What does the Deregulation act 2015 mean for Landlords?Make Text Bigger
The Deregulation Act 2015 was passed on 26 March 2015 in a bid to reduce some of the burdens of previous legislation which no longer had practical use.
The act as a whole covers measures relating to:
- general and specific areas of business, companies and insolvency
- the use of land, housing, transport, communications, education and training, the environment, entertainment and alcohol, public authorities and the administration of justice.
However, landlords, letting agents and tenants need only be aware of the points and practical implications of the act relating specifically to relevant aspects of residential legislation. See Video Below:
What laws have changed which affect landlords?
With more and more people moving into rented accommodation, the government has put into law better protections for tenant. The law also provides landlords greater clarification on their responsibilities concerning the protection of tenant deposits.
Below are the key changes that impact landlords.
The Energy Performance Certificate (EPC)
Tenancy Deposit Protection
Additional Information Relating to Prescribed Information
The Section 21 Notice
Deregulation Act 2015 tenancy deposits
The requirement to protect a tenancy deposit taken for an assured shorthold tenancy in England and Wales was introduced on 6 April 2007, following its inclusion in the Housing Act 2004.
Deposit protection legislation was introduced because the government recognised many deposits were being unfairly withheld at the end of a tenancy. So the aim behind the Tenancy Deposit Protection is to raise standards in the lettings industry and ensure tenants are treated fairly at the end of the tenancy.
The legislation covers virtually all new assured shorthold tenancy contracts used by letting agents and landlords to let a property in England and Wales.
Since the Tenancy Deposit Scheme (TDS) legislation came into force, there have been a number of cases before the courts in which the wording of the legislation has been under scrutiny. These cases include Superstrike Ltd v Rodrigues and Charalambous v Maureen Rosairie Ng.
But overall the Deregulation Act 2015 has provided much needed clarification on the steps that a landlord must take to comply with TDS legislation.
Deposits taken before 6th April 2007 and tenancies that became periodic before April 2007
Deposits don’t need to be protected if a tenancy deposit was received for a fixed term tenancy before 6th April, or if the landlord holds the deposit against a statutory periodic tenancy, which also started before April 2007.
However, if a landlord wishes to gain possession of the property under Section 21 of the Housing Act 1988, the deposit must be protected and the Prescribed Information issued to the tenant prior to serving the Section 21 notice.
Landlords will not face any financial penalties for non-protection of the deposit.
Deposits taken before 6th April 2007 and tenancies that became periodic after April 2007
Deposits taken before 6 April 2007, for tenancies that are still running and have moved onto a periodic tenancy on or after this date, now need to be protected in a Tenancy Deposit Protection scheme. If a deposit remains unprotected, the landlord could potentially face a fine.
Deposits taken on or after 6 April 2007
Landlords who took a deposit on an assured shorthold tenancy (AST) after 6th April 2007 and correctly protected and served the Prescribed Information to their tenant do not need to reissue the Prescribed Information to the tenant on future renewals of the AST, or if the AST rolls into a statutory periodic tenancy.
This is so long as the tenancy details haven’t changed (i.e. landlord, tenant and property information) and the deposit remains in the same tenancy deposit protection scheme.
Prescribed Information can include details of a person representing the landlord. The act confirms that where an agent has protected the deposit on behalf of the landlord, the agent’s contact details may be provided in place of the landlord’s.
Deregulation act 2015 section 21
On 1 October 2015 further provisions in the Deregulation Act 2015 came into force to protect tenants against unfair eviction when they have raised a legitimate complaint about the condition of their home.
The legislation also requires landlords to provide all new tenants with information about their rights and responsibilities as tenants. This information includes such detail that a landlord cannot serve a Section 21 notice unless they have complied with certain legal responsibilities.
The government also introduced a new standard form that landlords must use when evicting a tenant under the ‘no fault’ (section 21) procedure. This makes it more straightforward for landlords to evict a tenant where it is legitimate to do so.
These provisions apply to all new assured shorthold tenancies that start on or after 1 October 2015. However, as of 1 October 2018 the provisions will apply to all ASTs in existence at that time.
1. Compliance with prescribed legal requirements
A Section 21 notice may not be given if the landlord is in breach of any legislation which relates to any of the below.
