On 1 October 2015, significant changes were made to housing law in England (properties in Wales are not affected). The changes which are set out in the Deregulation Act 2015 increase the level of protection afforded to tenants, while placing extra burden on landlords.
Buy-to-let investors are still coming to terms with the budget bombshell concerning the reduction of tax relief on mortgage interest payments. How much will these 1 October 2015 changes add to their woes?
What has changed on 1 October?
The most important changes affect landlords’ ability to recover possession of their premises at or after the end of the term of an assured shorthold tenancy. Section 21 of the Housing Act 1988 allows landlords to remove tenants on a ‘no fault’ basis, provided they serve notice correctly and there are no factors that serve to invalidate the notice.
From 1 October there is a longer list of invalidating factors – or, in other words, there are more obstacles in the way of landlords seeking possession. There are also changes to the timing of a Section 21 notice and the timescale for issuing possession proceedings. And there is a new prescribed Section 21 notice which landlords must use.
Readers should note that the changes referred to below only affect tenancies that start on or after 1 October 2015. Tenancies granted before that date are not affected. However, from 1 October 2018, the new provisions will apply to all tenancies, regardless of when they were granted.
Validity of Section 21 Notices
Until 1st October 2015, there were two factors that could invalidate a Section 21 notice: failure to protect the tenant’s deposit in an approved tenancy deposit protection scheme and failure to comply with HMO licensing requirements.
On 1 October, several more restrictions came into play. Landlords are now unable to serve a valid Section 21 notice if:
1. The tenant has made a valid complaint about the condition of the property and, instead of addressing the complaint, the landlord serves a Section 21 notice. This is known as ‘retaliatory eviction’. This restriction comes into play where the local authority has served an improvement notice or an emergency remedial action notice under the Housing Health & Safety Rating System (HHSRS).
2. The landlord has failed to provide the tenant with any of the following: a valid energy performance certificate, a current gas safety certificate or a copy of the publication ‘How to rent: the checklist for renting in England’, published by the Department for Communities and Local Government.
To clarify because this is important: failing to give your tenant a copy of the ‘How to rent’ document means you can’t serve a valid Section 21 Notice!
Prior to 1st October 2015, some landlords and agents liked to issue a Section 21 notice at the start of the tenancy. This was deemed to be unfair to tenants, so from 1st October it is not possible to serve a Section 21 notice in the first four months of a tenancy. Therefore landlords and agents will need to make and keep accurate records if they want to obtain possession at the earliest possible stage – i.e. after six months.
There is also a new deadline for starting possession proceedings if the tenant does not vacate of his or her own accord. Proceedings must be started within six months of the date of service of the Section 21 notice, otherwise a new Section 21 notice must be served.
Prescribed form of Section 21 Notice
A new prescribed form of the Section 21 notice needs to be used to terminate tenancies that start on or after 1 October. Use of the prescribed form is optional for existing tenancies but it is likely that landlords will adopt the new form for all tenancies. From 1 October 2018, the new form must be used for all tenancies.
Any other changes?
As well as the changes to the Housing Act discussed above, landlords and agents need to be aware of the new Smoke and Carbon Monoxide Alarm (England) Regulations 2015 which came into force on 1st October.
Carbon monoxide incidents are more common in rented property than in privately owned homes, and these new regulations are part of a wider effort to improve fire safety in the UK.
The regulations require a smoke alarm to be installed on each storey of premises on which there is a room used wholly or partly as living accommodation (this includes bathrooms and toilets). They also require a carbon monoxide alarm to be present in any room that is used wholly or partly as living accommodation and contains a solid fuel burning combustion appliance. On the first day of a new tenancy, the landlord or their agent must check that each alarm is in proper working order.
Local housing authorities have enforcement powers.
Many properties, particularly those built in recent years, will already be equipped with alarms that comply with the regulations. However, landlords and agents should carry out an audit of their properties to identify deficiencies and remedy as soon as possible.
What should landlords and agents do now?
Landlords and agents should familiarise themselves with the new rules relating to termination of tenancies. A range of new and updated template documents is available on the Simply-docs website.
As we all get to grips with the new regime, we would love to know what landlords and agents think of these changes. Do they strike a fair balance between the interests of landlords and tenants? Will the “how to rent” publication be a useful addition to the tenancy paperwork? Please contribute to the debate in the comments section below!