What you need to know about Section 21

Landlords’ Fair, 11 November 2013
What you need to know about
Section 21
Mark Prichard, Housing Consultant
[email protected]
What is Section 21?
The section of the Housing Act 1988 that
provides ‘no fault’ procedure for ending an
Assured shorthold tenancy
○ ‘Mandatory right to possession’
○ No need to give any reason or ‘grounds’
○ Cornerstone of assured shorthold regime
Section 21 in 25 minutes? Really?!
○ Additional course on section 21 procedure
& tenancy deposit protection legislation
○ Half-day course
○ Register your interest
What we’re going to cover
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When you have to use the s.21 procedure
Technicalities about notices
‘Service’
Impact of taking a tenancy deposit
Impact of premises being HMO
When is the Section 21 notice
procedure not used?
○ Tenancy is not an assured shorthold
○ You want possession before a fixed term
period has expired
○ Tenant surrenders possession
Also:
○ Not a procedure for making a money claim
‘But I don’t ever go to court…’
Surrender of the tenancy is always preferable…
“Surrender” =
○ legal term for mutual agreement that
tenancy shall end
Surrender of the tenancy is nearly
always preferable…
○ Time saved (at least 90 days to evict a
tenant, in practice often considerably longer)
○ Cheaper –
• avoids court and eviction warrant fees
• avoids lost rent
○ Surrender can occur at any time:
• during fixed term; or
• at end of notice period; or
• at any time before a possession application /
court hearing / eviction.
Requirements for a valid surrender
○ Explicit agreement by landlord and tenant that
tenancy is to end; OR
○ Action of tenant which is clearly inconsistent with
continuation of tenancy and which exhibits an
unequivocal intention to end the tenancy, which is
accepted by the landlord by an act (e.g. changing
locks, closing rent account, notifying tenant that you
deem tenancy to have ended, re-letting) (‘implied’
surrender).
Risk in taking possession when no unambiguous action by
tenant, e.g. might have vacated
When to use Section 21 procedure
○ Continuing assured shorthold tenancy
○ Tenant has not given valid notice
○ No surrender (mutual agreement that tenant
ends)
○ So, you wish to unilaterally end tenancy
○ You don’t want to claim possession in the first 6
months, or before the expiry of any fixed term
A section 21 notice does not end
the tenancy
An AST cannot be brought to an end by the
landlord except by obtaining:
○ a possession order; and
○ executing the order.
(Housing Act 1988, s.5(1))
So, it is ok to accept rent after the notice
expires!
Also…
• the ending of a fixed term AST does not end
the tenancy either (unless the tenant moves
out on last day of term)
• a statutory periodic tenancy automatically
starts when fixed term expires (Housing Act
1988, s.5)
Procedure in outline
Notice
Court Order
Eviction
Section 21 imposes technical
formalities
A district judge simply does not
have discretion to…
• Waive the notice requirement;
• Waive the technical requirements (accept an
invalid notice as ‘substantially to the same
effect’);
• Count the time elapsed under an invalid
notice
Failure to follow correct procedure
= refusal of possession order
Manel v Memon, CA (2001) – Court of Appeal
stresses that district judges must rigorously
consider documents to establish whether
defects.
If the tenant wishes to apply to a
council for housing
Council likely to:
• advise tenant of legal position & of any
deficiency in notice;
• not treat occupiers as homeless until you have
obtained a possession order and applied for
an eviction warrant (R v Newham LBC ex parte
Sacupima, CA (2000));
• tenant placed in position of remaining in
occupation if want Council to house them
The rules about what a notice must
include
What constitutes a valid notice differs
depending whether the tenancy is:
• Fixed term; or
• Periodic
Note: no requirement that a particular type of
form (‘prescribed form’) is used
Formalities for fixed term
tenancies
Notice must:
• be in writing;
• be served by the landlord;
• be served on the tenant;
• not give less than two months notice;
• not expire before the end of the fixed term;
and
• state that the landlord requires possession.
(Housing Act 1988, s.21(1))
Additional rules for periodic
tenancies
This is what catches some less experienced
landlords out.
Most notices are served during a periodic
tenancy, e.g. after a fixed term has expired.
