The Deregulation Act explained for landlords – Part 1- Retaliatory Eviction

Posted: April 1, 2015 | Author: | Filed under: Landlords, Letting Agents, Possession, Property Law, Residential Property, Tenants | Tags: , , , , , | Leave a comment

The Deregulation Bill received Royal Assent on 26 March 2015. In Part 1 of this article I will summarise the new provisions to offer protection for tenants against the practice (albeit perhaps not very common) of retaliatory eviction where landlords serve a possession notice in response to a complaint (usually repair) from a tenant.

Section 33 of the Act provides a three part test which, if met, restricts the landlord’s ability to serve a valid Section 21 notice. The landlord will not be able to serve a valid notice if:

  1. The tenant has made a written complaint to the landlord regarding the condition of the property before service of a Section 21 notice; and
  2. The landlord has not provided an adequate written response within 14 days of complaint; and
  3. The tenant has complained to the Local Authority which then serves an Improvement Notice or an Emergency Remedial Notice.

If the Local Authority has served a notice as above, the landlord is unable to serve a valid Section 21 notice for 6 months from the date of the Local Authority notice being served or suspended.

There are some exceptions which include where the Local Authority notice is revoked, the property is genuinely on the market for sale, mortgage repossessions and where the tenant has caused the disrepair. The latter, certainly, will open up a debate as to who is responsible for the disrepair and may cause delay to possession proceedings.

There are various knock on effects to possession proceedings which will need to be considered on a case by case basis but, essentially, it is going to be a question of who gets in first in terms of either a complaint from the tenant or a Section 21 notice being served by a landlord.

However, further provisions of the Act provide a restriction on the timing of service of a Section 21 Notice. Some landlords serve a Section 21 notice at the start of the tenancy as a matter of course. A landlord will not be able to serve a Section 21 notice within the first 4 months of a fixed term under the new provisions. As such, no Section 21 notice can end on the last day of a 6 month term but a new prescribed Section 21 notice is to be introduced which will avoid the need for a landlord to specify, within the notice, the last day of the period of the tenancy for when the tenancy comes to an end. This will simplify the possession notice process and cut down errors in drafting Section 21 notices for landlords.

The new provisions relating to retaliatory eviction come in to force on 1 October 2015. They will initially only apply to new fixed term tenancies entered into from that date. Eventually, the provisions will apply to all tenancies but this will not be for another 3 years.

Landlords can expect additional provisions restricting their right to serve a Section 21 notice where they fail to comply with various obligations. Whilst these will be subject to further Regulations, it is anticipated that they will relate to health and safety issues, Energy Performance Certificates and Gas Safety Certificates.

Rent in advance- Deposit or no deposit?

Posted: April 26, 2013 | Author: | Filed under: Housing Act, Landlords, Letting Agents, Managing Agents, Possession, Property Law, Tenancy Agreements, Tenancy Deposits | Tags: , , , , , , , , , , | Leave a comment

Recent uncertainty as to whether rent in advance is a deposit or not has been clarified by the Court of Appeal decision in the case of Johnson v Old. Much to the relief of landlords, the decision was made in favour of the landlord. This means that when rent is paid in advance, where payment of the monies is to discharge the tenant’s liability for rent only, it is not treated as a deposit and therefore does not need to be registered.

I have set out in my previous articles the requirements of deposit registration and the consequences of failure to do so. This decision is important therefore for landlords that seek to take rent in advance as it now provides them with some peace of mind that a Section 21 Notice served will not be invalidated and they will not be liable to pay a penalty.

The case itself of Johnson v Old involved the Court dealing with some issues to the drafting of the tenancy agreement. So far as to say, the clearer the terms of the tenancy agreement, the less likely any dispute is to arise. The important issue addressed by the Court was whether a payment of 6 months rent in advance was a deposit or not.

The Court held that where money is paid in order to discharge a current liability (rent), it is not paid with the intention that it is to be held as security. The money taken in advance was to be allocated for rent only for the first 6 months and it was not to be allocated elsewhere or held as security for any breach of the tenancy agreement.

Importantly, the tenant had not been asked for further payment of rent within the first 6 months following the payment in advance. Had rent been demanded within that 6 month period, the landlord would clearly be seeking additional monies when rent had already been paid (by way of the advanced payment). An amount for further rent within that initial period is likely to render the advanced payment as a deposit.

Essentially, a landlord cannot take rent in advance and then ask for further rent to be allocated to the same period. If this is done, the advanced “rent” would need to be registered as a deposit.

Therefore, where a landlord is faced with a the tenant who cannot supply adequate referencing and the landlord wishes to request rent in advance, the landlord should ensure that no further rent is demanded for the period (already paid) unless the landlord is willing to treat the payment in advance as a deposit (and thus register and comply with the initial requirements).

Speaking to a number of landlords about tenancy deposits, many don’t take deposits now. As with many things, there are advantages and disadvantages of not taking the deposit but this recent case provides now some further scope for landlords and an option to take rent in advance.

There is a potential knock on effect of taking rent in advance which applies to the length of notice to be given pursuant to Section 21 of The Housing Act 1988. Landlords should take advice and I would be happy to offer some guidance in this respect.