The condition of dwelling houses or their common parts
The health and safety of occupiers of dwelling-houses
The energy performance of dwelling-houses.
This means all landlords must provide tenants with an EPC and a Gas Safety Certificate before the tenancy begins. If at a later date the landlord wants to serve a Section 21 notice on a tenant, he will need to prove the tenant has been provided with these two documents. If they don’t do this then the landlord wont be able to use the section 21 notice.
2. Requirement of the landlord to provide Prescribed Information
At the start of each AST, landlords are now required to provide tenants with a copy of the Department for Communities and Local Government’s booklet entitled ‘How to rent: the checklist for renting in England’.
3. Prescribed form of Section 21 notices
The new Section 21 notice combines the two previous section 21 notices into a single use notice for both fixed-term and periodic tenancies. It‘s for use with new tenancies starting after 1st of October 2015 and all tenancies (regardless of when they started) from 1st October 2018.
4. Timing and Lifespan of a Section 21 Notice
From 1st October 2015, a landlord is now no longer able to serve a Section 21 notice within the first four months of the contractual term of the tenancy. This is to stop landlords and their agents serving notice at the start of a tenancy if they want to finish it at their convenience.
A Section 21 notice now also has a lifespan. Once a Section 21 notice has been given under a fixed term AST or a periodic AST, possession proceedings must be started within 6 months of the date the notice was given. If the landlord doesn’t do this then the possession notice is invalid and a new one will be needed.
The Deregulation Act 2015 contains provisions suspending the operation of section 21 in order to protect a tenant against retaliatory eviction.
Retaliatory Eviction occurs where a landlord takes steps to evict a tenant because the tenant has complained about the condition of the property, rather than carry out repairs.
The new process means that the tenant has to put in writing to the landlord his/her complaints about disrepair. The landlord has 14 days to respond to the tenant, setting out when they will access the property, look at the remedies and carry out repairs.
If the tenant isn’t satisfied and the landlord hasn’t carried out the repairs, the tenant can make a complaint to the local housing authority. Local councils have been given the power to serve an enforcement notice on the landlord, setting out “a reasonable timescale” for improvement works to be carried out. Landlords served with an Improvement Notice cannot issue a section 21 within six months of an enforcement notice being served.
Are there any landlord benefits from the 2015 Deregulation Act?
Amendments in the Deregulation Act have finally put an end to the confusing tenancy deposit rules which have been in place since the Court of Appeal decision in the Superstrike v Rodrigues case.
Changes to Section 21 prescribed form are also great news for landlords and agents. The form is more straightforward and has a similar feel to that of the section 8 notice, which is already prescribed. It simplifies the claims process and, as it doesn’t request complicated end-dates previously required with periodic tenancies, should prevent as many possession claims being rejected at court due to errors with dates.
There is an argument that the measures tackling retaliatory evictions could open the flood gates for tenants to submit sham disrepair complaints to councils so as to avoid paying rent. At Landlord Action we also have concerns about time delays because of the shortage of Environmental Health Officers within local councils, which could impact landlords.
Good landlords will deal with any complaints within the given 14 days. Plus, with stringent penalties for non-compliance, landlords may well want to look at the increasing benefits of opting for a fully-managed service with their letting agent.
And how about the tenants’ perspective?
Many of the provisions outlined in the Deregulation Act 2015 have been designed to protect tenants. Their deposits must be protected in one of three government approved redress schemes. They must also be informed of their property’s Energy Performance Certificate and Gas Safety certificate prior to moving into a new rental property.
Landlords can no longer unfairly evict a tenant using a Section 21 for asking for repairs or complaining about the condition of a property. Instead, they must make improvements.
Deregulation Act 2015 summary for landlords
On the whole, we at Landlord Action welcome the changes, which provide much needed clarity over the protection of older deposits. It brings an end to confusion over the management of deposits taken before the legislation came into force and retained by landlords past their original tenancy period.
The changes to section 21 will help encourage landlords to operate best practice and the new prescribed form will also make life much easier.
It’ll be interesting to see how this act impacts the private rented sector over the long term. One thing for sure, is that it is more important than ever for landlords to ensure tenants’ deposits are protected and Prescribed Information given before a Section 21 notice is served. Plus, landlords should keep on top of maintenance issues to avoid tenants filing a case of disrepair later down the line.