Section 21, Disrepair and the Deregulation Act: a shield for tenants?

On 16 March 2015, the final text of the Deregulation Bill was agreed. This Bill will shortly receive Royal Assent. Once in force, this Act will have a significant effect on the private rented sector. Sitting alongside provisions relating to tenancy deposits, it is a legislative change that could give private landlords a real headache.

The Bill contains a section entitled 'Preventing retaliatory evictions.' This section is aimed at preventing landlords who, when faced with a complaint about disrepair from a tenant, serve a Housing Act 1988 section 21 notice and then seek to terminate the tenancy, rather than tackle the disrepair and pay out compensation that the tenant could potentially be entitled to receive.

In summary, the new law will be as follows:

• If a landlord is served with a Housing Act 2004 improvement notice in relation to category 1 or category 2 hazards, or an emergency remedial action notice under s40(7) of the Housing Act 2004, the landlord cannot serve a s21 notice within 6 months of the Housing Act 2004 notice being served, or within 6 months of such a notice being suspended.
• Any s21 notice served by a landlord will be invalid if:

- before the landlord served the notice, the tenant had made a written complaint to the landlord (or the landlord's agent) about the condition of the dwelling-house;

- the landlord did not provide a response to the complaint within 14 days or provided an inadequate response (by not describing the remedial action to be taken nor setting out a reasonable timescale for such action);

- the landlord served a s21 notice following the tenant's complaint;

- the tenant then complained to their local housing authority about the matter; and

- the local housing authority then served a Housing Act 2004 improvement/emergency remedial notice on the landlord.

• If proceedings have been commenced by a landlord based on a s21 notice, the courts must strike out possession proceedings based on that s21 notice if, before the order for possession is made, the s21 notice is deemed invalid by virtue of the existence of the circumstances listed above.

There are some safeguards aimed at preventing both tenants abusing the new powers and landlords finding themselves unable to manage their property assets. These include:

• A tenant cannot rely on disrepair where the disrepair is caused by the tenant.
• A landlord can still serve a s21 notice, irrespective of the above, if the property is genuinely being marketed for sale.
• The provisions do not apply if a lender is seeking vacant possession to sell, provided the mortgage was granted prior to the commencement of the tenancy.

At present, the new provisions will only apply to tenancies created after the provisions of the new Act come into force. Existing tenants will not therefore be able to rely on these provisions at the present time. However, landlords should note that the Act does provide that the provisions will apply to all assured shorthold tenancies 3 years after the provisions come into force.

It will be interesting to see how this Act impacts on the private rented sector. Landlords will undoubtedly have to prepare themselves for more disrepair complaints being made to them by their tenants. It does appear that there could be merit in landlords serving s21 notices early on in the life of a tenancy, as is the practice of some landlords, but landlords who do this do need to also have one eye on the tenancy deposit legislation and ensure that deposits are protected and prescribed information is given before the s21 notice is served. Landlords should also note that the Bill does only prevent possession being sought on the back of a no-fault, s21 notice; landlords can still therefore seek possession on one or more of the Housing Act 1988 grounds, irrespective of whether a tenant has raised an issue of disrepair.

One thing is certain - the no-fault possession route looks set to become far more complicated going forward.