carried out, as long as the 48 hour notice has been given. We are taking about a potentially life threatening scenario if the check is not completed and i think a judge would look upon this more sympathetically than losing a tenant to carbon monoxide.

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        1. I want to believe

          I wish i could share your trust of the judicial system. It has been my experience that a judge doesn’t need much in the way of persuading to side with a tenant !

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    2. Peter

      Tenants’ “right to quite enjoyment” will conflict with landlords’ legal duty to undertake a gas safety check. Landlord will need to obtain court order to gain access in this scenario.

       

       

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  6. Anonymous Coward

    It doesn’t stop you serving the notice – it potentially stops it being valid when you go to court to evict a tenant.

    However, if the tenant has obviously used this little loophole to try to make the section 21 invalid it will be obvious.

    Agent not contacted when GSC booking calls made, fails to be there on the day, changes locks etcetera, denies entry to the engineer – with the copious notes on your computer system to back all of this up the judge will find in the landlords’ favour as long as they have behaved themselves otherwise.

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    1. Peter

      Best get rid of a tenant who does not allow gas safety check to take place. All one has to do is serve a section 21 notice.

       

      I don’t see a flaw in this plan!

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  7. Anonymous Coward

    I did think the bit about repayment of rent is potentially unfair to the landlord, BUT…

    When I thought about it for a while, what this really boils down to is a way of making landlords’ think twice about the process.

    Why do you give a tenant notice?

    Bad payer? Good get ’em out sooner rather than later – no loss really
    Rent increase? Clean & tidy you are going to get a better price – no loss really
    Don’t like the tenants? Fab – woo hoo!
    Want to sell it? Tenants leave their underwear all over the place – sorted!
    Move back in yourself? Great – stop whining

    In the end the only time this could be a problem is if the tenant gives you two months’ notice to quit, you reciprocate and serve notice back (which I understand to be best practice) and then the tenant leaves early.

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  8. GlennAckroyd

    The new regs, including the need to give tenants a Guide (as well as EPC and gas cert), mean that Section 21 is no longer a no-fault remedy.

    Housing Advice Centres when faced with homeless cases are going to simply tell tenant’s to systematically report repairs and raise complaints with the local authority.

    This is taking the Housing Act back to the dark ages of the 1977 Rent Act – Trying to evict tenants becomes a nightmare and it was the reason why landlords left the private rental sector in droves.

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