Deregulation Act 2015 and the Assured Shorthold Tenancy Notices

The Deregulation Act 2015 (DA) was passed on 26 March 2015, and gained the full force of law on 1 October, 2015. The Act covers various points which will be of interest to landlords and those appointed to deal with residential properties. Here is a brief summary of those points and the practical implications. It should be noted at the outset that certain provisions of the DA only apply to property in England and these provisions have been highlighted accordingly.

Tenancy Deposit Protection

Since 6 April 2007, it has been a requirement upon landlords to register deposits taken from tenants, in relation to an Assured Shorthold Tenancy (AST), with one of three government-backed tenancy deposit schemes (TDS).

This requirement was originally understood to apply to ASTs that commenced on or after 6 April 2007, but after the Court of Appeal decision in Charalambous & Anor v NG & Anor [2014] EWCA Civ 1604 it appeared that the legislation applied, to a degree, to tenancies starting before that date.

The Deregulation Act 2015 introduced new obligations in respect of the termination of tenancies (ss.33-40), as well clarifying the duties of landlords to register those deposits taken before 6 April 2007 (ss.30-32). However, it should be noted that the new provisions contained at s.33-40 of the Deregulation Act only apply to ASTs in England.

In order to hold the deposit in accordance with an authorised TDS scheme, the landlord must:

  • Register the deposit with one of the three authorised schemes1 within 30 calendar days2 from the date upon which it is received
  • Provide the prescribed information to the tenant as required and contained in the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 within 30 calendar days3 from the date upon which it is received, and
  • Return the deposit within 10 calendar days of the parties agreeing how much should be returned

The Deregulation Act 2015 inserts and amends provisions in both the Housing Act 1988 (1988 Act) and the Housing Act 2004 (2004 Act). The provisions relating to tenancy deposits came into force on 26 March 2015 (subject to a 90 day transition period). The sections relating to section 21 of the 1988 Act came into force on 1 October 2015.

Tenancies that do not require registration with a TDS

The tenancy deposit rules apply to all ASTs in England and Wales. The rules do not apply to tenancies that are not ASTs, such as:

  • Tenancies where there is a resident landlord (those living at the property or those living in another part of the same property, where the multiple living units were created by conversion from a single dwelling)
  • Tenancies with rent over £100,000 per annum pro rata
  • Leases to companies or LLPs, or Student lets where the property is let directly by specified universities or colleges (ie halls of residence)

Deposits taken before 6 April 2007

For deposits taken before 6 April 2007 and where the fixed term ended before that date (making it a periodic tenancy), there is a requirement to register the deposit with a TDS and a landlord will not be able to serve a section 21 notice unless they have protected the deposit. However, there is no financial penalty for failing to do so, and so a landlord who does not register within a specific time period will not face any immediate financial penalty.

Unless the landlord registers the deposit with a TDS, he/she will have to rely on one of the grounds for possession in schedule 2 to the 1988 Act in order to end the tenancy. A landlord can choose to protect the deposit at any time to allow it to serve a section 21 notice without being at risk of a financial penalty for late compliance.

For deposits taken before 6 April 2007, where a further fixed term was granted after this date or the fixed term ended and a periodic tenancy came into existence after that date, the landlord must comply with the provisions or face a penalty under section 214 of the 2004 act.

ASTs which became periodic on or after 6 April 2007

All deposits taken before 6 April 2007, where the AST became a statutory periodic AST on or after 6 April 2007 and is still running, must be registered. The Deregulation Act 2015 provided a 90-day period in which to comply with the requirement to register the deposit. This period ended on 23 June 2015. The consequence of failing to register a deposit within that period means that a landlord or an agent acting on behalf of a landlord may be liable to a civil penalty.

If a deposit has not been protected by 23 June 2015, then a notice to repossess the property under section 21 of the 1988 act (section 21 notice) cannot be served until the appropriate remedial action is taken (see section 6 below for more information on section 21 notices).

  • The tenant is also entitled to make a penalty claim of one to three times their deposit under section 214 of the 2004 Act Prescribed information requirements
  • Pursuant to the Housing (Tenancy Deposits) (Prescribed Information) Order 2007, landlords will only have to give the prescribed information once. They will not have to re-serve the information upon renewal of the tenancy provided that:
  • The deposit is protected
  • The prescribed information has been given correctly in the first instance
  • The deposit remains registered with the same TDS
  • The tenancy remains between the same parties, and The tenancy is for the same property

These conditions apply to statutory periodic tenancies and written renewals, but only if the landlord protected the deposit and gave the prescribed information within the 30-day time limit in the first instance or the 14-day requirement, which operated between 6 April 2007 and 6 April 2012.

Failure to comply with the timeframe permitted could result in a penalty claim from the tenant and the landlord cannot serve a section 21 notice unless the deposit is returned.

Where the deposit was taken on or after 6 April 2007 then a new section 215B of the 2004 act provides that, if the deposit was protected and the relevant prescribed information served at some point within the initial tenancy, then there is no requirement to serve the prescribed information again for each subsequent tenancy.

Section 21 Notices

In respect of Section 21 notices, there are five key changes in addition to the form of the notice itself being amended:-

  • Landlords will have to provide prescribed information to tenants at the outset of a tenancy;
  • There will be no requirement for the date specified in the Section 21 notice to be the last day of a period of the tenancy;
  • A landlord will not be able to serve a Section 21 notice within the first four months of the tenancy;
  • There will be a right for tenants to claim back any rent that they have paid in advance where a Section 21 notice brings a tenancy to an end before the end of a payment period;
  • Once a Section 21 notice has been served, a landlord will only have 6 months to issue proceedings on the back of that notice.

These new rules will only apply to tenancies granted on or after 1 October 2015.

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