Additional rules for periodic
tenancy notices
Notice must also:
• state that possession of the dwelling-house is
required ‘by virtue of’ section 21
• specify a date after which possession is required
• which must be the last day of a period of the
tenancy
(Housing Act 1988, s.21(4))
Additional rules for periodic
tenancy notices (cont…)
• which must not be earlier than the earliest
day on which the tenancy could be brought to
end by a notice to quit (only applicable if
period of tenancy exceeds two months, or
where contract stipulate more than two
months’ notice required)
(Housing Act 1988, s.21(4))
Note

No requirement to serve the notice on a
particular day
How do I work out which day is the
last day of a period?
• If written tenancy – usually states when
period of tenancy starts and ends
• If fixed term has expired, and tenancy is a
statutory periodic tenancy, periods are ‘the
same as those for which rent was payable
under the fixed term tenancy’ (Housing Act
1988, s.5(3)).
How do I work out which day is the
last day of a period? (cont…)
• Legal disagreement over meaning of s.5(3)
• No necessarily the day before rent falls due to
be paid! (Salford CC v Garner, CA (2004))
Always use a ‘savings clause’ where
tenancy is periodic
Example 1:
“If the date specified above is not effective so as to
comply with the requirements of Section 21(4) of the
Housing Act 1988 then the date after which
possession of the premises is required pursuant to
this notice is the last day of a period of your tenancy
which ends next after the expiry of the period of two
months from the date of the service of this notice
upon you.”
Always use a ‘savings clause’ where
tenancy is periodic
Example 2:
“Date of notice expiry: after
[date]
or, if later, the day on which a complete period
of your tenancy expires next after the end of
two months from the service of this notice”
Always use a professionally
prepared notice
• Doesn’t mean paying a solicitor
• Available cheaply on internet and at stationers
You may need to prove service
The tenant may dispute receipt, or date of service
(alleging less than two months’ notice given).
Then a factual issue for county court to decide.
Tips:
• Keep a copy!
• If serving by post, allow time for delivery;
• Serve by hand
• Additional evidence (e.g. contemporaneous record,
witnessing by friend, signature by tenant, proof of
posting).
Service 21 notices do not lapse
• no statutory provision providing period within which
notices must be acted upon;
• e.g. Paddington Churches HA v Khan, CC [2004] C.L.Y.
2517 – delay of 3 years. Fact landlord had allowed K
to remain in the property for so long did not render
notice invalid
Service 21 notices do not lapse
Arguments tenant may use to defend a possession
claim on grounds that s.21 notice no longer effective:
• new tenancy granted since notice served;
• your subsequent actions are inconsistent with
continuing operation of notice (e.g. assuring tenant
that notice will no longer be acted upon);
• otherwise inequitable (unconscionable) for you to
rely on notice
If in doubt, serve a fresh notice
Implications
• You do not have to issue proceedings
immediately after the notice period expires
(or at all), and can in most cases agree with
the tenant to let them stay a bit longer
without affecting the validity of the notice
• Section 21 notice can be served well before
you definitely want possession
Implications (cont…)
• Notice can act as an ongoing threat of
possession proceedings - a way of getting
tenants to agree to sign a tenancy at a new
rent, or to encourage compliance with
obligations.
Serve notice immediately after
tenancy granted?
• Good idea?
• Used to be common practice – cut down the
time taken to obtain possession
• Not if a tenancy deposit has been received…
Impact of the tenancy deposit
protection legislation
• Most landlords take a sum of money as
security for non-payment of rent, damages,
and other losses due to tenant’s actions in
connection with the tenancy
• Various legal requirements, triggered when
you receive a tenancy deposit (post 6 April
2007)
Sanctions for non-compliance
• court order, requiring repayment of the
deposit, or payment into the custodial scheme
• court order for compensation, between
amount of deposit and three times’ deposit
• inability to serve valid section 21 notice
(Housing Act 2004, s.214)
Obligations upon receiving a
tenancy deposit
• Protect the deposit, in accordance with one of
the authorised statutory schemes
• Comply with the ‘initial requirements’ of the
particular scheme within 30 days;
• Give the tenant (and any ‘relevant persons’)
prescribed information within 30 days.
(Housing Act 2004, s.213; Housing (Tenancy Deposits)
(Prescribed Information) Order 2007 SI No 797)
Obligations apply where:
• Tenancy deposit paid on or after 6 April 2007;
• Initial deposit paid before 6 April 2007, fixed term
expired after this date, and new statutory periodic
tenancy arose, under which tenant required to pay
deposit (even when landlord simply retained money
& no money changed hands) (Superstrike Ltd v
Rodrigues, CA (2013));
• Initial deposit paid before 6 April 2007, original
tenancy replaced by express replacement tenancy,
under which landlord retained original deposit (even
where no money changed hands) (Superstrike by
analogy).
