Is the section 21 notice now a risk?

Is the section 21 notice now a risk?

10:39 AM, 19th August 2013, About 9 years ago 42

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Under Section 21 of the Housing Act 1988, once an Assured Shorthold Tenancy (AST) agreement has come to an end, a landlord has the legal right to recover possession of their property should they wish. Is the section 21 notice now a risk?

A landlord wishing to re-gain possession of a property is required to serve a Section 21 Notice to tenants. They do not have to give any reason for ending the tenancy.

There are strict rules for landlords to follow when evicting tenants. Under an AST, they must ensure that the tenancy has run for at least six months and that the initial contract term has finished. Landlords have a duty to protect deposits in a suitable holding scheme and to serve the correct notices using Section 21. There are two types of Section 21 Notice and it is important the right one is issued. If the tenancy is still within the contracted fixed term, the S.21 (1)(b) Notice should be served. Where the fixed term has ended and the tenancy has become a periodic agreement, the S.21 (4)(a) Notice is used. Landlords must give at least two months notice before evicting tenants. If the tenant does not vacate within the timescale, a court possession order can be obtained. Following this, if occupants still won’t leave, the landlord can apply again to the court for bailiffs to assist in tenant eviction.

Before going to court it is imperative that protocols have been followed properly. The appropriate notices need to have been served correctly and in a timely manner. According to the Chairman of the London Association of District Judges, a high percentage of eviction notices are being dismissed out of court due to mistakes made in their issue.

Previously, properly served Section 21 Notices have usually proved effective. Wishing to avoid the issue of going to court, tenants nearly always left within the requisite two months. However, it has recently become popular for councils to refuse a Section 21 notice as evidence of tenant eviction. They prefer to wait until the case has been brought to court and a possession order granted before re-homing individuals. As this process can take several weeks or months, it gives councils additional time to relocate tenants. However, it can be financially devastating for landlords, especially if the tenant is not paying rent.

The new Universal Credit system is also causing concern for both landlords and tenants. Previously, benefits were paid to claimants in separate instalments and rent paid directly to landlords, but tenants will now receive one payment, including housing benefit, from which they will need to pay their rent. Only a small percentage of tenants fail to pass rent on to their landlords. However, the new system could potentially see more individuals struggling to manage their finances effectively and the risk of rent arrears will increase. In addition, there is apprehension over proposals to recover arrears by reducing payments to the claimant and paying a percentage directly to the landlord. This could place tenants in an even more vulnerable position and the landlords will only recoup lost rent over very long periods of time and risk further arrears in the future.

It seems inevitable that the long-term result will be more landlords withdrawing from the social-housing sector, with the gap between supply and demand only increasing.



Comments

Lynne Davis

22:37 PM, 19th August 2013, About 9 years ago

Reply to the comment left by "andrew townshend" at "19/08/2013 - 20:22":

We do the same - but we like to avoid having rent paid on a day that isn't the first day of a tenancy period, so we grant an initial AST of six months plus a few days, as in Mary's example. That way you still get all your rent at the beginning of the period it covers, and you don't have to worry about a part-month causing complications at the end of the term.

Example of a tenancy of ours: Tenant moves on on 20th April but gets paid on the 25th of the month so he wants to pay the rent on the 26th after the first month. We therefore set up a tenancy running from 20th April to 25th October, with the rent due for 20th April to 25th May inclusive (the first month + an extra 6 days) on move-in, and subsequent rent payments due on the 26th of each month, so each tenancy period runs from the 26th to the 25th.

So if we wanted to serve notice on the tenant to depart at the end of the fixed term then - if my understanding is correct - we'd have to make sure they got it BEFORE 26th August, and the notice would expire at the end of 25th October - so they might still be moving out at 11pm on the 25th but (in theory) we could go to court if they were still there a minute after midnight.

If, with the same tenants' tenancy set up as in Andrew's example, the tenancy period was 20th-19th but with rent not paid until the 26th of each month, the fixed term would end on 19th October and you'd have to serve notice by 19th August at the latest. The rent day would be completely irrelevant.

