Understanding the Deregulation Act’s effect on landlords and tenants

Introduction

The aim of the Deregulation Act, passed on 26 March 2015, was to reduce administrative burden by repealing legislation which was no longer necessary or practical. Bearing this in mind, the Act touches on a wide range of issues, from general areas of business and insolvency, to the use of transport, education, public authorities and the administration of justice.

Yet some of the most significant changes have been in property. The Act has important implications for landlords and tenants, specifically in relation to tenancy deposits, Section 21 notices, and retaliatory eviction.

Overall some unnecessary legislation has been repealed, particularly in the case of tenancy deposits, which clarified some particularly contested issues. However, the Deregulation Act also introduced greater legal protection for tenants, to reflect the greater numbers of people moving into rented accommodation.

The changes for landlords and tenants have been a mixed bag; on the one hand some changes have succeeded in reducing administrative burden, but on the other, some have introduced new responsibilities and new legal issues.

The new rules introduced in the Act initially only applied to assured shorthold tenancies which began after the act came into law. However, from 1st October 2018 onwards, the provisions apply to all assured shorthold tenancies, whatever date they were entered into. By now both tenants and landlords should be aware of their new responsibilities, so we’ve broken down the most important changes for each group.

Protection of Tenancy Deposits

The first significant change is in a landlord’s responsibility to protect and return tenancy deposits. Prescribed information on protecting tenancy deposits came into force in 2007, which required deposits for assured shorthold tenancies to be placed in government-backed schemes. This legislation had the unintended effect of catching out many landlords who failed to re-protect tenancy deposits when the nature of the tenancy changed from an assured shorthold tenancy to a statutory periodic tenancy.

As happened in Superstrike Ltd v Rodrigues and Charalambous v Maureen Rosairie Ng, the court ruled the shift created a whole new tenancy and the landlords had unknowingly been in breach of regulations. Due to the accidental breach the Section 21 Notice served upon the tenants was deemed invalid, both landlords lost their cases.

The Deregulation Act addressed this confusion. It clarified that if the deposit had initially been received and correctly protected, it would not need to be protected again even after the nature of the tenancy shifted. This change, though relatively straightforward, has eliminated an obscure loophole through which unwitting landlords could easily be found to be in breach of their responsibilities. 

Serving a Section 21 Notice

Various changes have also been made to the process of evicting a tenant with a Section 21 notice. Some of them make a landlord’s life easier, but a couple protect the tenant’s interests.

The correct date to serve a Section 21 notice has long been disputed. The Housing Act of 1988 specifies the notice must be given on “the last day of a period of the tenancy and not earlier than two months after the date the notice was given.” This stipulation resulted in a great deal of confusion and invalid Section 21 notices. In Spencer vs Taylor, the incorrect date given on the notice gave the tenant grounds to appeal his eviction. The Deregulation Act makes it clear that a Section 21 notice will no longer need to specify the last day of a tenancy, which should go some way to reducing validity disputes.

Another change which could benefit landlords is a new standard form to be used in evicting a tenant. It combines the two previous Section 21 notices for fixed-term and periodic tenancies into one single form. This is another stipulation which is clearly intended to reduce some of the unnecessary complexities in landlord-tenant litigation.

However, several other new clauses have increased a landlord’s responsibilities. The Section 21 notice can no longer be given if a landlord is in breach of legislation on the condition of dwelling houses or their common parts; the health and safety of occupiers of dwelling houses; and the energy performance of dwelling-houses.

In practice, this means if a landlord wants to evict a tenant, they must have provided tenants with an EPC and Gas Safety Certificate. They are also required to give the tenant a copy of the Department for Communities and Local Government’s booklet entitled ‘How to rent: the checklist for renting in England‘ at the beginning of the tenancy. Keep in mind if you are a landlord and you do not have proof of taking these steps, a tenant may be able to challenge your Section 21 notice.

Finally, there are also new time constraints on the process of eviction. A landlord is no longer able to serve a Section 21 notice in the first four months of the tenancy. Furthermore, after the notice has been served, possession proceedings must have been started within six months or the notice will be invalid.

Both tenants and landlord should be aware of these changes. Tenants served with a Section 21 would do well to be aware of the circumstances in which it is invalid, and landlord should be certain they are fully complaint before serving the notice.

Retaliatory Eviction

The Deregulation Act also puts new rules in place to prevent retaliatory eviction, a term for when a landlord evicts a tenant in reaction to their disrepair complaint.

First, if you are a landlord and your tenant has put complaints to you in writing, you have fourteen days to respond, and must set out in your letter when you will access the property, come up with solutions, and when you intend to carry out the repairs. If the repairs have not been carried out, tenants also have the power to make a complaint to the local housing authority, who can serve an enforcement notice on the landlord.

This notice will set out a schedule that the works must be carried out in. If landlords are served with this notice, they also will not be able to issue a Section 21 notice for six months afterwards.

While these measures have clearly been implemented to protect tenants from unfair eviction, landlords will have to ensure they react quickly to allegations of disrepair or either will face difficulties in relation to their possession claim or fact a complaint by the tenant to their Local Authority. Tenants, on the other hand, should make sure to put their complaints in writing if they want a prompt response, and be aware of their rights to complain if the landlord does not oblige.

Has the Act Succeeded?

The Deregulation Act has managed to reduce confusion and unnecessary admin in landlord tenant issues; clarifying the position on tenancy deposits and simplifying the Section 21. Yet measures intended to protect tenants could be more of a mixed bag. Attempts to empower tenants against unscrupulous landlords should of course be applauded. However, there is the possibility that these attempts, such as involving housing authorities in disrepair claims, could be used as a strategy by tenants to prevent or slow down eviction, or else put a strain on the resources of local councils, as landlords are put under pressure to increase rental income to cover void rental periods or difficulties in collecting rental revenue.

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If you are either a tenant or a landlord struggling with the new regulations, please get in contact with us from our details below.

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