Prescribed information
• contact details of the scheme administrator under which the deposit is
being protected, including their name, address, telephone number, e-mail
address and fax number (if any);
• information supplied by the scheme to the landlord explaining the
statutory deposit protection requirements;
• the procedures for repayment of the deposit at the end of the tenancy;
• the procedures where the landlord or tenant is not contactable at the end
of the tenancy (including where their whereabouts are known, but they
have failed to respond to communications about the deposit);
• the procedures where the landlord and the tenant dispute the amount to
be paid or repaid to the tenant in respect of the deposit;
• the facilities for resolving disputes (Alternative Dispute Resolution);
• the deposit amount;
• the address of the tenanted property;
Prescribed information (cont…)
• the contact details of the landlord, including his name, address, telephone
number, and any e-mail address or fax number;
• the contact details of the tenant, including his name, address, telephone
number, and any e-mail address or fax number, for the purpose of the
scheme administrator contacting him at the end of the tenancy;
• the contact details of any relevant person (i.e. the person who actually
paid the deposit – see para 5.32 below), including his name, address,
telephone number and any e-mail address or fax number;
• the circumstances when all or part of the deposit may be retained by the
landlord, by reference to the terms of the tenancy;
• confirmation, signed by the landlord, that the information given is
accurate to the best of his knowledge and belief; and;
• confirmation, signed by the landlord, that he has given the tenant the
opportunity to sign to confirm that the information given is accurate to
the best of his knowledge and belief.
Each scheme provides a
‘prescribed information’ form
• If third party paid deposit, form also needs to
be served on third party.
• Care needs to be taken in completing form.
• If form is not completed correctly, a
subsequent s.21 notice may be rendered
invalid (no case law. Yet…)
Interestingly…
• In practice, can’t comply with Prescribed
Information requirements without a written
tenancy
• Prescribed information notice must include:
“the circumstances when all or part of the deposit
may be retained by the landlord, by reference to
the terms of the tenancy”
Wanting to serve a valid s.21 notice
where deposit was not protected
within 30 days?
• Return the deposit in full; or
• Agree deduction(s) with tenant and return
balance; or
• Application by tenant (or relevant person) for
repayment/compensation has been
determined
(Housing Act 2004, s.215(2A))
Wanting to serve a valid s.21 notice
where deposit was not protected
within 30 days?
Note!
You do not have the option of:
• protecting deposit late; and
• re-serving section 21 notice!!
Wanting to serve a valid s.21 notice
where prescribed information was
not served within 30 days?
• Serve prescribed information; or
• Return deposit to tenant in full; or
• Agree deduction(s) with tenant and return
balance; or
• Application by tenant (or relevant person) for
repayment/compensation has been
determined
(Housing Act 2004, s.215(2))
Wanting to serve a valid s.21 notice
where prescribed information was
not served within 30 days?
You do have the option of:
• serving the prescribed information late; and
• re-serving section 21 notice
Wanting to serve a valid s.21 notice
where you have taken a nonmonetary deposit?
You can’t.
Until you’ve returned the property…
(Housing Act 2004, s.215(3))
Implications of tenanted premises
being a registerable HMO
If a ‘house in multiple occupation’ (HMO) is:
• deemed to require a licence by the Housing
Act 2004; or
• is within an area / class of HMO which the
local authority has subjected to licensing
(‘selective’ or ‘additional’ licensing),
then, an application must be made to the LA for
a licence.
One implication of not obtaining a
licence
• No section 21 may be served, so long as
remains an unlicensed HMO
Possession claim form
Possession application form, post-2004 Housing
Act, requires you to:
• declare whether tenancy deposit paid;
• if so, declare whether protected and
prescribed information served;
• provide deposit protection reference
number;
• declare whether property part of a HMO that
is required to be licensed;
• if so, provide evidence of licence application
or valid licence.
‘Renting Homes’ and Housing Bill
• To change the landlord & tenant landscape in
Wales;
• Abolition of the assured shorthold tenancy;
• Changes to the re-possession process
Register your interest
○ Additional course on section 21 procedure &
tenancy deposit protection legislation
suggested
○ Half-day course
○ Any other subjects you’d find useful?