Overview of the Deregulation Act 2015 for Landlords
The intention of the Deregulation Act 2015 is an attempt to simplify a number of areas under the current legislation, cut red tape and repeal outdated legislation. From a landlords point of view this is questionable whether this will be achieved and many landlords say the provisions of DA 2015 add to further unwanted red tape for residential landlords. Some parts of the Deregulation ACT 2015 only apply to England.
The main key points under the DA 2015 for Landlords & Lettings agents
Deregulation Act 2015 does bring in improtant elements of changes regarding termination of assured shorthold tenancies. The tenancy deposit regulations contained within the provisions of the Housing Act 2004 (HA 2004) and extended by the Localism Act 2011 were far from straightforward and have resulted in a number of cases coming before the courts. The provisions of DA 2015 has brought some clarity to the law surrounding the treatment of tenancy deposits, which is particularly is very welcomed in cases where the deposit was received before the regulations came into effect.
DA 2015 also brings in provisions that prevent a landlord serving a section 21 notice in certain circumstances where disrepair has been reported. The new section 21 notice under the DA 2015 is now a prescribed document.
The Deregulation Act 2015 introduces minimum requirements on landlords in relation to:-
The condition of the let property or their common parts the health and safety of occupiers, and the energy performance of the dwelling house.
The DA 2015 also brings in welcomed relaxing of the restrictions on short-term lets in London, which previously required consent for change of use for residential lettings for less than 90 nights.
Changes to the Tenancy deposit provisions (TDS) under DA 2015
Before the DA 2015 some cases highlighted problems with the TDS legislation cases like Superstrike Ltd v Rodrigues and Charalambous and another v NG highlighted some of the problems landlords and letting agents faced due to confusion as consequences of conflicting case law prior to the DA 2015. Regulations (Prior to the DA 2015) confused landlords who faced conflicting legal advice due to the uncertainty due to some of the court rulings on the TDS.
The TDS legislation was inacted to protect the tenant from bad landlords who would refuse to return the tenants deposit. landlords who, in good faith, took a deposit at and protected it in compliance with the TDS regulations (before the DA 2015) were unjustly punished because the deposit was not re-registered upon expiry of the contractual term of the tenancy.The DA 2015 has dealt with this unfairness (partly) because now once the deposit has been received and correctly protected, it will not need to be re-protected upon expiry of the contractual term.
Section 21 notices
The expiry date on a section 21 notice has been a problem for some time and has frequently meant some section 21 notices were deemed as invalid. The case of Spencer v Taylor widened the scope for reliance on HA 2004, s 21(1)(b) which was generally considered to be easier to use and less prescriptive than HA 2004, 21(4).
The decision in Spencer v Taylor has been extended by DA 2015 to tenancies which were periodic from the outset, to which HA 2004, s 21(4) would apply. From 1 October 2015, therefore, whether the tenancy is for a fixed term initially or is periodic from the outset, the section 21 notice will no longer need to specify the last day of a period of a tenancy. This should reduce the scope for dispute over the validity of a landlord’s section 21 notice. In an attempt to balance the interests of landlord and tenant, DA 2015 also includes an express provision that the tenant will be entitled to a refund of any overpaid rent where a tenancy comes to an end mid-way through a period.
However, to prevent us getting carried away with the idea that deregulation means what it says, DA 2015, s 38 allows the Secretary of State to introduce more ‘prescribed legal requirements’ in relation to the condition of the property generally. While it is a little difficult to make an exact comparison until these prescribed requirements have been published, the wording of DA 2015, s 38 suggests that the requirements could be quite wide-ranging and onerous for a landlord. If a landlord is in breach of the requirements, it will be prohibited from serving a section 21 notice—which brings into question the need for further protection for tenants, which is provided by DA 2015, s 33 regarding retaliatory evictions.
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 TDS 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.
The DA introduces new provisions which will come into force on 1 October 2015, to protect tenants from eviction in England only.The Retaliatory eviction element under the DA 2015 is going to prove troublesome for some landlords. The intention of the HA 1988 that owners may let there property without fear and by serving a no fault section 21 notice one could take comfort in this. The DA 2015 has removed the safe guard for landlords when a landlord could previously quite proplerly seek possession under a no fault section 21 notice. Clearly, much will turn on the tenant’s perception of the severity of the condition of the dwelling, and there is every possibility that the landlord and the tenant will disagree about:
a. When and how alleged disrepair was reported?
a. Nature of the alleged disrepair that brought the complaint?
b. Extent of the disrepair?
c. Appropriate course of action?
d. Timescale for carrying out works?
The nature of the accelerated possession process is that the section 21 notice is non-fault based and ought to provide a swift, cost effective solution for a landlord who needs to recover possession of a property. It is quite possible that if a property is genuinely in disrepair, the landlord will be precluded from serving a section 21 notice in any event in view of the prescribed requirements that will be introduced under the powers vested in DA 2015, s 38 on the Secretary of State. However, even if the property was in disrepair and a landlord was able to proceed with the eviction process, the order for possession and subsequent eviction does not affect a tenant’s right to claim compensation for disrepair where the landlord is in breach of its contractual and statutory duties.
That being so, I am not sure these new provisions are either appropriate or necessary. I anticipate a significant increase in the number of hearings being listed as a result of this provision, where there is dispute over the validity of the tenant’s complaint and the extent of the landlord’s response. It potentially allows a streetwise tenant to extend the possession process by months, if not years, and ultimately even if the landlord is entirely vindicated there will be little prospect of recovering any unpaid rent or potentially significant court costs.
What do Landlords & letting agents need to be aware of under the DA 2015?
A. landlord and letting agents will need to ensure they fully comply with the TDS legislation and they have all the records and papers regarding the same. They will need to ensure they have evidence how and when the deposit was protected, when and how the deposit certificate along with the deposit prescribed information was given to the tenant.
B Landlords and letting agents will need to ensure they promptly deal with any complaints of disrepair and they must keep records regarding the same.