Section 21 Housing Act 1988: A Round Up

On 15 April 2019 the Government announced plans to abolish section 21 of the Housing Act 1988. Under section 21, so long as the initial fixed term is at least six months, Landlords are presently entitled to terminate an assured shorthold tenancy (AST) on two months’ notice without any underlying reason or fault on the part of the tenant.

Until now, a Landlord’s ability to serve a section 21 notice on its tenants has been cited as one of the key advantages to letting property on an AST. Once abolished, Landlords will need to rely on section 8 of the Housing Act 1988. Many of these grounds rely on some fault by a tenant. However, the Government has announced that it will expand the grounds on which Landlords may rely on section 8 and expedite the underlying court procedure.

As the Housing Act 1988 is currently drafted, Landlords may only terminate ASTs on eleven mandatory grounds (e.g. failure to pay rent and where the Landlord requires the property to live in as its principal residence) and eleven discretionary grounds (e.g. where the property was let as part of the tenant’s employment with the Landlord and the tenant is no longer employed by the Landlord).

The Ministry of Housing, Communities and Local Government (MHCLG) has now launched its consultation on abolishing section 21 and improving section 8 grounds. The consultation will run for 12 weeks and closes on 12 October 2019 – you can respond to the consultation here. The announcement has coincided with the introduction of the Tenant Fees Act 2019, which became effective from 1 June 2019 and prohibits Landlords from accepting certain payments from their tenants and imposes fines for non-compliance.

Separately, a string of recent case law has seen Landlords being prevented from relying on section 21 notices due to non-compliance with sections 21A and 21B of the Housing Act 1988. Those sub-sections prevent Landlords from serving a section 21 notice unless, prior to the commencement of the AST, they have provided their tenants with:

• An energy performance certificate;
• A gas safety certificate; and
• A copy of the Ministry of Housing, Communities & Local Government's guidance.

As has been the case for some time now, there are also consequences for a Landlord’s failure to protect tenants’ deposits with an approved tenancy deposit scheme within 30 days of the start of the tenancy (e.g. landlords may be prevented from recovering possession of their properties by giving notice under section 21 and may be required to pay an amount equal to between one and three times the amount of the deposit to their tenants by way of a fine).

Case summary

The Court’s decision in Sebastiampillai v Parr (11 April 2019) is the latest demonstration of the Court tightening the noose on section 21 in respect of tenancy deposits. In that case, the Court allowed a tenant’s appeal and quashed a possession order on the basis of the Landlord’s non-compliance with section 213 of the Housing Act 2004 (relating to tenancy deposits).

In brief, Ms Parr had occupied a flat since July 2007 under a series of twelve month ASTs. She had paid a deposit of £1,050 to Mr Kadiwar (her then Landlord) who had protected Ms Parr’s deposit within an authorised tenancy deposit scheme. Throughout the duration of Ms Parr’s subsequent ASTs with Mr Kadiwar, Mr Kadiwar retained Ms Parr’s deposit within the same authorised tenancy deposit scheme.

In July 2014, Mr and Mrs Sebastiampillai became the leaseholders of the flat, subject to Ms Parr’s existing AST, and thus became Ms Parr’s Landlord. By September 2014 Mr Kadiwar had paid Ms Parr’s deposit to Mr and Mrs Sebastiampillai. On the expiration of Ms Parr’s existing AST in May 2015, Ms Parr remained in occupation of the flat and, in the absence of a new AST being entered into, a new statutory periodic tenancy arose. None of the prescribed information was served on Ms Parr.

In March 2018, Mr and Mrs Sebastiampillai served a section 21 notice on Ms Parr and later issued possession proceedings. A possession order was granted, but Ms Parr appealed the order on the basis that Mr and Mrs Sebastiampillai had failed to comply with section 213 as they had not provided her any of the prescribed information at the time her deposit was transferred to them, or subsequently.

Allowing the tenant’s appeal, the Court held that Mr Kadiwar’s compliance with section 213 did not amount to deemed compliance by Mr and Mrs Sebastiampillai of sections 213 and 215B of the Housing Act 2004 (by which landlords are not required to serve their tenants with the prescribed information wherever a new tenancy replaces a previous one (i.e. wherever the premises let under both tenancies are the same or substantially the same and the landlord and the tenant are the same) and the change in landlord should have resulted in fresh prescribed information being sent to the tenant.