Preventing Retaliatory Eviction: A new restriction to section 21 notices
The Deregulation Act 2015 produces a new restriction on the service of section 21 notices. This article considers the application of such provisions, what the new provisions mean, and the exceptions to those provisions.
On 1 October 2015, sections 33 and 34 of the Deregulation Act 2015 come into force. The Deregulation Act 2015 makes a raft of changes to Assured Shorthold Tenancies (“AST”), with the provisions contained in section 33 and 34 perhaps the most significant. Headed “Preventing Retaliatory Eviction”, these sections impose new restrictions on the use of a notice pursuant to section 21 of the Housing Act 1988 to recover possession.
Application of the New Provisions As important as the new defence will be, it will be of initially limited application.
Section 41 of the 2015 Act provides that:
• Sections 33 to 40 of that Act apply only to an AST of a dwelling house “granted on or after the day on which the provision comes into force” (s.41(1)). Subject to section 41(3) these sections do not effect preexisting ASTs. For both sections 33 and 34, the date on which the provision comes into force is 1 October 2015 (Deregulation Act 2015 (Commencement No.1 and Transitional and Saving Provisions) Order 2015).
• Section 41(1) is subject to an important qualification from section 41(2). This section concerns a tenant who holds over after the end of an AST and so obtains a periodic tenancy under section 5(2) of the Housing Act 1988. If the AST was granted before the provisions came into force, they will not apply to the new periodic tenancy even if that periodic tenancy commenced after 1 October 2015.
• There is a further exception from section 41(3). This provides that at the end of a three year period beginning with sections 33 and 34 coming into force, these sections will apply to:
o Any AST that is in existence at that time; and
o To which the provisions do not otherwise apply.
This manner of commencement means that there will effectively be two standards of ASTs for a period of three years – those to which the new sections apply and those to which it does not.
This is most stark in relation to a long-term tenant who entered occupation of the dwelling before the commencement of these sections. If the landlord is content to allow the tenant to hold over as a periodic tenant the new provisions will not apply, but if a landlord asks the tenant to enter into a new AST on exactly the same terms after 1 October 2015 they will apply.
It also means that the first issue when considering retaliatory eviction must be whether the new provisions apply at all. Retaliatory Eviction: What is it? Stated at its broadest, section 33 is designed to prevent an unscrupulous landlord evicting a tenant by way of a section 21 notice in response to a legitimate complaint about the condition of the dwelling house.
It is not the case, however, that any complaint about the condition of the dwelling house will prevent service of a section 21 notice. Section 33 operates in two ways. The first, in section 33(1), applies where a landlord has received a “relevant notice”. The landlord may not give a section 21 notice within six months beginning with the service of the notice. In the event that the relevant notice is a suspended notice, no section 21 notice may be given within six months of the end of the suspension of the relevant notice.
“Relevant Notice” is defined in section 33(13) as either:
• A notice under section 11 of the Housing Act 2004 (“Improvement Notices Relating to Category 1 Hazards: Duty of Authority to Serve Notice”);
• A notice under section 12 of the Housing Act 2004 (“Improvement Notices Relating to Category 2 Hazards: Power of Authority to Serve Notice”); or
• A notice under section 40(7) of the Housing Act 2004, which applies when an Authority carries out emergency remedial action in relation to a category 1 hazard. Section 33(1) is focussed on notices provided by the relevant authority.
Section 33(2) is the section that expressly protects a tenant who complains about the condition of the dwelling house to the landlord. This subsection states that a section 21 notice is invalid if:
• Before the section 21 notice was given the tenant made a written complaint to the landlord about the condition of the dwelling house at the time of the complaint. In the event that the tenant does not know the landlord’s postal or email address, the complaint need not be in writing (section 33(4)); this requirement also does not apply if the tenant made reasonable efforts to contact the landlord to complain but was unable to do so (section 33(5));
• The landlord:
o Did not provide a response to the complaint within 14 days beginning with the date on which the complaint was made; or
o Provided a response that was not an adequate response; or
o Served a section 21 notice in relation to the dwelling house following the complaint;
As with the requirement for a complaint by the tenant, this section does not apply if the tenant made reasonable but unsuccessful efforts to contact the landlord;
• The tenant then made a complaint to the relevant local housing authority. This complaint must be about the same or substantially the same subject matter as the complaint to the landlord;
• The relevant local housing authority served a relevant notice in relation to the dwelling house in response to the complaint. A relevant notice is again one under sections 11, 12 or 40(7) of the Housing Act 2004; and
• If the landlord did not give the section 21 notice before the complaint to the local housing authority, it was given before service of the relevant notice.
Retaliatory eviction is not, therefore, simply a case of evicting a tenant via section 21 of the Housing Act 1988 who had complained about the state of the dwelling. First and foremost, the complaint would have to relate to a category 1 or category 2 hazard as defined by regulations made under section 2 of the Housing Act 2004.
The second point to note is that the complaint must be about the present state of the dwelling. Whereas it may be possible for historic disrepair of a dwelling to be used as a defence to a claim for possession based on rent arrears by setting off rent arrears against damages for disrepair, a complaint about historic problems with the premises cannot be used to prevent service of a section 21 notice.
