Question
I have purchased a block of flats in England, most of which are let under assured shorthold tenancy agreements (ASTs). I want to obtain vacant possession to carry out a redevelopment. I have seen the deposit certificates, energy performance certificates (EPCs) and current gas safety certificates (GSCs) for each property. I have not seen evidence that the EPCs and GSCs were provided to the tenants at the outset. Will this have any impact on my ability to obtain possession?
Answer
If you cannot prove that an EPC and a GSC were provided before the tenancies commenced then you may be prevented from terminating the ASTs by way of a notice under section 21 of the Housing Act 1988. You might be able to terminate the tenancies under the section 8 process. If the tenancies were granted prior to 1 October 2015 then the position may be more straightforward if you are able to serve notice prior to 1 October 2018.
Explanation
A section 21 notice allows a landlord to terminate a tenancy when its term expires or where there is a break right on behalf of the landlord. The Deregulation Act 2015 applies to tenancies in England granted after 1 October 2015 and introduced several requirements that must be complied with in order to serve a section 21 notice.
The landlord needs to demonstrate it provided to its tenants before the tenancy commencement date an EPC and a GSC. If the landlord cannot demonstrate this, they may be restricted from serving a valid section 21 notice terminating the tenancy, even if it can show it provided copies of the EPC or GSC after the tenancy started.
New GSCs need to be provided to the tenants following annual checks. Failing to do so may also debar the landlord from serving a section 21 notice.
Tenants need to be provided with a copy of the “How to rent” leaflet. Unlike the EPC and GSC requirements, this can be provided at any point prior to serving a section 21 notice and so failure to provide this information at the outset is not fatal.
You mention that the tenancy deposits have all been protected but you should check that these were protected on time (ie within 30 days of the commencement of the AST) and that the prescribed information was provided. Otherwise, the deposits would need to be returned to the tenants before a valid section 21 notice could be served.
Being debarred from serving a section 21 notice can have the effect of turning an AST into an assured tenancy, in which case a landlord would need to rely on the largely fault-based grounds available under section 8 to terminate a tenancy.
It follows that if you are unable to show that you complied with the EPC and GSC provision requirements then you may need to rely on the section 8 procedure to terminate the tenancies. Alternatively, you could serve section 21 notices but at the risk that a tenant may defend any possession proceedings on the basis that the documents were not provided in time and that a court might not be satisfied of your right to possession.
If the tenancies were granted prior to 1 October 2015, then the process is much simpler and you can serve an “old” form of section 21 notice. You would need to do this quickly, however, as the 2015 Act will apply retrospectively to all tenancies in England from 1 October 2018.
Question
I am a landlord with several residential properties across London. I have used a trusted family friend as my agent for many years for collecting rent and the day-to-day management of my properties. My agent is not currently a member of an approved client money protection (CMP) scheme – what are the consequences for me if my agent does not sign up by the time it becomes mandatory to be a member?
Answer
As you are a landlord and not a property agent, the regulations regarding membership of a CMP scheme do not apply to you and there are no direct consequences for you if your agent is not a member of an approved scheme. As they are likely to apply to your agent, you may want to encourage him or her to join a CMP scheme by 1 April 2019 so you benefit from the CMP scheme’s guarantee and claim procedure, in case of loss or theft of client money by your agent.
Explanation
Agents need to pass the CMP scheme’s screening and due diligence checks and comply with their requirements in order to become and remain members.
The objective of the Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc) Regulations 2018 (the Regulations) is to ensure all client money handled by agents is protected and can be recovered by the landlord or tenant through the CMP scheme in case of loss or theft by the agent or the agent’s insolvency.
The draft Regulations are due to come into force on 1 April 2019 and will make it mandatory for property agents that hold client money to be members of an approved or designated CMP scheme.
Local authorities will be responsible for enforcing the Regulations and can impose a civil penalty of up to £30,000 for non-compliance with the requirement to belong to a scheme and a penalty of up to £5,000 for failing to display the membership certificate at its offices and on its website
There are no consequences for landlords for the breach of the Regulations by their agents. It follows that if your agent is not a member of a CMP scheme on 1 April 2019, and he or she continues to hold client money at that time, then he or she, not you, could be fined.
Megan Davies is an associate at Charles Russell Speechlys LLP; Emma Read is a barrister at Enterprise