Mark Alexander - Founder of Property118 View Profile

22:48 PM, 19th August 2013, About 9 years ago

Reply to the comment left by "Lynne " at "19/08/2013 - 22:37":

Hi Lynne

I totally concur with your logic on that basis 🙂
.

andrew townshend

8:55 AM, 20th August 2013, About 9 years ago

Reply to the comment left by "Lynne Davis" at "19/08/2013 - 22:37":

yes lynne, i think that is a better way, thank you for the tip.

Joe Bloggs

9:26 AM, 20th August 2013, About 9 years ago

we have this a lot. tenants often want to pay the rent soon after they get paid which is a good idea. so the rent date is different to the tenancy anniversary date.

Joe Bloggs

9:30 AM, 20th August 2013, About 9 years ago

Reply to the comment left by "Mark Alexander" at "19/08/2013 - 11:15":

i have been advocating (to the mrs) visits to prospective tenants current homes too, especially if we have doubts. however, only had the bottle to do it once as seems a bit cheeky.

Mark Alexander - Founder of Property118 View Profile

10:12 AM, 20th August 2013, About 9 years ago

Get over it Joe, far better to feel slightly uncomfortable that end up with a wrecked property! I use it as an opportunity to build rapport too 🙂

Mary Latham

11:23 AM, 20th August 2013, About 9 years ago

Reply to the comment left by "Lynne Davis" at "19/08/2013 - 22:37":

When serving a SECTION 21 within the fixed term the date that you request Possession is irrelevant so long as you give the tenants a minimum of 2 full months Notice and it is on the expiry of the fixed term or after.

It becomes VERY relevant when serving a SECTION 21 after the fixed term during the SPT period this is when the date must be on the expiry of the last day of the TENANCY PERIOD this is not the same as the RENT PAYMENT PERIOD. The tenancy period is taken from the date that the tenancy began not the date that the rent is due and this is why having two different dates causes so many invalid S21s to be thrown out of court.

Landlords need to be very careful that they are not taking rent that covers a period beyond the tenancy period. In your example the tenant would be paying rent for a different period to the tenancy period which would always start from the move in date not the rent due date.

The "saving clause" is usually, but not always accepted by Judges because it shows that the landlord had no intention of asking the tenant to leave before he could legally do so. BUT it is far better to get the date right. I always use the NLA on line S21 because it auto fills and the date cannot be wrong, it also has the savings clause just in case.

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Tony McVey

12:31 PM, 20th August 2013, About 9 years ago

Reply to the comment left by "Mary Latham" at "19/08/2013 - 12:45":

I do not understand Mary's comment about tenancy periods and rent periods. S.5(3)(d)
of the Act says that a tenancy period is the same as the contractual rent period. In which case the s.21 should expire on the last day of a month. Our own tenancy
agreements conform to this exactly and judges have agreed with me.

Mary Latham

13:45 PM, 20th August 2013, About 9 years ago

Reply to the comment left by "Tony McVey" at "20/08/2013 - 12:31":

This is not saying that the tenancy period is the same as the rent payment period. It is saying that the Statutory Periodic Tenancy arises when this condition and the others listed, remain the same as the fixed term tenancy.

If your AST has a start date and rent due date that is the same there is no problem, it where there are two different dates that problems arise and S21 Notices are thrown out of court because the wrong date has been used.

"Legal documents like tenancies use calendar months (month lengths vary between 28
and 31 days): so if the first day of a tenancy [date on the agreement] is the 1st of May (not
necessarily the same day as the rent day – rent may be due on a different day if the
agreement says so) the last day of a six-month fixed-term would be the 31st of October.
With a twelve-month fixed-term the last day of the tenancy is the 30th of April. So, the
last day of a tenancy term is always the day in the month BEFORE the tenancy
agreement date."

Source http://www.landlordzone.co.uk/pdf/servingS21.pdf

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My book, where I warn about the storm clouds that are gathering for landlords is here >>> http://www.amazon.co.uk/dp/1484855337

Tony McVey

14:20 PM, 20th August 2013, About 9 years ago

Surely S. 5(3)(d) is saying that when a periodic tenancy arises its periods are
the same as the rent periods under the original written agreement. If my TA's
expressly state that following an initial pro-rata rent payment, subsequent
rent is due 1st monthly, then the tenancy periods of the subsequent periodic
agreement are identical to this and any S21 must expire on the last day of a given
month.

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