Thirdly, even before the various exceptions to this section are considered, it is clear that the tenant must conform with stringent requirements to activate the new protections intended to be afforded. Most important is the requirement for the complaint to be in writing (subject to the exceptions of section 33(4) and (5)); merely telling the landlord at, for example, a periodic inspection of the dwelling is unlikely to be enough.
There is a further point to note in relation to section 33(2) in that it only contains one time limit – that the landlord must give an adequate response within 14 days of the tenants written complaint. Section 33(2)(c) only states that the tenant “then” made a complaint to the relevant local authority. There is no requirement that this be undertaken within a set period of time. Neither is there a time limit in respect of the landlord serving a section 21 notice in relation to the dwelling following the complaint.
It would appear, therefore, that many months may elapse between the tenant’s complaint to the landlord and the tenant’s complaint to the local authority. Linked to this concern is the question of what occurs if a landlord does not give an adequate response within 14 days but nonetheless goes on to address the subject matter of the tenant’s complaint and carry out any necessary repair works. Assuming that the works carried out by the landlord properly correct the problems in the dwelling, it is unlikely that this will render a section 21 notice invalid.
This is because the tenant will not be able to complain to the local authority about the same or substantially the same subject matter as the complaint to the landlord. The tenant would therefore be unable to satisfy section 33(2)(c). Exceptions The effects of section 33 of the Deregulation Act 2015 are likely to be restricted by both the nature of the complaints to which it relates and the steps that have to be taken to limit the operation of section 21 of the Housing Act 1988. Along with these practical limitations, section 34 is headed “Further Exceptions to Section 33”.
The first of these exceptions is that section 33 does not apply where the condition of the dwelling house that gave rise to service of the relevant notice is due to a breach by the tenant to use the dwelling in a tenant-like manner, or an express term of the tenancy to the same effect (s.34(1)(a) and (b)). Whilst this exception is useful for landlords in that mandatory possession can still be obtained against tenants who damage the property, it does present something of a practical legal problem.
Possession pursuant to section 21 of the Housing Act 1988 is meant to be simple and swift – hence the Accelerated Possession Procedure in Part 55 of the Civil Procedure Rules, along with the general summary nature of Part 55. It can readily be anticipated, however, that a possession claim that needs to plead this exception to section 33 will be adjourned for a substantive hearing, possibly with oral evidence, as to who is responsible for the condition of the dwelling giving rise to the service of the relevant notice. It may be that the landlord will be able to recover possession under section 21 of the Housing Act 1988 but that this may be more arduous and expensive has previously been the case for this type of possession action.
There are two exceptions in relation to the sale of the property. One relates to sale by a mortgagee exercising a power of sale either under the mortgage or under section 101 of the Law of Property Act 1925, and when the section 21 notice was given the mortgagee requires possession to sell the dwelling with vacant possession (s.34(7)(b) and (c)).
The important limitation in this respect is in section 34(7)(a) – that the dwelling is subject to a mortgage granted before the commencement of the tenancy. It follows that where a mortgage post-dates the tenancy the mortgagee is affected by section 33(1) and (2), and so relative dates of the tenancy and mortgage will be of great importance to a tenant seeking to defend possession based on a section 21 notice served by a mortgagee.
The second sale-based exception is that the dwelling is genuinely on the market for sale at the time that the section 21 notice is given; section 34(2). Under section 34(3), a dwelling is not genuinely on the market for sale if, “in particular”, the landlord intends to sell to:
• A person associated with the landlord (with “a person associated with” taking the same meaning as under section 178 of the Housing Act 1996);
• A business partner of the landlord (as defined by section 34(5));
• A person associated with a business partner of the landlord; or
• A business partner of a person associated with the landlord.
Under this exception a landlord effectively remains entitled to realise the dwelling house as an asset, for example if the landlord wishes to change his investments, retire, or pay off an impending bankruptcy petition.
The question is, however, how the landlord demonstrates that there the dwelling is genuinely on the market for sale. There is only a requirement that the property is on the market not that the property has been sold; clearly the Courts will be astute to prevent the landlord of a property subject to a relevant notice from putting the property on the market simply to nullify the effects of section 33. Whilst some clear examples of the property being genuinely on the market for sale can be considered – such as sale to raise funds to settle a bankruptcy petition debt – can be thought of, it is also the case that there will be many less-clear examples.
This may require the landlord to go to extensive lengths to show that the property is genuinely on the market for sale in order to obtain possession based on a section 21 notice. There is a further exception in that section 33 does not apply where the landlord is a private registered provider of social housing.
Despite its complexity, section 33 of the Deregulation Act 2015 does introduce an important new bar to possession based on a section 21 notice. Further, if a notice is or has become invalid under section 33(2), the court must strike out possession proceedings brought on that notice; section 33(6). With the questions concerning the application of the section, the steps that need to be taken for the section to bite and the further statutory exceptions to the section the first question for landlords and tenants alike will be whether the provisions in relation to retaliatory eviction apply at all.